<PAGE>
As filed with the Securities and Exchange Commission on November 2, 1999
Registration No. 333-83539
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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THINWEB.COM CORPORATION
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(Exact Name of registrant as specified in its charter)
<TABLE>
Delaware 52-2102438 7372
- --------------------------------- ---------------------- ----------------------------
<S> <C> <C>
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification Number) Classification Code Number)
------------------
</TABLE>
thinWEB.com Corporation
Suite 101, Phase 3
6 Antares Drive
Ottawa, Ontario K2E 8A9
613/225-8446
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Gary Hannah
thinWEB.com Corporation
Suite 101, Phase 3
6 Antares Drive
Ottawa, Ontario K2E 8A9
613/225-8446
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration 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 registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class of Amount Proposed Proposed Amount of
Securities to be Registered to be Maximum Maximum Registration
Registered Offering Aggregate Fee (2)
Price Per Share Offering Price
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<S> <C> <C> <C> <C>
Common Stock 4,000,0000 $ 7.00 $28,000,000 $7,784
- ---------------------------------------------------------------------------------------------------
Common stock held by selling
securityholders 6,412,500 $ 0.02(1) $ 124,250 34
===================================================================================================
TOTAL $28,124,250 $7,818
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</TABLE>
(1) There is no current market for the securities and the price at which the
shares held by the selling securityholders will be sold is unknown.
Pursuant to Rule 457(f)(2), the registration fee is based upon the
estimated per share of common stock book value of $0.02 as of March 31,
1999.
(2) Previously paid by electronic transfer.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
PROSPECTUS Subject to Completion, Dated October ______, 1999
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement which has been filed
with the Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
THINWEB.COM CORPORATION
4,000,000 shares of common stock; and
6,412,500 shares of Common Stock to be sold by the Holders thereof
ThinWEB.com Corporation is offering for sale 4,000,000 shares of its common
stock, par value $.0001 per share at an initial offering price of $7.00 per
share.
The shares are being offered for sale by thinWEB.com by its officers and
directors on a direct participation basis. These officers and directors will not
receive any remuneration for such sales. ThinWEB.com has not established a
minimum number of shares that it must sell. Proceeds received from any sales of
its shares will be immediately available for use by thinWEB.com and will not be
held in escrow, trust or any type of similar arrangement. ThinWEB.com will
offer its shares for sale for a period of six months from the effective date of
this prospectus which term thinWEB.com can extend for an additional 90 days at
its option.
This Prospectus also relates to the offer and sale of 6,412,500 shares of
common stock by the holders of such shares. The sale of the shares by
thinWEB.com and the selling securityholders will occur concurrently. The sale of
the shares by the selling securityholders, either directly or through dealers or
agents, on terms to be determined at the time of sale, may reduce the market
price, if a market is developed, of the shares and may dilute the value of the
shares sold by thinWEB.com.
All costs incurred in the registration of the shares are being borne by
thinWEB.com. ThinWEB.com will not receive any funds from the sale of the shares
by the selling securityholders. All funds received by the sale of their shares
will be retained by the selling securityholders.
ThinWEB.com has limited operations, revenues and capital. There is no
public market for the common stock and a public market may not develop following
completion of this offering or, if a market does develop, it may not be
sustained.
<TABLE>
<CAPTION>
===========================================================================================================
Underwriting Discounts and Proceeds to Company or
Price to Public Commissions(1) Other Persons (2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Company Share $7.00 $0 $7.00
- -----------------------------------------------------------------------------------------------------------
Total $7.00 $0 $7.00
===========================================================================================================
</TABLE>
(1) The officers and directors of thinWEB.com are offering the shares for sale.
If an underwriter is used, of which there can be no assurance, discounts or
commissions are not anticipated to exceed 10% of the offering price.
(2) Does not include an estimated $118,000 in expenses of issuance and
distribution of this offering.
These securities involve a high degree of risk.
See "Risk Factors" contained in this prospectus beginning on page 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
The date of this Prospectus is October ____, 1999
<PAGE>
PROSPECTUS SUMMARY
Risk Factors
There are substantial risk factors involved in investment in thinWEB.com.
Investment in thinWEB.com is speculative and no assurances can be made of any
return to investors.
The Company
ThinWEB.com Corporation is a recently created Delaware corporation formed
to develop Internet e-business software applications targeted to organizations
that require rapid access to data and immediate interaction with customers and
employees over the Internet.
ThinWEB.com maintains its executive offices at Suite 101, Phase 3, 6
Antares Drive, Ottawa, Ontario K2E 8A9 and its telephone number is 613/225-8446.
Trading Market
There is currently no trading market for thinWEB.com's securities,
including its common stock. ThinWEB.com intends to apply initially for admission
to quotation of its common stock on the OTC Bulletin Board maintained by Nasdaq
but there is no assurance that thinWEB.com will qualify for quotation. See
"RISK FACTORS--Absence of Trading Markets" and "DESCRIPTION OF SECURITIES--
Admission to Quotation on Nasdaq SmallCap Market or the OTC Bulletin Board
maintained by Nasdaq".
Selected Financial Data
The following table sets forth the selected consolidated financial data for
thinWEB.com Corporation for the period from April 22, 1998 to December 31, 1998
and the six months ended June 30, 1999:
<TABLE>
<CAPTION>
Income statement data: Period ended Six Months Ended
December 31, June 30,
1998 1999
------------- -----------------
(unaudited)
<S> <C> <C>
Revenues 1,156 1,421
Research and development expense 43,888 3,069,229
Loss for the period (100,296) (5,693,503)
Balance sheet data: December 31, June 30,
1998 1999
(unaudited)
Current Assets 103,258 188,950
Total Current liabilities 200,906 414,258
</TABLE>
-2-
<PAGE>
RISK FACTORS
ThinWEB.com may need additional funds in order to commence and continue
operations
ThinWEB.com has suffered losses from its start-up activities, has
insignificant operations and revenues and is dependent upon certain activities
in order to obtain sufficient financing to complete its research and development
projects, to market those products once available and to develop profitable
operations. ThinWEB.com believes that if it receives at least $7,000,000 from
the proceeds from this offering, and revenues from potential immediate
operations, funds from subscriptions already received, borrowings available from
E-Capital Management Inc., Lines Overseas Management Limited and shareholders of
thinWEB.com will be sufficient to fund its operations for the next 12 months.
If the net proceeds of this offering are insufficient to fund thinWEB.com's
proposed operations, thinWEB.com will seek additional sources of capital,
including possibly, an additional offering of its equity securities, an offering
of debt securities or borrowing through a bank or other entity. ThinWEB.com has
not established a limit as to the amount of debt it may incur nor has it adopted
a ratio of its equity to a debt allowance. ThinWEB.com cannot guarantee that
there is financing available, from any source, or that financing will be
available on terms acceptable to thinWEB.com, or that any future offering of
securities will be successful. In order to raise additional funds, ThinWEB.com
anticipates that it will offer additional equity securities for sale, but it has
not yet determined the time or terms of such offering.
Potential adverse effects if less than maximum number of shares offered is sold
If less than all the shares offered by thinWEB.com are sold, then it will
be required to reduce its planned use of such proceeds. ThinWEB.com anticipates
that its administrative costs will be relatively level regardless of the number
of shares sold. If the aggregate proceeds are less than $7,000,000, then
thinWEB.com does not anticipate expending funds on acquisition of existing
software and will reduce its expenditures on marketing, sales and advertising,
and research and development. The planned development of thinWEB.com and the
completion, introduction and marketing of its two software programs would be
severely curtailed if only nominal proceeds from this offering were
received.
ThinWEB.com has no operating history on which to make an investment decision and
such investment is speculative in nature
Potential investors have no basis on which to make an investment decision
as thinWEB.com and its subsidiaries have no operating histories, have recently
started operations and to date have received only insignificant revenues from
start-up operations. ThinWEB.com's operations will be subject to all the risks
inherent in the establishment of a relatively new business enterprise, including
the lack of significant operating history. There can be no assurance that
future operations will be profitable. Revenues and profits, if any, will depend
upon various factors, some of which are beyond the control of thinWeb.com,
including market acceptance of its concepts, market awareness, reliability of
the software products, dependability and accuracy of technical support,
availability of competing software, initial user acceptability, and general
market conditions. ThinWEB.com could also incur uninsured losses for
liabilities which arise in the ordinary course of business in the software
industry, or which are unforeseen, including but not limited to copyright
infringement, product liability, and employment liability.
Lack of an underwriter increases speculative nature of investment
Because thinWEB.com has not obtained an underwriter to sell its securities,
the officers and directors are selling the securities on a direct participation
basis. As a direct participation offering, there is a greater likelihood that
not all or possibly even none of the securities offered will be sold. In
addition, in an offering without the services of an underwriter a potential
investor cannot rely on the additional investigation and examination of the
issuer and its operations that an underwriter provides prior to consenting to
act as an underwriter.
Sales by selling securityholders may lower market price of common stock
The large number of shares available for sale by the selling
securityholders could reduce the market price of the common stock, if a market
should develop, and the availability of lower priced shares could hinder the
sale
-3-
<PAGE>
of the shares offered by thinWEB.com. The selling securityholders may offer and
sell their shares at prices and at times they determine, in accordance with
applicable federal and state securities laws. The timing of such sales and the
price at which the selling securityholder shares are sold could have an adverse
effect upon the public market for the common stock, should one develop.
ThinWEB.com's software may suffer delays in release
Any delay to a product's release, or any recall or unforeseen impairment to
use of the software once released could drain any resources from the potential
sales of such product and adversely impact thinWEB.com's projected operations
and business plan.
ThinWEB.com products are designed for use in Java platform and a decrease in its
use would hurt potential thinWEB.com sales
ThinWEB.com's software is Java based, which is currently a widely used
computer platform, but it is possible that such wide-spread acceptance will not
continue or that a competitor to Java will develop a better and more widely used
platform not compatible with thinWEB.com's software. Although the software
would continue to be available and usable with the Java platform, there is no
assurance that the Java platform market will continue to expand or that,
potentially in light of a better platform, will not decrease in size.
Lack of continued development of e-commerce market would hamper sales of
thinWEB.com products
Use of the Internet and World Wide Web for commercial purposes is expanding
and as increased commerce takes place on the Internet unforeseen overloads, lack
of sufficient hardware, telephone availability or other problems may develop.
In addition, consumer use of the Internet for purchases, banking, and other
commercial uses may decline for any number of reasons such as security problems,
overload difficulties, shopping trends, or slow Internet access. ThinWEB.com's
marketing strategy is based on Internet sales and a reduction in general use of
the Internet for e-commerce would likely reduce sales of thinWEB.com's products.
Competing software may hurt thinWEB.com's market
The competition in the software industry is intense. Competitors may offer
similar or identical or better software to that being developed or to be
developed by thinWEB.com and may offer such software prior to the availability
of thinWEB.com's software. In addition, a competitor may offer similar or
identical software at a cheaper price or as free software. Given the intense
competition in the software market, it can be important to sales to be the first
software available in an application or to be offered for the cheapest price.
There are numerous well-established competitors, including national,
regional and local software developers possessing substantially greater
financial, marketing, personnel and other resources than thinWEB.com.
ThinWEB.com may not be able to market or sell its products if faced with direct
product competition from these larger software developers.
Trademark protection and proprietary marks do not necessarily ensure protection
of name
Notwithstanding the pending registration of its trade names with the United
States Trademark Office and the Canadian Intellectual Property Office,
thinWEB.com may not be able to enforce against use of these marks by prior
users. ThinWEB.com may not be able to prevent competitors from using the same
or similar marks, concepts or appearances and it may not have the financial
resources necessary to protect its marks against infringing use.
Management and affiliates own enough shares to control shareholder vote
Because thinWEB.com's executive officers and directors, together with
entities affiliated with them, beneficially own approximately 53.8% of the
outstanding common stock, they are able to exercise controlling interest over
matters requiring stockholder approval, including the election of directors and
the approval of material corporate matters such as change of control
transactions. The effects of such management control could be to delay or
prevent any change of management control of thinWEB.com.
-4-
<PAGE>
ThinWEB.com's development of software applications is highly dependent on
expertise of two of its officers
Bryan MacLean, Vice President and a director, and Cory Reid, Vice
President, are the initial developers of thinWEB.com's two current software
applications and the loss of their services for any reason would have a material
adverse effect on thinWEB.com's business and operations and its prospects for
the future. The competition for information technology expertise, including
Internet, computer and software programmers and developers is intense and
thinWEB.com may have difficulty in replacing the services of these two
individuals, if lost for any reason. ThinWEB.com does not have a "key man" life
insurance on the lives of any of its executive officers.
No market for thinWEB.com's common stock
Prior to this offering, no public trading market existed for the common
stock of thinWEB.com or any of its subsidiaries. A public trading market for
thinWEB.com's common stock may not develop or if developed, may not be
sustained. If for any reason the common stock is not listed on the OTC Bulletin
Board or a public trading market does not otherwise develop, purchasers of the
shares may have difficulty selling their common stock or warrants should they
desire to do so.
Immediate dilution in value on purchase of shares of common stock
Purchasers of the shares offered by thinWEB.com will incur immediate and
substantial dilution in the net tangible book value of their shares. Additional
dilution to investors may result when, and if, any warrants are exercised or the
preferred shares converted at a time when the net tangible book value per share
of the common stock exceeds the exercise price of such warrants or the
conversion price of such preferred shares.
Future issuance of additional common stock will reduce investors percentage
ownership and may dilute share value
The future issuance of all or part of thinWEB.com's remaining authorized
common stock or preferred stock could result in substantial reduction in the
percentage of its common stock held by its then shareholders, including
purchasers of the shares and such issuance may have the effect of diluting the
value of the shares held by its then shareholders. ThinWEB.com may issue common
stock for future acquisitions, or other items, or may sell shares of its common
stock at a price lower than price paid by any purchaser hereof. Such issuance
may have the effect of diluting the value of the shares held by its then
shareholders and might have a material adverse effect on any trading market,
should a trading market develop for thinWEB.com's securities.
Additional shares entering market pursuant to Rule 144 without additional
capital contribution
The outstanding restricted securities of thinWEB.com will become eligible
for sale in the public market pursuant to Rule 144 without additional capital
contribution to thinWEB.com. The addition of such shares to the shares already
available in the public market, may reduce the then current market price of
thinWEB.com's shares without any increase to thinWEB.com's capital which may
result in a dilution in the value of the outstanding shares.
The possibility of thinWEB.com issuing additional preferred stock with certain
preferences may depress market price of the common stock
The Board of Directors may designate additional series or classes of
preferred shares without shareholder consent which designations may give the
holders of the preferred stock voting control and other preferred rights such as
to liquidation and dividends. ThinWEB.com has 20,000,000 shares of non-
designated preferred stock authorized which it may issue from time to time by
action of the Board of Directors. As of the date hereof, the Board of Directors
has designated 2,000,000 shares and issued 1,500,000 shares of preferred stock.
The authority of the Board of Directors to issue such stock without shareholder
consent may have a depressive effect on the market price of thinWEB.com's common
stock even prior to any such designation or issuance of the preferred stock. In
addition, any such issuance of shares of preferred stock, under certain
circumstances, could have the effect of delaying or preventing a change in
control of thinWEB.com or other take-over attempt and could adversely materially
affect the rights of holders of shares of the common stock.
-5-
<PAGE>
Officers and directors have limited liability and have indemnity rights
The Certificate of Incorporation and By-Laws of thinWEB.com provide that
thinWEB.com indemnify its officers and directors against losses sustained or
liabilities incurred which arise from any transaction in such officer's or
director's respective managerial capacity unless such officer or director
violates a duty of loyalty, did not act in good faith, engaged in intentional
misconduct or knowingly violated the law, approved an improper dividend, or
derived an improper benefit from the transaction. ThinWEB.com's Certificate of
Incorporation and By-Laws also provide for the indemnification by it of its
officers and directors against any losses or liabilities incurred as a result of
the manner in which such officers and directors operate the thinWEB.com's
business or conduct its internal affairs, provided that in connection with these
activities they act in good faith and in a manner which they reasonably believe
to be in, or not opposed to, the best interests of thinWEB.com and their conduct
does not constitute gross negligence, misconduct or breach of fiduciary
obligations.
ThinWEB.com common stock may be subject to penny stock regulation
There has been no public market for thinWEB.com's common stock. If a
market for the common stock develops and the price of the common stock falls
below $5.00 per share, then the common stock may be considered "penny stock".
Penny stocks generally are equity securities with a price of less than $5.00 per
share other than securities registered on certain national securities exchanges
or quoted on the Nasdaq Stock Market, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. The Company's securities may be subject to "penny stock"
rules that impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse).
For transactions covered by these rules, the broker-dealer must:
Make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the
transaction prior to the purchase;
Unless exempt, deliver, prior to the transaction, a disclosure schedule
relating to the penny stock market;
Disclose the commissions payable to the broker-dealer and the registered
representative and the current quotations for the securities; and
Send monthly statements disclosing recent price information on the limited
market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of
broker-dealers to sell thinWEB.com's securities.
Sales of the shares of the selling securityholders may not be subject to state
securities laws
Investors may not be able to rely on regulation of sales of the shares held
by the selling securityholders imposed by the states. The National Securities
Market Improvement Act of 1996 limits the authority of states to impose
restrictions upon sales of securities made pursuant to Sections 4(1) and 4(3) of
the Securities Act of companies which file reports under Sections 13 or 15(d) of
the Securities Exchange Act. Sales by the selling securityholders in the
secondary market will be made pursuant to Section 4(1) (sales other than by an
issuer, underwriter or broker). It is anticipated that following the effective
date of this prospectus the selling securityholder's shares will be eligible for
resale in the secondary market in each state.
Sales of shares by thinWEB.com must be registered with states prior to sale
ThinWEB.com anticipates that it will primarily sell the shares in a limited
number of states. ThinWEB.com will not accept subscriptions from investors
resident in other states unless it effects a registration therein or determines
that no such registration is required.
-6-
<PAGE>
In order to comply with the applicable securities laws, if any, of certain
states, the shares will be offered or sold in such states through registered or
licensed brokers or dealers in those states. In addition, in certain states,
the shares may not be offered or sold unless they have been registered or
qualified for sale in such states or an exemption from such registration or
qualification requirement is available and with which thinWEB.com has complied.
Computer systems facing unknown problems on change to year 2000
Failure of computers from the Year 2000 problem may severely and adversely
affect thinWEB.com. Many existing computer programs use only two digits to
identify a year in such program's date field. These programs were designed and
developed without consideration of the impact of the change in the century for
which four digits will be required to accurately report the date. If not
corrected, many computer applications could fail or create erroneous results by
or following the year 2000. ThinWEB has conducted an internal assessment for
the Year 2000 problem and has confirmed its readiness. ThinWEB utilized the
services of a third party consultant to perform reformatting of some of its old
computers to ensure Year 2000 Problem compliance.
Many of the computer programs containing such date language problems have
not been corrected by the companies or governments operating such programs.
ThinWEB.com's plans for its operations are contingent upon the continued use and
acceptability of the Internet. A computer failure that impacts on the Internet
for any length of time could undermine thinWEB.com's business plan. In
addition, any failure of the Internet may damper its use and growth and stall or
depress the market for e-business.
ThinWEB.com could be impacted by the failure of other domestic and
international companies and countries to timely correct their computer systems,
telephone systems, mail and package delivery systems, transportation systems,
financial systems, and others. If any of these systems or systems of other
companies or countries become inoperational thinWEB.com may be directly and
significantly affected. The extent or duration of the problems connected with
the Year 2000 problem are impossible to predict.
AVAILABLE INFORMATION
ThinWEB.com has filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act with respect to the
Shares offered hereby. This prospectus does not contain all the information
contained in that registration statement. For further information regarding the
Company and the securities offered hereby, reference is made to the registration
statement, including all exhibits and schedules thereto, which may be inspected
without charge at the public reference facilities of the Commission's
Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C. 20549. Each
statement contained in this prospectus with respect to a document filed as an
exhibit to the registration statement is qualified by reference to the exhibit
for its complete terms and conditions.
ThinWEB.com will provide without charge to each person who receives a copy
of this prospectus, upon written or oral request by such person, a copy of any
of the information incorporated herein by reference, not including exhibits.
Such requests should be made in writing to Gary Hannah, President, thinWEB.com
Corporation, Suite 101, Phase 3, 6 Antares Drive, Ottawa, Ontario K2E 8A9
Canada, or by telephone at 613/225-8446.
ThinWEB.com is subject to the informational requirements of the Securities
Exchange Act of 1934 and files reports and other information with the
commission. Reports, proxy statements and other information filed by thinWEB.com
can be inspected and copied on the Commission's home page on the World Wide Web
at http://www.sec.gov or at the public reference facilities of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
following Regional Offices: 7 World Trade Center, Suite 1300, New York, N.Y.
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies can be obtained from the Commission by mail at
prescribed rates. Request should be directed to the Commission's Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 or by telephone at 800/SEC-0330.
ThinWEB.com intends to furnish its stockholders with annual reports
containing audited financial statements and such other reports as may be
required by law.
-7-
<PAGE>
THE COMPANY
Warwick Acquisition Corporation was created on June 2, 1998 to provide a
method for a foreign or domestic private company to become a reporting company
whose securities would be qualified for trading in the United States secondary
market. Warwick Acquisition Corporation had no operations, revenues, material
assets or liabilities and was a "blank check" company as that term is defined in
the securities acts. On February 19, 1999 Warwick Acquisition Corporation filed
a Form 10 registration statement under the Securities Exchange Act of 1934
making it a reporting company.
On May 27, 1999 Warwick Acquisition Corporation finalized and executed a
share exchange agreement with an effective date of April 22, 1999, among Warwick
Acquisition Corporation, Warwick's wholly-owned newly-created subsidiary
Thinweb.com Inc., ThinWeb Software Incorporated, and the shareholders of ThinWeb
Software Incorporated. As part of the transaction, Warwick Acquisition
Corporation changed its name to thinWEB.com Corporation. By the terms of the
exchange agreement, Thinweb.com Inc. purchased all the outstanding shares of
ThinWeb Software Incorporated for the consideration of:
(1) the issuance of 16,916,344 Class A exchangeable non-voting
participating common shares of thinWEB.com common stock;
(2) thinWEB.com's issuance to StockTrans, Inc., Ardmore, Pennsylvania, as
trustee for the ThinWeb Software Incorporated shareholders, 16,916,344
shares of its common stock to be held in trust under the terms of an
exchange and voting agreement dated April 22, 1999; and
(3) thinWEB.com's issuance of 1,500,000 shares of its preferred stock to
583317 British Columbia, Ltd., a British Columbia corporation, at $.0001
per share. J. Gregory Wilson is sole shareholder of 583317 British
Columbia, Ltd. and the President of E-Capital Management, which company has
been engaged by thinWEB.com to assist it in raising capital. The holder of
the preferred shares shall be entitled to convert such shares into ordinary
shares of thinWEB.com on a one-for-one exchange basis at any time before
June 30, 2000 provided that the holder was instrumental in arranging an
equity financing which resulted in the receipt of net proceeds by
thinWEB.com of not less than $5,000,000.
James M. Cassidy was the sole officer and director of Warwick Acquisition
Corporation from which positions he resigned pursuant to the share exchange.
Warwick Acquisition Corporation redeemed and retired 4,850,000 of its 5,000,000
outstanding shares of common stock. As consideration for the acquisition of
Warwick Acquisition Corporation, TPG Capital Corporation
(1) retained 150,000 shares of the common stock of Warwick Acquisition
Corporation which were exchanged for an equal number of shares of
thinWEB.com, Inc.; and
(2) received a warrant to purchase 50,000 shares of common stock of
thinWEB.com at an exercise price of $1.00 per share.
James M. Cassidy is the controlling shareholder of TPG Capital Corporation
and is an affiliate of Cassidy & Associates, the law firm which prepared this
registration statement. In consideration of services to thinWEB.com provided or
caused to be provided by TPG Capital Corporation, including among other
services, the preparation and filing of this registration statement, thinWEB.com
has agreed to pay TPG Capital Corporation $150,000.
At the time of the share exchange transaction, 24 shareholders received
Class A shares. Following the windup and distribution of assets by a corporate
shareholder 3024704 Nova Scotia Limited, certain share transfers, and
conversions to thinWEB.com common stock, there are currently 42 Class A
shareholders. Each beneficial shareholder of the Class A shares has, through the
trustee, voting rights in thinWEB.com equal to the number of Class A shares held
for his benefit by the trustee. The Class A shares may be converted into or
exchanged for an equal number of shares of thinWEB.com held by the trustee upon
proper notice to thinWEB.com. By having the Class A shares exchangeable at some
time in the future for issued shares of thinWEB.com held by the Trustee, the
ThinWeb Software Incorporated shareholders were able to defer, until the
exchange of their Class A shares for the thinWEB.com shares,
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certain Canadian taxes otherwise payable upon the disposition of their ThinWeb
Software Incorporated shares while maintaining voting rights in thinWEB.com.
ThinWEB.com has two wholly-owned subsidiaries, Thinweb.com Inc., a Nova
Scotia corporation and ThinWeb Software Incorporated, a Nova Scotia corporation.
Thinweb.com Inc. was created to effect the exchange of stock with ThinWeb
Software Incorporated and has no operations. As a result of the exchange of
stock, ThinWeb Software Incorporated has become a wholly-owned subsidiary of
Thinweb.com Inc.
ThinWeb Software Incorporated was founded in April, 1998, by two of the
Company's present officers, Bryan MacLean, also a director, and Cory Reid, to
focus on e-commerce business applications. Messrs. MacLean and Reid were part
of the initial software development team at Sanga International, Inc., a company
providing web-based software business solutions using Java technology. Messrs.
MacLean and Reid determined that a market opportunity existed to develop web-
based software applications targeted to software developers and Internet
providers based on the use of Sun Microsystems' Java software programming
language. Messrs. MacLean and Reid began development of ThinAccess and
WebCrumbs and its core technology in March, 1998, and thereafter established
ThinWeb Software Incorporated through which they continued development of the
technology and products. Effective April 22, 1999 ThinWeb Software Incorporated
became a wholly-owned subsidiary of thinWEB.com Corporation.
ThinWEB.com has an authorized capitalization of 100,000,000 shares of
common stock, par value of $.0001 per share and 20,000,000 shares of non-
designated preferred stock, par value $.0001, of which 2,000,000 shares have
been designated. See "DESCRIPTION OF SECURITIES". The main offices of the
Company are located at Suite 101, Phase 3, 6 Antares Drive, Ottawa, Ontario K2E
8A9 and its telephone number is 613/225-8446.
ThinWEB.com currently has 16 full-time employees and one part-time
employee.
USE OF PROCEEDS
ThinWEB.com will not receive any proceeds from sales of the shares offered
by the selling securityholders. If all the shares offered by thinWEB.com are
sold at the initial selling price of $7.00 per share, which may not happen, the
proceeds to thinWEB.com will be $28,000,000 not including broker or underwriting
commissions which it anticipates would not exceed 10% of the proceeds if any
broker or underwriter is used. There is no minimum number of shares required to
be sold by thinWEB.com pursuant to this offering, and the actual number of
shares sold may be significantly less than the numbered offered. The use of the
proceeds from the offering is dependent on the amount of proceeds received, but
the following list prioritizes the use of proceeds that thinWEB.com may receive.
The following table sets forth thinWEB.com's anticipated use of proceeds
from the offering:
Regardless of amount of proceeds received, the following items would be
paid in full:
. Commissions or underwriting fees, if any 10% of proceeds
. Offering expenses $ 118,000
After payment of the above fees, proceeds of an amount up to $7,000,000 will be
applied in the estimated following percentages:
. Marketing, sales and advertising 45% of proceeds
. Research and development 40% of proceeds
. Administrative expenses 5% of proceeds
. Contingency 10% of proceeds
If thinWEB.com receives proceeds in an amount greater than $7,000,000, then it
would be in a position to pursue the acquisition of existing software
applications and the estimated percentage application of the additional proceeds
would be:
. Marketing, sales and advertising 5% of proceeds
. Research and development 5% of proceeds
. Acquisition of existing software applications 80% of proceeds
. Administrative expenses 5% of proceeds
. Contingency 5% of proceeds
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The foregoing represents thinWEB.com's best estimate of the net proceeds of
the offering based on current planning and business conditions. The exact
allocation of the proceeds for the purposes set forth above and the timing of
the expenditures may vary significantly depending upon the exact amount of funds
raised and status of the Company's business plan.
Administrative expenses include such items as:
. rent
. office furnishings and equipment
. telephone and fax
. office management salaries
. office supplies
. shareholder communications and annual meetings
. professional fees including accounting, stock transfer agent and legal,
filing fees
. insurance
Marketing, sales and advertising expenses include:
. website development and maintenance
. design, printing and distribution of corporate brochures
. contract with a public relations firm specializing in technology
companies
. contract with technology market research firm
. national press and analysts tours
. direct mail and database marketing campaigns
. national advertising campaigns in industry and business press
. participation in industry trade shows and conferences
. participation in co-marketing activities with alliance partners
. salaries for all necessary in-house marketing support personnel
. salaries for all necessary sales personnel
. sales trips to meet with customers and prospective customers
Acquisition of third party software applications consists of the purchase
of independently developed software which is considered to be a strategic fit
for thinWEB.com's software, whether existing or under development. It is
anticipated that any acquisitions would consist of the purchase of the
intellectual property and source codes for the software or by purchase of the
corporation developing or owning the software.
Contingency is a category which is part basket and part buffer to reflect
the unknowns of corporate life whereby unforeseen problems and/or
opportunities arise which must be paid.
The marketing and advertising activities undertaken will partially be a
function of the amount of funds available. Depending upon the availability of
funds the following marketing and advertising activities, in addition to those
listed as marketing expenses, would be undertaken:
. hiring of additional in-house marketing support personnel
. continuous website development and maintenance to provide product and
program information
. design, printing and distribution of corporate brochures, data sheets,
information kits
. contracting with a public relations firm specializing in technology
companies
. contracting with technology market research firm
. national press and analysts tours
. direct mail and database marketing campaigns
. national advertising campaigns in industry and business press
. participation in industry trade shows and conferences
. participation in co-marketing activities with alliance partners.
ThinWEB.com has not yet determined the extent of the technical support it
will offer and the amount of funds to be budgeted to it. Customers will pay to
receive technical support and thinWEB.com anticipates that the technical support
division may be monetarily self-sustaining. Some technical support expenditures
are inherently included in the research and development budget because software
programmers best understand the technology and can provide
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the most useful support while at the same time gaining insight into any existing
bugs and the need for additional or improved features.
ThinWEB.com believes that the proceeds from this offering, potential
revenues from operations, funds from subscriptions already received, borrowings
available from E-Capital Management Inc., Lines Overseas Management Limited and
shareholders of thinWEB.com will be sufficient to fund its operations for the
next 12 months. If thinWEB.com is not able to sell all or a majority of its
offered shares, or to sell its shares at the initial offering price, it may be
required to delay, scale back or eliminate parts of its development plan or
obtain funds through additional financing, including loans or additional
offerings of its securities. ThinWEB.com has no additional agreements or
understandings with respect to any future financing or loan agreements, but
anticipates that it will do additional offering of its equity securities.
DILUTION
Purchasers of the shares may experience immediate and substantial dilution
in the value of the common stock. Dilution represents the difference between the
initial public offering price per share paid by the purchasers in the offering
and the tangible net book value per share immediately after completion of the
offering. Tangible net book value per share represents the net tangible assets
of thinWEB.com (total assets less total liabilities), divided by the number of
shares of common stock outstanding upon closing of the offering. At June 30,
1999 thinWEB.com had a tangible net book value of $(160,455) or $(0.01) per
share.
Assuming sale of all 4,000,000 shares of thinWEB.com at $7.00 per share
(and assuming no conversion of the convertible preferred shares and no exercise
of the outstanding warrants) the tangible net book value of thinWEB.com would be
$24,879,545 or $1.18 per share.
This represents an immediate dilution to purchasers of the shares of $5.82
per share and the aggregate increase in tangible net book value to present
shareholders of $1.19 per share. The following table illustrates such effect:
<TABLE>
<S> <C>
Initial public price per share $ 7.00
Tangible net book value before offering $(0.01)
Increase per share attributable to
new investors $ 1.19
Tangible net book value per share after Offering $ 1.18
Dilution per share to new investors $ 5.82
</TABLE>
Assuming sale of all 4,000,000 shares of thinWEB.com at a nominal amount of
$0.04 per share (and assuming no conversion of the convertible preferred shares
and no exercise of the outstanding warrants) the tangible net book value of
thinWEB.com would be $(160,455) or $(0.01) per share.
This represents an immediate dilution to purchasers of the shares of $0.05
per share and no aggregate increase in tangible net book value to present
shareholders. The following table illustrates such effect:
<TABLE>
<S> <C>
Initial public price per share $ 0.04
Tangible net book value before offering $(0.01)
Increase per share attributable to
new investors $ 0.00
Tangible net book value per share after Offering $(0.01)
Dilution per share to new investors $ 0.05
</TABLE>
The following table sets forth, on a pro forma basis, (without inclusion of the
1,500,000 common shares issuable on conversion of the preferred shares or the
50,000 shares issuable on exercise of the outstanding warrant), the differences
between existing shareholders and new investors in the offering with respect to
the number of shares of common stock purchased from thinWEB.com, the total
consideration paid and the average price per share paid by existing shareholders
and by new investors:
<TABLE>
<CAPTION>
Assuming all shares sold:
Percentage
Percentage of Cash of Total Average
Number of Outstanding Consideration Consideration Price per
Shares Shares Paid Paid Share
---------- -------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders 17,066,344 81.0% $ 651,781 2.3% $ .038
New Investors 4,000,000 19.0% 28,000,000 97.7% $ 7.00
Total 21,066,344 100% $28,651,781 100%
Assuming all shares sold for nominal consideration:
<CAPTION>
Percentage
Percentage of Cash of Total Average
Number of Outstanding Consideration Consideration Price per
Shares Shares Paid Paid Share
---------- -------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders 17,066,344 81.0% $ 651,781 78.6% $ .038
New Investors 4,000,000 19.0% 177,778 21.4% $0.044
Total 21,066,344 100% $ 829,559 100%
</TABLE>
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<TABLE>
<CAPTION>
Assuming 500,000 shares sold: Percentage
Percentage of of Total Average
Number of Outstanding Consideration Consideration Price per
Shares Shares Paid Paid Share
---------- ------------ ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders 17,066,344 97.15% $ 602,500 14.7% $.035
New Investors 500,000 2.85% 3,500,000 85.3% $7.00
Total 17,566,344 100% $ 4,102,500 100%
</TABLE>
DIVIDEND POLICY
ThinWEB.com currently intends to retain substantially all of its earnings,
if any, to support the development of its business and has no present intention
of paying any dividends on its common stock in the foreseeable future. Any
future determination as to the payment of dividends will be at the discretion of
the Board of Directors, and will depend on thinWEB.com's financial condition,
results of operations and capital requirements, and such other factors as the
Board of Directors deems relevant.
BUSINESS
References herein to thinWEB.com or the Company include its wholly-owned
subsidiaries, Thinweb.com Inc. and ThinWeb Software Incorporated, unless the
context otherwise requires. ThinWEB.com is a start-up company and has
insignificant operations or revenues to date. Its ability to continue is
dependent upon it obtaining the necessary financing to complete its research and
development projects and upon future-profitable operations.
Pursuant to a share exchange agreement effective April 22, 1999, Warwick
Acquisition Corporation acquired all the outstanding stock of Thinweb Software
Corporation and changed its name to thinWEB.com Corporation. Prior to the stock
exchange Warwick Acquisition Corporation was a blank check reporting corporation
with one shareholder and director. Warwick Acquisition Corporation was
incorporated in Delaware on June 2, 1998 and filed a registration statement on
Form 10-SB with the Securities and Exchange Commission on February 19, 1999.
Overview
ThinWEB.com develops e-business software applications for organizations
that require rapid access to data and immediate interaction with customers or
employees over the Internet. ThinWEB.com intends that all its software
applications will utilize Java, the language released in 1995 by Sun
Microsystems that provides a universal platform that can run on any computer and
on most operating systems without alteration. ThinWEB.com's use of Java will
enable it to develop applications for mobile and wireless devices and other
emerging technologies that require platform independence, swift deployment,
flexibility, fast operation and low-cost.
ThinWEB.com anticipates that its customer base will consist of stand alone
software development companies, Internet service providers, application service
providers and software development teams within large organizations.
ThinWEB.com has developed a core technology that will support current and
future e-commerce applications developed by it. The core technology will
provide the framework for all future software developed by thinWEB.com and will
eliminate the need and cost for developing a particular framework for each
application. ThinWEB.com's first two applications are targeted for the e-
commerce web applications market.
On August 9, 1999, thinWEB.com introduced into the market ThinAccess as its
first product. To introduce ThinAccess, ThinWEB.com issued a press release
supplemented by an informational mail-out to industry publications and research
analysts, sent an e-mail announcement to all users of the beta version (i.e.
earlier testing version) of ThinAccess, and hosted a tour for product reviewers,
writers and industry analysts. Several articles describing ThinAccess appeared
in some industry publications and management anticipates that after testing of
the product, additional reviews will be published in industry trade
publications.
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On October 6, 1999, thinWEB.com announced at the Internet World '99 trade
show in New York the release of a version of ThinAccess for the Java 2 Platform.
ThinWEB.com also announced release of the beta version of WebCrumbs 1.0 for free
downloading from the thinWEB.com Web site.
Glossary
The glossary offers definitions of some of the technical terms used in the
text following.
applet a program written in the Java language which is
downloaded over the internet and runs in a web browser.
application
programming interface a source code which programmers use to develop software.
component containment refers to a software storage area which contains or
manages objects for later retrieval and usage.
component naming a mechanism which allows objects to be discovered and
identified based on a given name.
driver a software code designed to enable a particular device
or program by translating an independent format request
into instructions the device can understand.
dynamic link library a code which is linked when programs are executed
instead of when they are compiled.
HTTP tunneling communication between web servers and web browsers
through an agreed port using hypertext transfer protocol
(HTTP) thereby allowing web servers to remain secure
while still allowing the exchange of information.
hypertext markup
language a standard set of tags or characters which are used to
format documents on the world wide web.
Java sandbox a security model used in the Java programming language
which restricts certain actions when running Java
applets and applications.
JDK version proxying the ability to determine and react within software
depending on which version of the JDK software is
currently running.
object interaction allowing objects to use the functionality or behavior of
another object.
open database
connectivity an industry standard application programming interface
allowing developers to access different database
systems.
perimeter middleware software that mediates between a program and a network,
managing the interaction between disparate applications
across various computing platforms.
Query Tool a software program whose sole purpose is to query or
retrieve information from a database and display it for
the user.
Schema Viewer a software program whose sole purpose is to view how
data is stored in a database and display the physical
structure for the user.
servlet a Java code that runs as part of a web server which when
requested executes the code on the server and returns
any information to the web browser.
smart agent analysis
tool a term used to describe software which both analyzes web
site usage and gives web site administrators the ability
to smartly determine which page web visitors see.
structured query
language an industry standard language for creating, updating and
querying relational databases.
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transmission control
protocol/internet
protocol a set of protocols developed for the Internet in the
1970's to get data from one network device to another.
ultra-thin download software downloaded over the internet to a web browser
which has under 100 kilobytes of memory.
uniform resource
locator an address that identifies a document or resource on
the world wide web.
Technology and Products
Core Technology. Through its subsidiary, ThinWeb Software Incorporated,
thinWEB.com has developed its core technology to be used by its e-commerce
applications. The core technology uses Java software compliance and enterprise
Application Programming Interfaces (APIs) from Sun Microsystems, Inc. to
retrieve data and business logic wherever located and to integrate it into new
applications for use on the web. The core technology approach treats
applications as a tapestry of inter-linked collaborating and intelligent modular
objects called components. Each component is responsible for encapsulation of
its internal data as well as displaying the designed behavior. Any component
connected into the core requiring a particular action of another component can
send instructions via that component's interpretation mechanism, the API. The
core technology eliminates the need to build a new framework for each new
application developed by thinWEB.com.
ThinWEB.com anticipates that using its core technology will allow it more
rapid product research and development of applications by:
. Decreasing duplication of effort. A problem encountered in a
development project can be solved once and abstracted for use by
others in the project with the same or similar problem.
. Decreased lines of code. Component specialization reduces needed lines
of code since specific functions are encapsulated in one place and can
be referenced by other developers.
. Developer specialization. A developer can specialize in one or a few
components with regard to performance, functions, and other areas and
not use time attempting tasks with which he is not familiar.
. Increase bug detection and fixing. Common operations and algorithms
are encapsulated into components shared by all the developers; when a
bug occurs with one of these operations or algorithms, it can be
quickly isolated to one component and fixed for at one time for
developers utilizing the operation or algorithm.
. Easier adaptation. As applications evolve, components can be easily
added, updated or replaced with minimal effect at the application
level.
The core technology is not intended to directly be a marketable product;
the core technology was specifically developed to provide a competitive
technical advantage in the development of thinWEB.com's web applications and is
designed for TCP/IP ("transmission control protocol/internet protocol") networks
using web clients such as web browsers, middle tier services such as web
servers, application servers and database middle-wares with support for industry
standard protocols.
ThinWEB.com has developed two marketable applications utilizing the core
technology: ThinAccess and WebCrumbs. ThinAccess and WebCrumbs have been
tested and listed by Sun Microsystems on its Web site as being approved Java
cross platform applications (i.e. "100% Pure Java"). ThinAccess was introduced
into the market in August, 1999, and WebCrumbs is completing its beta testing
phase. ThinWEB.com has additional products in the design and development
phases.
ThinAccess Overview. Databases are widely used in computing and are
crucial to many e-commerce applications including:
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<PAGE>
. payroll and employee records departments,
. travel and reservation systems,
. financial services systems,
. accounting departments and
. many other areas in both government and private industry
organizations.
ThinAccess is designed to offer remote access to any database running in
any web browser over the Internet with exceptional speed and an ultra-thin
download. Timely access to databases is crucial and ThinAccess is designed to
provide such database access in seconds. ThinAccess is a packaged software
application that can be downloaded from a web site. A customer is able to
download this application in the form of an installation program. ThinAccess is
designed to work on any platform, including cellular phones and personal data
assistants.
Java Database Connectivity (JDBC) is a standard defined by Sun Microsystems
to allow database access from Java applets and applications. ThinAccess is
intended to provide high performance, powerful features and scalable JDBC
database access to network databases. This improves user responsiveness for web
database applications and gives web developers a single interface to access all
databases enabling web applications to manipulate all databases uniformly.
ThinAccess is specifically aimed at providing thin client Java database
access for Java applets, servlets and applications. ThinAccess is designed to
improve the performance at both the client and server level with these key
features:
. Decreases database application development cost
. Can use any browser, any database, or any platform
. Reuses database connections across multiple clients
. Provides remote management over the web
. Connects to multiple databases with one driver download
. Increases web page response time by avoiding large driver downloads
. Saves redundant database processing by enabling multiple clients to
browse same query results
. Ease of use and installation saves costs of installation of
specialized software
. No software installations required of clients
. Ships with a SQL compliant pure Java database
. Utilities include a Query Tool, Interactive SQL and Schema Viewer
ThinAccess Technical Data. ThinAccess first requires the ThinAccess Server
to be started. Once this product is initialized customers are able to configure
the ThinAccess Server using the graphical administrator contained in ThinAccess.
Configuration issues for customers include
(1) importing database middlewares,
(2) specifying properties such as user name and password to connect to the
database, and
(3) pre-configuring database objects.
ThinAccess is shipped to customers pre-configured with an SQL ("structured query
language") compliant Java database called InstantDB. With a configured
ThinAccess Server running, web clients are able to access their databases in
Java applets, servlets or applications using JDBC drivers or ultra-thin
Thinlets.
Thinlets provide an ultra-thin download and high performance mechanism to
directly access a pre-configured component existing on the ThinAccess Server.
They drastically reduce the time to perform database operations because many
critical path issues can be performed before the user clicks on the button. For
example, it is possible to instantly access a pre-configured connection to save
on the time it takes to create a connection, access a pre-configured database
query result or access a pre-configured query to execute if required.
Three JDBC drivers are included with ThinAccess that support the JDBC
standard for Java database connectivity. The choice of driver depends on the
requirements of the project. Factors determining the appropriate driver include
the web browser support required, firewalls requiring HTTP tunneling, and JDK
version or proxying. ThinAccess can be used to connect to any database
accessible via a JDBC driver and supports access to any ODBC database as
well.
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<PAGE>
JDBC drivers involve low level protocols that connect to databases.
Downloading these drivers to web browsers introduces many potential obstacles
including breaking browser security models, Java sandbox issues, huge class
downloads from loading drivers, client software installation issues such as DLLs
("dynamic link libraries"), insecure transmission of database user id's and
passwords, complicated JDBC URL's ("uniform resource locators") and many more.
ThinAccess provides all the functionality of these JDBC drivers without the
downloading obstacles.
ThinAccess provides "remote" access to these drivers, without the need to
download the driver. This immediately saves a class download that could take
minutes for network users to complete. When a JDBC request is made by the
client, ThinAccess proxies this request over to the middle tier server where it
is executed, then the results returned.
Technical Benefits of ThinAccess include:
. One location for all JDBC drivers. In environments where multiple
databases and database drivers exist, ThinAccess can simplify this
environment by organizing database connectivity in one place.
. Simplicity for web developers. ThinAccess gives web developers a
simple JDBC URL to access databases by simple names. Using the ThinWeb
JDBC URL means the web developer does not have to know underlying
database specifics including the need to know SQL.
. Seamless access when database changes occur. When databases are
upgraded, new JDBC driver versions are released, ports change,
database user identifications and passwords change, and the physical
location of the database changes. This means the user must change all
its database applications to reflect these changes. With ThinAccess
this is avoided since the web developer deals simply with the user
defined name. The database could change but the ThinAccess
application does not have to be changed.
. One driver download for multiple databases. If an applet requires
connectivity to multiple databases, a user could be faced with
multiple downloads. With ThinAccess, one JDBC driver download is
sufficient.
. Pre-configuration for premium performance and scalability. It is
possible to pre-configure database connections, statements and result
sets so they can be instantly accessed and processed by many clients
simultaneously.
. Work in any version of any Java enabled web browser. Web browsers only
support one version of Java and if there is a download of an applet
with the wrong driver version, the application will not work.
ThinAccess contains a JDBC driver that works in any browser and avoids
having to keep a separate driver for every version of a web browser.
. Use of the more efficient Type 2 drivers. Web enabled databases using
"type 2" drivers are regarded as the best performing and most reliable
since they use native database libraries. Most often the type 2
driver is much more stable and preferred but it cannot be deployed
over networks without customer software installations. ThinAccess
uses the type 2 driver.
. Avoids transmitting database user identifications and passwords over
the network. Many JDBC drivers send user identifications and passwords
from the application over the Internet and often are unprotected.
ThinAccess avoids transmitting any user identification or password
information.
. Flexibility of use. ThinAccess can plug into any web server, any
browser, or any database on any platform supporting the Java
specifications.
WebCrumbs Overview. WebCrumbs is designed to be a web site management and
smart-agent analysis tool. WebCrumbs is a shrink-wrapped packaged application
which can be graphically installed and easily used to run in correlation with
the corporate web server. WebCrumbs is intended to gather and analyze
information about a visitor to a particular web site and to generate a
personalized look to the web site in response to the information learned
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<PAGE>
about that visitor. WebCrumbs runs on any operating system supporting Java, any
web server supporting Java Servlets, and communicates with any database
supporting JDBC or ODBC ("open database connectivity").
WebCrumbs Technical Data. As a web site analysis and reporting tool,
WebCrumbs is intended to offer a non-intrusive installation and integrated real-
time reporting and the ability to use any in-house database customer reporting
tool. Real time, high performance database communication, via JDBC or ODBC,
allows WebCrumbs to provide web-based industry standard analysis reports, in
both HTML ("hypertext markup language") and 3D graphs quickly and accurately to
any web browser. This database communication also allows WebCrumbs to serve up
dynamic database pages and complicated real time web pages.
Management believes WebCrumbs to be unique from other web site analysis
tools by its utilization of the "Dynamic Navigation Technology", a technology
developed by thinWEB.com that automatically generates customized web pages based
on pre-defined business rules and tracks web site activity in real time.
WebCrumbs Smart Agent technology learns about a visitor's preferences by
monitoring such visitor's web site usage patterns (such as pages visited and
length of stay) and utilizes such information in real time by instantly
presenting on the web site information and advertising most suitable.
ThinWEB.com anticipates that WebCrumbs will be a commerce tool on many Web
sites. These sites will display different pages to visitors based on the
visitor's past and current behavior. Web sites will present users with
personalized content or purchase recommendations based on individual interests
and preferences. Since this data is updated continuously in real-time, new
suggestions for additional purchases are available instantly.
WebCrumbs' personalization of the web site takes two basic forms:
collaborative filtering and profiling. Both are attempts to collect specific
information that will aid in generating additional traffic, click-throughs and
revenue on web sites.
Collaborative filtering is voluntary. It accepts information provided by
the user and predicts what information will be of interest to him or her.
It can also compare a user profile with those of other users to create
common-interest groups and make recommendations based on other customer
preferences.
Profiling is not voluntary. A visitor's actions are observed and tracked.
Subsequent user clicks identify patterns of behavior and interests, which
result in the presentation of specific information to Web sites visited.
ThinWEB.com anticipates that future versions of WebCrumbs will all be based
on the core features WebCrumbs provides. The versions will include both an ISP
("Internet Service Provider") and Enterprise edition. ISPs have the unique
problem of having to handle multiple domain name web sites so all tools must be
able to handle their environment. The Enterprise edition will be a more
scalable, multi server version.
The WebCrumbs Community edition will enable multiple sites, the community,
to collaboratively share certain information obtained by WebCrumbs about
visitors as they move from one site to another in the community.
Future Products and Research and Development. ThinWEB.com intends to
develop additional e-commerce focused Internet applications on its core
technology, in response to perceived market demands. The development of newer
versions of the two products currently developed and the development of
new e-commerce products will require a material investment of resources. During
its first nine months, thinWEB.com expended US$107,750 on research and
development.
Memorandum of Agreement with Agritek Bio Ingredients Corporation
ThinWEB.com entered into a Memorandum of Agreement to establish a
joint venture with Agritek Bio Ingredients Corporation ("Agritek") of Toronto,
Canada on September 10, 1999, for the development of ThinAccess for application
to the wireless database access market. Agritek is a Canadian public
corporation trading on the Montreal Exchange which has been divesting itself of
its agricultural biotechnology investments and is repositioning itself as an
investor in software technologies, with an emphasis on the Internet sector. The
joint venture vehicle will be a Canadian private corporation with each venture
partner owning 50% and the operations of which will be jointly funded by
each
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partner. ThinWEB.com will be the managing partner and will be paid a 2.5%
surcharge by Agritek on its contribution to operating costs.
The joint venture will pay thinWEB.com a 5% royalty on its revenues. As
consideration for thinWEB.com granting a perpetual license to the joint venture
for ThinAccess application to the wireless database access market to the joint
venture, Agritek will pay thinWEB.com the sum of $1,000,000 CDN ($650,000 US),
$500,000 ($325,000 US) of which has been received and is non-refundable and the
balance of which is payable upon the signing of a definite joint venture
agreement.
In addition Agritek will deliver, subject to regulatory approval, 500,000
units of Agritek, each unit consisting of one share of freely tradeable common
stock and one non-transferable common stock purchase warrant good for two years
at an exercise price of $.50 CDN ($.325 US). ThinWEB.com will issue to Agritek
100,000 non-transferable common stock purchase warrants with a two year exercise
term at an exercise price being the lower of $5.00 USD and the price at which
thinWEB.com next issues equity pursuant to a financing.
Revenues and Other Financing
To date, thinWEB.com has used monies received from loans and equity
investment to develop its products and to pay administrative expenses. See
"FINANCIAL STATEMENTS".
ThinWEB.com projects that funds may be received from the following sources:
(1) The sale of thinWEB.com's products. ThinWEB.com is actively pursuing
marketing and sales partnerships with established companies in the Java
marketplace.
(2) The joint venture royalty and license fee. If finalized, the joint
venture with Agritek will pay thinWEB.com a 5% royalty on its revenues and
$1,000,000 CDN ($650,000 US) for the perpetual license of ThinAccess to the
wireless database access market.
(3) The sale of thinWEB.com's securities. ThinWEB.com anticipates that it
will raise funds through the sale of its equity securities through this offering
and possible subsequent offerings.
The holder of thinWEB.com's 1,500,000 issued Preferred Shares shall be
entitled to convert such shares into common shares, on a one-for-one exchange
basis, at any time before June 30, 2000 provided that such holder was
instrumental in arranging equity financing on terms acceptable to thinWEB.com
resulting in the receipt of net proceeds by it of not less than $5,000,000.
ThinWEB.com may not be successful in any sales of its products or support
packages nor be able to raise any funds through the sales of its securities. In
such event it may be required to seek financing for its operations from other
sources, including debt financing or borrowing from financial institutions or
other sources. There can be no assurance that any such funding will be
available, or available on terms acceptable to thinWEB.com, if and when needed
by it.
Trademarks
ThinWEB.com does not have any patents. On December 4, 1998, thinWEB.com
applied for trademark registration in Canada for "WebCrumbs" and "ThinWeb" and
on April 16, 1999, for "ThinAccess". On June 4, 1999, thinWEB.com applied for
trademark protection in the United States for "WebCrumbs", "ThinWeb" and
"ThinAccess". There is no guarantee that other companies do not already utilize
these names as their company name or for their products and there is no
assurance thinWEB.com would be able to enforce against use of these marks
against prior users. Even if such trademark protection is granted, there is no
assurance that thinWEB.com will be able to prevent competitors from using the
same or similar marks, concepts or appearances or it will have the financial
resources necessary to protect its marks against infringing use.
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Licenses
Sun Microsystems, Inc. On September 2, 1998 ThinWeb Software Incorporated
entered into a 100% Pure Java Logo License Agreement with Sun Microsystems, Inc.
of Palo Alto, California whereby Sun Microsystems granted a non-exclusive, non-
transferable, personal, royalty-free license to use the 100% Pure Java logo and
the "For Java" tagline (a) on the products, splash screens and product
packaging, and (b) in the marketing, advertising, distribution and sale of the
products, provided that ownership of the logo and tagline are attributed to Sun
Microsystems. The license only extends to those products which have
successfully passed Sun Microsystem's certification tests. Both ThinAccess and
WebCrumbs have passed the certification tests.
New Atlanta Communications, LLC. On December 15, 1998 ThinWeb Software
Incorporated entered into a reseller agreement with New Atlanta Communications
LLC of Alpharetta, Georgia whereby New Atlanta granted ThinWeb Software a non-
exclusive right to license and market New Atlanta's ServletExec, Version 2.0
software to its customers provided it is bundled with ThinWeb Software's
products. ThinWeb Software has the right to purchase the license for use with
WebCrumbs versions 1.0 and 2.0 and other products developed at very favorable
pricing, including the option to pay a one-time lump sum fee for a 3 year
period.
The pricing terms also apply to any upgrades of the Servlet Exec Version
2.x series made by New Atlanta during the term of the agreement. If ThinWeb
Software markets WebCrumbs version 2.0 without bundling ServletExec 2.0 the
agreement automatically terminates and New Atlanta is to be paid an amount as
liquidated damages. New Atlanta is to provide technical support to ThinWeb
Software and its customers as is customarily provided to New Atlanta's own
retail customers. The term of the agreement is for one year commencing February
1, 1999, and is automatically renewed for an additional one year term unless
canceled by ThinWeb Software in writing not less than 30 days prior to
expiration of the initial one year term. Either party may terminate the
agreement upon 30 days written notice if the other party breaches the agreement.
Cloudscape, Inc. On March 31, 1999, ThinWeb Software entered into a
license agreement with Cloudscape, Inc., Oakland, California, by which
Cloudscape granted ThinWeb Software a non-exclusive, non-transferable license to
use its JBMS embedded client and workgroup server deployment software to (i)
develop a limited use version of the software and (ii) distribute or otherwise
deploy to end users the limited use version of the software. One year of
maintenance and support of the software is included in the license, including
updates, upgrades, new versions, and new products within the embedded software
product family. The term of the license agreement is one year, renewable
annually from year to year unless canceled by ThinWeb Software in writing not
less than 90 days prior to an anniversary date. Cloudscape may terminate the
agreement upon 30 days written notice in the event that ThinWeb Software is in
breach of the agreement . ThinWeb Software agreed to pay a minimum license fee
over 12 months and a royalty of 3% of the selling price for distribution of
Cloudscape restricted limited use licenses with development copies of ThinWeb
Software. A royalty of 10% of the selling price is payable by ThinWeb Software
for distribution of Cloudscape unrestricted licenses with deployment copies of
ThinWeb Software. No royalty fee is payable in any quarter during the first
year except to the extent that it exceeds the quarterly payment. Support is
charged on a per call basis with the minimum 10 pack of support calls at $1,000
to be charged against the initial prepayment.
Informix Software, Inc. On August 2, 1999 thinWEB.com entered into a
license agreement with Informix Software, Inc. of Menlo Park, California whereby
Informix granted thinWEB.com a non-exclusive, non-transferable license to
internally use its products provided under the Informix Solutions Alliance
Program solely for thinWEB.com's development and support purposes and appointed
thinWEB.com an Independent Software Vendor under the Informix Solutions Alliance
Program. Pricing for licensing of any products used is pursuant to the pricing
established in the Informix Solutions Alliance Program from time to time. The
agreement is for a 1 year term but is automatically renewable annually unless
either party provides written notice at least 30 days prior to expiration that
it will not be renewed.
Marketing-General Strategy
ThinWEB.com intends to target software manufacturers (database and
application), software developers and Internet service providers. ThinWEB.com
anticipates that its products will be marketed directly to businesses. It also
anticipates that it will market its technology to developers directly through
Internet sales on its web site in the form of a developers' tool kit.
ThinWEB.com anticipates that its thinner and faster Internet solution will have
a
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significant appeal to many software suppliers. Many of the current database
software companies have an application too thick to be easily Internet ready.
ThinWEB.com anticipates generating sales inquiries through an on-line
marketing campaign designed to lead Java software developers to its web site.
Using discussion forums, chat groups, and web site advertising banners to be
placed on strategic web sites, customers will be able to link directly to the
thinWEB.com web site and learn more about and download the products.
ThinWEB.com plans to support its on-line advertising with attendance at
industry trade shows and selected magazine advertisements.
ThinWEB.com began to establish a marketing staff during the second quarter
of 1999 with the employment of three industry-experienced personnel and has 5
sales and marketing employees. ThinWEB.com intends to expand this marketing
staff with additional employees. It has leased space in Halifax, Canada to
accommodate increased research and development, accounting and administrative
personnel in addition to its executive offices in Ottawa, Ontario, Canada.
Marketing and Sales Strategy-ThinAccess
The target markets for ThinAccess are database software development
companies that need to web-enable their products and developers seeking to
enable client server applications either for internal use or re-marketing.
ThinWEB.com believes that a major shift is taking place in the way information
and applications are accessed and that such shift will provide users access to
powerful computer applications and information through inexpensive and easy to
use information access devices i.e. thin clients.
ThinAccess sales efforts will be initially focused on the major database
companies, sales force automation and customer relations vendors. ThinWEB.com
anticipates that it will attempt to establish long-term agreements with original
equipment manufacturing companies ("OEM") whereby ThinAccess would be bundled or
embedded within that vendor's software and shipped as a web enhancement.
ThinWEB.com intends to focus on assisting these vendors to enable their products
to remotely access the Internet, Intranet and extranet with the eventual target
of entering into a binding royalty or one-time fee structure with these
vendors. Pricing for ThinAccess will start at US$11,000 per CPU (Central
Processing Unit) with OEM pricing based upon type of sales stream i.e. either
bundled with a version of the database or sold embedded with all versions with
subsequent annual maintenance fees
ThinWEB.com will also target ThinAccess to the wireless market segment. It
will attempt to establish relationships with vendors who require a faster and
smaller footprint to allow effective deployment of their application such as
palm-held organizers, certain Windows applications, cellular phones and pagers.
There is no assurance that thinWEB.com can meet these expectations or that it
will be able to establish agreements or relationships with the OEM or wireless
markets.
Marketing and Sales Strategy-WebCrumbs
The target markets for WebCrumbs are Internet Service Providers (ISPs),
Application Service Providers (ASPs), web marketers, call center application
vendors and web houses. ThinWEB.com will attempt to market WebCrumbs to ISPs by
focusing on the use of WebCrumbs to increase the value of advertising on web
sites. By using WebCrumbs, thinWEB.com believes that an ISP will be able to
charge a premium for advertising. ThinWEB.com anticipates that it will charge a
"click charge" to the ISP, that is, each time the ISP uses WebCrumbs,
thinWEB.com will receive a fee. ThinWEB.com will also try to obtain a "powered
by thinWEB.com" logo on the ISP's web site.
ThinWEB.com anticipates that it will market WebCrumbs to call center
vendors to improve their customer experience by having the ability to adjust to
the caller's needs while online. It anticipates that the fee for embedding
WebCrumbs into the software applications will be based on a royalty fee
structure.
Web houses design and deploy web sites for other companies, including the
design, functionality enhancements and, often, the hosting. ThinWEB.com
anticipates first introducing the software developers tool kit (discussed below)
to web houses to assist them in improving web site features and then building
WebCrumbs to that. It hopes to eventually charge a license fee to such web
houses for use of WebCrumbs with subsequent annual
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maintenance fees. There is no assurance that thinWEB.com can meet these
expectations or that it will be able to establish any such agreements or
relationships.
Software Developers Tool Kit
ThinWEB.com believes that the key to the success of any software company is
its linking the input of customers and prospects with the input from the
software developer community. ThinWEB.com will make available a software
developers tool kit that will enable developers to develop applications using
thinWEB.com products. ThinWEB.com anticipates that it will sell the software
developers tool kit directly, through its web site, to assist in-house
information technology departments and developers to work with thinWEB.com
technology. Both ThinAccess and WebCrumbs will be available to be downloaded
directly from the thinWEB.com web site for a 30-day no risk trial. After the
trial period, the software developers tool kit for ThinAccess and WebCrumbs will
be available for purchase at US$995 and will include a 5-user license. The
software developers tool kit will be only for development use and once an
application is to be deployed to more than five users, thinWEB.com anticipates
it will enter into a license agreement.
Marketing-Specific Alliances
ThinWEB.com has joined several alliances with certain major computer
companies and computer groups which it anticipates will assist in the promotion
and sales of its products.
Sun Developer Connection. ThinWeb Software is a member of the Sun
Developer Connection Alliance, a free alliance open to 100% Pure Java certified
companies. As a member of the Sun Developer Connection Alliance the Company
anticipates the promotion of ThinWeb Software and its products on the Sun web
site, a web site description of ThinWeb Software and a link to ThinWeb
Software's web site from the Javasoft web site, distribution of evaluation
copies of ThinWeb Software's products bundled on Sun Solutions' widely
distributed CD's, inclusion in the Sun Solutions Catalogue which is distributed
to all Sun Microsystem hardware customers, and possible Sun trade show
participation (such as Sun's Java One and Java Business Expo trade shows).
Microsoft Independent Software Vendors Program. ThinWeb Software is a
member of the Microsoft Independent Software Vendors Program which is designed
for ISVs which produce shrink-wrapped or downloadable software that supports or
runs on Microsoft products, technologies and platforms. Benefits include
opportunities to promote thinWEB.com and its products within and outside of
Microsoft to potential customers and developers, regular receipt of current
information on the latest technology, product news and product strategy from
Microsoft, discounts and special pricing.
Novell. ThinAccess is listed on the Novell web site as an approved product
for use with Novell's operating system.
Informix Solutions Alliance Program. ThinWEB.com is a member of the
Informix Solutions Alliance Program which is designed for Independent Software
Vendors which support or use Informix products. Benefits include marketing
tools in accordance with the marketing opportunities under the Informix
Solutions Alliance Program from time to time.
Internet Screenphone Reference Forum. ThinWEB.com is a member of the
Internet Screenphone Reference Forum (ISRF), which was established in 1997 to
help foster the global development of new Java technology-based services to be
offered through screenphone terminals and includes many device manufacturers,
software vendors, network operators and service providers. The ISRF's working
document is intended to establish an open specification intended to standardize
screenphone access to the Internet, giving consumers an easy-to-use, low cost
alternative for getting online and accessing an array of services that operate
with any compliant Internet screenphone. Software designers who will be
developing end-user solutions are invited to provide their feedback.
Marketing-Alliance Strategy
ThinWEB.com will attempt to form alliances with major database
manufacturers, operating system manufacturers, Internet Service Providers and
other software manufacturers to establish technical, marketing and OEM
("original equipment manufacturer") alliances.
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ThinWEB.com anticipates that technical alliances will enhance current and
future products where there is a clear business advantage to incorporate the
vendor's product versus building elements of thinWEB.com's products. A typical
technical alliance would have thinWEB.com use a vendor's technology to enhance
its products. Currently thinWEB.com has a technical alliance with New Atlanta
with their Servlet Exec product.
ThinWEB.com anticipates that marketing alliances will increase market
presence through cross selling to other vendors' customers, reducing the costs
of marketing by combining efforts and shortening the sales cycle. ThinWEB.com
will attempt to form marketing alliances with firms that have complimentary
products. A typical marketing alliance for ThinAccess would be for a database
vendor to commend ThinAccess as a preferred remote access tool to its customers
on its web site and in its literature. These alliances will enable thinWEB.com
to gain broader coverage in media, trade shows, joint sales calls and
promotions.
ThinWEB.com will attempt to establish OEM alliances which would bundle
thinWEB.com's software applications with vendor's products. There are different
levels of OEM alliances depending on the manufacturer, product maturity and
market potential. The most common methods that thinWEB.com anticipates will be
used for its software applications are bundled and embedded. A bundling OEM
alliance would have the technology shipped or sold with selective models or
products. An embedded OEM Alliance would have the technology sold every time
the vendor's product is sold.
Technical Support
ThinWEB.com anticipates that it will develop a dedicated web site to
support and attract software developers. Its research and development team will
provide the support for such developers. ThinWEB.com will also host online chat
sessions to allow its developers to network and discuss issues and ideas.
ThinWEB.com anticipates that it will provide second level support for the OEM
alliances, i.e. the manufacturer will be responsible for supporting its
customers directly and thinWEB.com will provide support for product issues and
"bug" fixes to the manufacturer. ThinWEB.com intends to establish a secure
section of its web site to list any known deficiencies in the products and known
"work arounds". This is intended to ensure that the OEM manufacturers do not
spend time debugging known issues.
The Market
ThinWEB.com's first two products are intended to target the Internet
e-business access and intelligence software applications markets. The future
prospects for thinWEB.com are tied directly to the future growth and continued
global acceptance of the Internet. The Internet has grown in less than a decade
from a limited research tool to a global network consisting of millions of
computers and users. Management believes that the Internet is becoming the
computing structure of choice for global business. Companies are introducing new
web-based applications in mainstream operations such as sales force automation,
call center integration, one-to-one marketing, remote training, and customer
support.
Both of thinWEB.com's products are"100% Pure Java"certified software
solutions, the Sun Microsystems standard of excellence in Java programming.
ThinWEB.com has developed its applications in Java based on the belief that it
is fast becoming the standard for Internet programming. ThinWEB.com expects to
benefit from investments being made in Java technology by enterprises worldwide.
It believes that application development budgets for Java endeavors will almost
double in the next 24 months and will continue to grow exponentially as Java
microprocessors flourish in Internet devices such as TV set-top boxes, smart
phones, personal digital assistants, hand-held devices, pagers, and laser
printers.
The primary target market for ThinAccess is companies utilizing Internet
web applications with any database, any web browser and requiring "thin client"
database connectivity. ThinWEB.com perceives a major initiative by e-commerce
companies to web-enable their business activity and to provide it as another
medium for their customers. Database access is crucial to web-enabling business
activity as it is the predominant mechanism to store and access information.
ThinWEB.com also perceives wireless devices and sales force automation as a
major target market for ThinAccess. ThinWEB.com agrees with projections that
predict the global thin client market will expand dramatically, potentially
aggregating over $1 billion annually. Such predictions have been recently
published in various articles including:
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(1) An article in Computer World dated April 28, 1999 by Stacy Collett
----------------
which stated, "The thin-client market should reach 2.2 million units
shipped by 2001, with revenue exceeding $1 billion, according to a new
report by Zona Research Inc. in Redwood City, California."
(2) An article in Computer World dated May 10, 1999 by Stacy Collett
---------------
stated, "More hardware options and lower prices will join Microsoft's
blessing to propel thin-client sales to 2.2 million units by 2001, with
revenue of $1 billion, according to separate reports by IDC (International
Data Corporation)and Zona."
(3) An article in Inter@ctive Week on line dated June 14, 1999 by Charles
-----------------
Babcock stated, "Mobile databases are found on client devices, such as
laptops and handheld computers. A "boom in thin clients" is anticipated
between now and 2001, with 2.25 million Internet-accessing devices totaling
$1 billion in value expected to be sold, according to Zona Research."
The primary target market for WebCrumbs is the web site management and
analysis market with a secondary target including Internet Service Providers,
call center integrations and remote training. WebCrumbs targets companies that
desire to upgrade their web sites with the ability to learn about and respond to
web site visitors by instantly personalizing that company's Web site for that
visitor. This personalization provides companies with the increased ability of
turning web visitors into clients. ThinWEB.com anticipates that this will
assist companies to increase customer response and to increase sales. It
believes that as a result of the growth of online applications (e.g. e-commerce,
extranets, automated customer service) and related businesses, web traffic
analyzers will become an even more strategic element with larger budgets for web
traffic analysis tools and services. ThinWEB.com believes that companies that
now analyze or will develop analysis capabilities of web site traffic patterns
or web site personalization need powerful data analysis solutions such as
WebCrumbs that will integrate effortlessly with other applications and
platforms.
ThinWEB.com anticipates that companies can increase their web site
investment return by better understanding the profiles and preferences of site
visitors.
Competition
ThinWEB.com faces competition from different companies for different
aspects of its technology and for its different software applications.
ThinAccess connects to any database over the web with swift high
performance downloads of web database applications. ThinWEB.com considers the
competitors to ThinAccess to be those products that can provide thin client
(under 100K download) distributed access in Java. Software Synergy's
JDBCConnect provides a thin access database application product, but it is a
Windows specific product supporting ODBC databases. IDS Software's IDS Server
is another competitor and is also a Windows/Linux product with support for ODBC
and Oracle databases.
ThinWEB.com anticipates that WebCrumbs will face competition from companies
in the e-commerce field including Web Trends, Active Concepts, Net.Genesis,
Andromedia and Accrue. These companies primarily supply static Web analyzer
software providing detailed reports on Web site activity without the Dynamic
Navigation Technology used by WebCrumbs which allows a Web page viewed by one
visitor to be different than the same Web page viewed by another.
The software industry is highly competitive with frequent entries into all
markets and fields by new start-up companies and by established companies with
new products. Many of these competitors may have more experience and access to
resources, including financial and technological resources, than thinWEB.com.
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Property
ThinWEB.com's executive offices are located at Suite 101, Phase 3, 6
Antares Drive, Ottawa, Canada, at an annual rent of CDN$36,000 ($23,400US)
and its telephone number is 613/225-8446. It leases its research and
development offices at Suite 1510, 1505 Barrington Street, Halifax, Canada at an
annual rent of CDN$41,615 ($27,049.75US) and its telephone number is
902/425-2802.
ThinWEB.com's Web site is http://www.thinweb.com.
-----------------------
PLAN OF OPERATION
Overview
ThinWEB.com is a development stage company which develops Internet software
products. It has two developed software applications, ThinAccess, designed for
organizations that require rapid access to data over the Internet, and
WebCrumbs, designed for organizations that require immediate interaction with
customers and employees. ThinWEB.com's use of Java enables it to develop
applications for mobile and wireless devices and similar and other technologies
as they emerge that require platform independence, swift deployment,
flexibility, fast operation and low-cost. ThinWeb Software Incorporated, its
owned subsidiary, has developed a core technology and two software applications.
Sales of ThinAccess 1.0 commenced in August, 1999. A version of ThinAccess
for the Java 2 Platform was announced on October 6, 1999 at the Fall Internet
World '99 Show in New York City. The release of the beta version of WebCrumbs
1.0 was also announced on the same day.
Results and Plan of Operations
ThinWEB.com has had insignificant sales and revenue. Since inception
thinWEB.com (and its subsidiaries) have focused on organizational activities and
research and development of the software applications.
ThinWEB.com's ability to continue its operations is dependent upon its
receiving funds through revenues from the sale of its products and alternate
sources of financing. ThinWEB.com may be required to raise additional capital
by the sale of its equity securities, through an offering of debt securities, or
from borrowing from a financial institution. ThinWEB.com does not have a policy
on the amount of borrowing or debt that it can incur.
Management believes that the Internet as a source of e-business will
continue to experience rapid technological and user growth and that Java-based
technology will continue to increasingly become the user standard. ThinWEB.com's
first two applications have been certified by KeyLabs on behalf of Sun
Microsystems as "100% Pure Java" which is considered the industry seal of
approval and assures customers that these products are of the highest quality,
interpretable Java solutions. ThinWEB.com anticipates that all its future
applications will be certified as "100% Pure Java".
Management has developed a sales and marketing strategy to introduce these
products into the market. As part of its marketing strategy, thinWEB.com
anticipates entering into license arrangements and alliance relationships with
major database manufacturers, operating system manufacturers, Internet Services
Providers and others to establish technical, marketing and OEM ("original
equipment manufacturer") alliances. ThinWEB.com has a license agreement with
Sun Microsystems, Inc. to utilize the Pure Java logo and For Java tagline in its
packaging and advertising. ThinWEB.com has entered into an agreement with New
Atlanta Communications, LLC to license and market New Atlanta's ServletExec,
Version 2.0 software, to its customers bundled with thinWEB.com's products.
ThinWEB.com entered into a license agreement with Cloudscape, Inc. to use
Cloudscape's JBMS embedded client and workgroup server deployment software to
develop a limited use version of the software and to distribute it to end users.
ThinWEB.com entered into a license agreement with Informix Software, Inc. to use
Informix's products internally for development and support purposes, further to
the Informix Solutions Alliance Program.
Liquidity and Capital Resources
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ThinWEB.com, including its subsidiary, has incurred start-up costs,
including administrative costs and research and development costs. To date
thinWEB.com has received funds from sales of its securities and from loans. It
has primarily used the proceeds from the sale of the securities of ThinWeb
Software Incorporated (prior to becoming a subsidiary) for payment of operating
costs to date.
Since inception, ThinWeb Software Incorporated has received an aggregate of
$602,500 from the sale of its securities. ThinWeb Software Incorporated took
out a loan from Business Development Bank of Canada for an aggregate amount of
$18,900 which has been repaid in full from such subscription proceeds.
ThinWEB.com has entered into a loan agreement with E-Capital Management,
Inc., acting on behalf of Amery Associates Inc., Arrendadora Solarsa S.A.,
Butternut Capital Limited, Cannon Equity Limited, Corporate Solutions Limited,
Greensted Equities Limited, International Shareholdings Corp., Seismic
Investments Limited and Strathglen Capital Limited, all of whom are selling
securityholders herein and all of whom are clients of Lines Overseas Management
Limited. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
The loan agreement set up a two part credit facility for up to an aggregate
available borrowing of CDN $1,335,000 ($867,750US).
One part of the credit facility provides for borrowing up to CDN $375,000
($243,750), without interest, to be repaid from the proceeds of the first
significant financing event obtained by thinWEB.com. ThinWEB.com borrowed
CDN $375,000 ($243,750 US) from this facility but repaid the entire
amount.
The second part of the credit facility provides for borrowing up to CDN
$960,000 ($624,000US) at 12% interest per annum to be repaid from the
proceeds of the first significant financing event obtained by thinWEB.com.
At the option of E-Capital Management Inc., all or any portion of the
outstanding amount of the interest-bearing credit facility may be converted
into securities of ThinWEB.com at the time of and on the same terms and
conditions as such securities are issued pursuant to a significant
financing event. To date, thinWEB.com has borrowed CDN $510,000
($331,500 US).
E-Capital Management Inc. will be issued, for no additional consideration,
common stock purchase warrants equal to the amount drawn down under the
interest-bearing facility divided by the price of thinWEB.com's shares of common
stock issued pursuant to a significant financing event. Such warrants will be
exercisable at a per share price equal to the price at which thinWEB.com's
common stock is issued pursuant to such significant financing event for an
exercise period of one year from the date of closing of such transaction.
Lines Overseas Management Limited, Hamilton, Bermuda, has agreed to provide
thinWEB.com with an interim credit facility of $2,000,000. The credit facility
will bear an interest rate of 12% per annum calculated and payable monthly on
the outstanding balance. ThinWEB.com has agreed to repay the loan out of the
proceeds from the sale of shares. To date, $500,000 has been advanced under the
facility.
Pursuant to the proposed joint venture with Agritek Bio Ingredients, Inc.,
ThinWEB.com will receive CDN $1,000,000($650,000US) as consideration for
licensing the development and exploitation of ThinAccess for the wireless
database access market. ThinWEB.com has received CDN $500,000 ($325,000US) of
such fee and the remainder will be paid upon signing of a detailed agreement.
ThinWeb Software Incorporated had a net loss of $5,793,799 from operating
activities for the period April 22, 1998 to June 30, 1999.
ThinWeb Software has approximately $160,000 in losses for income tax
purposes available to reduce future taxable income. The availability of
utilizing such losses to reduce income taxes expires in 2005.
The cash flow of ThinWeb Software Incorporated from financing activities
for the period April 22, 1998 to June 30, 1999 was primarily from the receipt
of outstanding capital subscriptions and advances under the E-Capital Management
credit facilities.
-25-
<PAGE>
ThinWEB.com has no commitments for capital expenditures in the near future.
It anticipates that it will primarily focus on marketing ThinAccess and
WebCrumbs and refining these applications. ThinWEB.com anticipates developing
additional software applications for use in e-business over the Internet.
The financial statements appearing elsewhere in this prospectus have been
prepared assuming that thinWEB.com will continue as a going concern.
ThinWEB.com's ability to continue its operations is dependent upon its receipt
of revenues through sales of its software applications or through raising
capital through debt or equity financing or borrowings, or a combination of the
foregoing. If substantial additional funding is not acquired, alternative
sources developed, or revenues from sales not received, management will be
required to curtail its operations then there is substantial doubt about
thinWEB.com's ability to continue as a going concern
ThinWEB.com believes that proceeds from this offering, loans from Lines
Overseas Management, Limited, anticipated revenues from operations, the CDN
$500,000 ($325,000 US) proceeds received and the CDN $500,000 ($325,000 US)
anticipated to be received from its proposed joint venture with Agritek Bio
Ingredients Corporation and funds from earlier subscriptions will be sufficient
to pay its currently anticipated expenses including payment of salaries, rent
and payments to professionals and to continue its research, developmental and
marketing operations for the next 12 months. If additional funds are required,
ThinWEB.com has two credit facilities in place from which it may borrow.
ThinWEB.com may borrow up to an additional CDN $825,000 ($536,250US) under the
E-Capital credit facility and $1.5 million under the Lines credit facility.
MANAGEMENT
Officers and Directors
The officers and directors of the Company are as follows:
Name Age Title
- ---- --- -----
James S. Anthony 51 Chairman of the Board
Gary T. Hannah 35 President, Chief Executive Officer
and Director
C. James Enman 45 Vice President and Secretary
Bryan C. MacLean 31 Vice President, Director
Cory Reid 28 Vice President
George R. Fraser 61 Chief Financial Officer, Director,
All directors of thinWEB.com hold office until the next annual meeting of
shareholders or until their successors are elected and qualified. At present,
thinWEB.com's Bylaws provide for not less than one nor more than five directors.
Currently, there are four directors of thinWEB.com. The Bylaws permit the Board
of Directors to fill any vacancy and such director may serve until the next
annual meeting of shareholders or until his successor is elected and qualified.
Officers serve at the discretion of the Board of Directors.
Directors do not receive any salary or fee from thinWEB.com for acting as
directors. However, directors are entitled to participate in the employee and
directors stock option plan and will be issued options. ThinWEB.com pays all
expenses incurred by the directors relating to attending board of director
meetings.
The principal occupation and business experience for each officer and
director of thinWEB.com, for at least the last five years are as follows:
James S. Anthony has served as Chairman of the Board of thinWeb.com since
March, 1999. Since June, 1974, Mr. Anthony has been the President of
J. S. Anthony Ltd., Toronto, Canada, which provides consulting services to
corporations, including thinWEB.com, including strategic planning, finance and
corporate organization. Mr. Anthony
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<PAGE>
is the founder of The Foundation for the Study of Objective Art, a charitable
foundation which operates an art gallery in Toronto and funds art education
programs for the public. Mr. Anthony also serves on the board of directors of
Agritek Bio Ingredients Corporation, Toronto, Canada, an agricultural
biotechnology investment company listed on the Montreal Exchange; and, Denbridge
Capital Corporation, Toronto, Canada, a digital radar imaging company listed on
the Toronto Stock Exchange. Mr. Anthony formerly served on the board of
directors of Borneo Gold Corporation, Toronto, Canada, a gold exploration
company listed on the Vancouver Stock Exchange and Independence Resources Ltd.,
Toronto, Canada, a gold exploration company listed on the Vancouver Stock
Exchange. From 1986 to 1993, Mr. Anthony served as a director and strategist for
Softkey Software, Inc., a public company traded on the Toronto Stock Exchange,
which subsequently through mergers became The Learning Company and was acquired
in 1999 by Mattel. Mr. Anthony received his Bachelor of Arts degree from the
University of Manitoba in 1968 and attended Carleton University from 1968 to
1970.
Gary T. Hannah has served as President and Chief Executive Officer and a
director of thinWeb.com since April, 1999. From 1995 to 1999, Mr. Hannah held
increasingly senior positions in the marketing, sales and service divisions,
culminating as Vice President, of JetForm Corporation, an Ottawa, Ontario
software manufacture. From 1991 to 1995, Mr. Hannah held senior management
positions with Alliance Network Inc., a subsidiary of Crowntek Business Centres,
Inc., Missisauga, Ontario, a computer distribution company, including serving as
its president from 1993 to 1995. In 1994, GE Capital purchased Crowntek
Business Centres, Inc. and Mr. Hannah continued to serve as president of
Alliance Network until it was sold 1995. Mr. Hannah graduated from Saskatchewan
Technical Institute in 1983 with a diploma in Radio, Television and
Communications.
C. James Enman, Esq. has served as Vice President and Secretary for
thinWeb.com since March, 1999. From 1990, Mr. Enman was a member of the law
partnership of Goldberg Thompson, Halifax, Nova Scotia, where he practiced
corporate and commercial laws, including securities, financing and intellectual
property. Mr. Enman received his Bachelor of Arts degree from Acadia University
in 1977 and his LL.B. degree from Dalhousie University in 1980. Mr. Enman is a
member of the Nova Scotia Barristers Society, Canadian Tax Foundation, and is a
Canadian Trademark Agent. Mr. Enman serves as general counsel to the
Company.
Bryan C. MacLean has served as Vice President and a director of thinWeb.com
since its inception in April, 1998. Mr. MacLean is the co-founder of ThinWeb
Software Incorporated and co-developer of the Company's Java software e-commerce
applications. From 1996 to 1998, Mr. MacLean was a software engineer for Sanga
International Research, Boston, Massachusetts specializing in Java software
solutions. From 1994 to 1996, Mr. MacLean was a software engineer for Northern
Telecom, Ottawa, Canada specializing in asynchronous transfer software switch
development. During 1996, Mr. MacLean was employed by Bell Canada, Ottawa,
Canada as a software engineer where he served as one of the lead developers of
that company's project to process telephone bills over the Web using electronic
data interchange. Mr. MacLean obtained his Bachelor Commerce degree from St.
Francis Xavier University in 1990 and his Bachelor of Computer Science degree
from DalTech University of Nova Scotia in 1994.
Cory Reid has served as Vice President of thinWeb.com since its inception
in April, 1998. Mr. Reid is the co-founder of ThinWeb Software Incorporated
and co-developer of the Company's Java software e-commerce applications. From
1996 to 1998, Mr. Reid was a senior designer for Java Internet software at Sanga
International Research, Boston, Massachusetts and Halifax, Nova Scotia. From
1995 to 1996, Mr. Reid was a senior software designer at AT&T, Herndon,
Virginia specializing in telecommunications. Mr. Reid received his Bachelor of
Computer Science degree from DalTech University of Nova Scotia in 1993.
George R. Fraser, C.A. has served as Chief Financial Officer and a director
of thinWEB.com since August 16, 1999. Since 1997, Mr. Fraser has served as
Vice-President of Fraser Financial Consultants, an Oakville, Ontario based
private company providing specialized financial services to public corporations
on mergers and acquisitions and international treasury financing. From 1995 to
1997, Mr. Fraser was president of TRC Sports Medical Products Inc., a private
company located in Toronto, Ontario engaged in the distribution of strength and
cardiovascular equipment (StairMaster, Quinton and Cybex) and related health
products across Canada. From 1988 to 1993, he was Chief Financial Officer and
Corporate Secretary of Crowntek Business Centres Inc. in Toronto, which was the
largest privately owned Canadian distributor of IBM and Compaq computer
equipment and related software with annual sales exceeding CDN $350 million
($227 million US) and 600 employees. Prior to that, from 1984 to 1987 Mr. Fraser
was Treasurer of Bow Valley Resource Services Ltd. in Calgary, Alberta a major
public company engaged in land and offshore drilling, heavy truck manufacturing
and waste management operations. From 1974 to 1984 he was employed in several
positions, the last of which was as Assistant Treasurer, at Cominco Inc., the
Vancouver, British Columbia based multinational producer of zinc, lead, copper,
precious metals and chemicals. Mr. Fraser began his professional career with
Price Waterhouse,
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<PAGE>
where he obtained his Chartered Accountant designation in Manitoba in 1962 and
was employed as a Manager of Taxation Services when he left in 1974.
Remuneration
Gary Hannah, President of thinWEB.com, has entered into an employment
agreement with the Company and receives an annual salary of CDN$200,000
($130,000US). In addition, Mr. Hannah was issued 1,181,344 shares of
thinWEB.com's common stock for nominal consideration. ThinWEB.com has entered
into employment agreements with Messrs. Enman, MacLean and Reid. Through his
company J. S. Anthony & Co., Ltd., Mr. Anthony receives consulting fees for
consultancy services rendered to thinWEB.com.
The following table sets forth the total compensation paid or accrued by
thinWEB.com on behalf of the Chief Executive Officer and President of
thinWEB.com during 1998. No officer of thinWEB.com received a salary and bonus
in excess of $100,000 for services rendered during the fiscal year ended
December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
FISCAL OTHER COMPENSATION
------------
PRINCIPAL POSITION YEAR SALARY BONUS & AWARDS ALL OTHER
<S> <C> <C> <C> <C>
James Anthony 1998 -0- -0- -0-
Chairman of the Board
Gary Hannah 1998 -0- -0- -0-
Current President
Bryan MacLean 1998 $51,986 -0- -0-
Former President
</TABLE>
Employment Agreements
ThinWEB.com has entered into an employment agreement with Gary Hannah to
serve as President and Chief Executive Officer at an annual salary of $200,000
CDN ($130,000US) and an automobile allowance of CDN $600 per month ($390US).
The agreement provides a right to participate in the employee stock option plan
through which he would be awarded more options than any other employee. The
agreement contains comprehensive confidentiality and non-competition provisions
and provides one year's notice of termination.
ThinWEB.com has entered into an employment agreement with Bryan MacLean to
serve as Vice-President of technology at an annual salary of $120,000
CDN($78,000US). The agreement provides a right to participate in the employee
stock option plan. The agreement contains comprehensive confidentiality and non-
competition provisions and provides one year's notice of termination.
ThinWEB.com has entered into an employment agreement with Cory Reid to serve
as Vice-President of Product Development at an annual salary of $120,000
CDN($78,000US). The agreement provides a right to participate in the employee
stock option plan. The agreement contains comprehensive confidentiality and non-
competition provisions and provides one year's notice of termination.
ThinWEB.com has entered into an employment agreement with James Enman to
serve as Vice-President of Corporate Affairs and General Counsel at an annual
salary of $100,000 CDN ($65,000US). The agreement provides a right to
participate in the employee stock option plan. The agreement contains
comprehensive confidentiality and non-competition provisions and one year's
notice of termination.
Stock Option Plan
ThinWEB.com adopted a stock option plan for key employees, officers and
directors. The plan allows for the issuance of options at the discretion of the
board of directors to such employees, officers and directors and in such amounts
as the directors choose. The total amount of the options issued, if converted,
may not exceed 17% of the total issued and outstanding shares of thinWEB.com.
Options issued under the plan expire five years after the date of issuance.
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<PAGE>
Indemnification of Officers, Directors, Employees and Agents
The Certificate of Incorporation and Bylaws of thinWEB.com provide that it
shall, to the fullest extent permitted by applicable law, as amended from time
to time, indemnify all of its directors, as well as any of its officers or
employees to whom thinWEB.com has agreed to grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status as directors
and officers provided that this provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) arising under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
The effect of the foregoing is to require thinWEB.com to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers or persons controlling
thinWEB.com pursuant to the foregoing provisions, it is the opinion of the
Securities and Exchange Commission that such indemnification is against public
policy as expressed in the act and is therefore unenforceable.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the effective date
of this prospectus regarding the beneficial ownership of thinWEB.com's common
stock by each of its officers and directors and by each person who owns in
excess of five percent of its common stock giving effect to the exercise of
warrants or options held by the named securityholder.
<TABLE>
<CAPTION>
Amount of Common Percent of Percent of
Stock Beneficially Common Stock Common Stock
Owned or Right to Beneficially Owned Beneficially Owned
Name Direct vote (1)(2) or Right to Direct vote or Right to Direct vote
Prior to Offering (1) After Offering (2)
<S> <C> <C> <C>
James S. Anthony, Chairman (3) 250,000 1.5% *
158 Amelia Street
Toronto, Canada M4X 1E7
Gary T. Hannah, President, (4) 1,181,344 6.9% 4.7%
Chief Executive Officer, Director
1250 Squire Drive
Manotick, Ontario, Canada K4M 1B8
George R. Fraser, C.A. 0 * *
Chief Financial Officer, Director
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
C. James Enman, Vice President, (5) 3,090,000 18.1% 13.7%
Secretary
1883 Seldon Street
Halifax, Nova Scotia, Canada B3H 3X3
Bryan MacLean, (6) 3,090,000 18.1% 13.7%
Vice President, Director
5444 Victoria Road, #8
Halifax, Nova Scotia, Canada B3H 1M5
Cory Reid, Vice President (7) 3,090,000 18.1% 13.7%
1360 Lower Water Street, Suite 207
Halifax, Nova Scotia, Canada B3S 3N2
All directors and
executive officers as
a group (5 persons) 10,701,344 62.7% 46.1%
</TABLE>
* denotes less than 1%
(1) Based upon 17,066,344 outstanding shares of common stock. Includes rights
to acquire common stock through exercise of exchangeable Class A Shares.
(2) Assumes all shares offered by thinWEB.com are sold resulting in 21,066,344
shares of common stock outstanding (assuming no conversion of Convertible
Preferred stock). Includes rights to acquire common stock through exercise
of exchangeable Class A Shares.
(3) James Anthony is the founder, director and president of The Foundation for
the Study of Objective Art, a charitable trust, and may be deemed to be
the beneficial owner of the 250,000 shares owned by it, of which 200,000
are registered herein for sale.
(4) Of which 200,000 shares are registered herein for sale.
(5) James Enman is the trustee and beneficiary of the Enman Family Investment
Trust and is deemed to be the beneficial owner of the 3,090,000 Class A
Shares held by it, of which 200,000 shares are registered herein for sale.
(6) Bryan MacLean is the trustee and beneficiary of the B. MacLean Family
Trust and is deemed to be the beneficial owner of the 3,090,000 Class A
Shares held by it, of which 200,000 shares are registered herein for sale.
(7) Cory Reid is the trustee and beneficiary of the C. Reid Family Trust and
is deemed to be the beneficial owner of the 3,090,000 Class A Shares held
by it, or which 200,000 shares are registered herein for sale.
SELLING SECURITYHOLDERS
In addition to the shares it is offering, thinWEB.com is registering for
offer and sale shares of common stock held by 44 security holders. These
selling securityholders will offer their shares for sale on a continuous basis
pursuant to Rule 415 under the 1933 Act. See "RISK FACTORS--Additional Shares
Entering Public Market without Additional Capital Pursuant to Rule 144" and
"Selling Securityholders May Sell Shares at any Price or Time."
ThinWEB.com is applying for quotation on the OTC Bulletin Board maintained
by Nasdaq for its common stock; however, there can be no assurance that the
common stock will be accepted for quotation thereon. See "RISK FACTORS--No
Current Trading Market for the Company's Securities" and "DESCRIPTION OF
SECURITIES--Admission to Quotation to Nasdaq SmallCap Market and Bulletin
Board"
All of the selling securityholder shares registered herein will become
tradeable on the effective date of this prospectus.
The following table sets forth the beneficial ownership of the shares held
by each person who is a selling securityholder and by all selling
securityholders as a group. The names of the individuals who may be deemed the
beneficial owner of such listed shares is attached to this registration
statement as an exhibit.
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<PAGE>
<TABLE>
<CAPTION>
Number
of Shares Percent of Stock Owned
Name and Address of Common Stock Registered Prior to After
Beneficial Owner Owned for Sale Offering (1) Offering (2)
- ---------------- ----- -------- ------------ ------------
<S> <C> <C> <C> <C>
Gary T. Hannah (3) 1,181,344 200,000 6.9% 4.7%
1250 Squire Drive
Manotick, Ontario, Canada K4M 1B8
C. James Enman (4) 3,090,000 200,000 18.1% 13.7%
1883 Seldon Street
Halifax, Nova Scotia, Canada B3H 3X3
Bryan MacLean (5) 3,090,000 200,000 18.1% 13.7%
5444 Victoria Road, #8
Halifax, Nova Scotia, Canada B3H 1M5
Cory Reid (6) 3,090,000 200,000 18.1% 13.7%
1360 Lower Water Street, Suite 207
Halifax, Nova Scotia, Canada B3S 3N2
T. MacLean Family Trust (7) 300,000 100,000 1.8% *
1338 Molli Street
Halifax, Nova Scotia Canada B3J 1T9
J. Smyth Family Trust (8) 300,000 100,000 1.8% *
1991 Brunswick Street
Apartment 620
Halifax, Nova Scotia Canada B3J 3N2
Amery Associates Inc. 473,000 473,000 2.8% 0%
Apartada Postal 1802-1002
Passeo de los Estudiantes
San Jose, Costa Rica
Anjula Ltd. 5,000 2,500 * *
Bahamas Financial Centre
Shirley & Charlotte Street
3/rd/ Floor, PO Box CB13135
Nassau, Bahamas
Arrendadora Solarsa S.A. 500,000 500,000 2.9% 0%
600 mts. Sur oeste de la Antigua Fabrica
Paco, San Rafael
San Jose, Costa Rica
Stephanie Bigelow 80,000 40,000 * *
10 Crichton Park Road
Dartmouth, Nova Scotia Canada
Patrick Birmingham 10,000 5,000 * *
322 Millwood Drive
Sackville, Nova Scotia Canada
Butternut Capital Limited 613,000 613,000 3.5% 0%
Apartada Postal 7-3330-1000
San Jose, Costa Rica
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Cannon Equity Limited 398,000 398,000 2.3% 0%
Avenida 7, Calle 3 Bix
Edifico Teresa 3 Piso
San Jose, Costa Rica
Dale Chaisson Auto Sales, Inc. 20,000 10,000 * *
218 Micmac Boulevard
Dartmouth, Nova Scotia Canada
Corporate Solutions Limited 602,000 602,000 3.5% 0%
Apartada Postal 1555-1000
San Jose, Costa Rica
Everest Private Trust 14,000 7,000 * *
PO Box HM2706
4/th/ Floor, Jardine House
33 Reid Street
Hamilton HM 12 Bermuda
The Foundation for the Study 250,000 200,000 1.5% *
of Objective Art (9)
80 Gerard Street East
Toronto, Ontario Canada M5B 1G6
Greensted Equities Limited 471,000 471,000 2.8% 0%
Apartada Postal 7-3330-1000
San Jose, Costa Rica
Iguana Investments Ltd. 100,000 50,000 * *
Buckingham Square
West Bay Road
Seven Mile Beach, Grand Cayman
International Shareholdings Corp. 387,000 387,000 2.3% 0%
Apartada Postal 1802-1002
Paseo de los Estudiantes
San Jose, Costa Rica
Althea Lacas 5,000 2,500 * *
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Andrew Lacas 5,000 2,500 * *
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Betty Lacas 12,000 6,000 * *
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Peter Lacas 14,000 7,000 * *
1005 Beaufort Avenue
Halifax, Nova Scotia Canada
Paul Landry, Sr. 100,000 50,000 * *
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
32 Greenwood Drive
Antigonish, Nova Scotia Canada B2G 2H8
Paul Landry, Jr. 10,000 10,000 * *
32 Greenwood Drive
Antigonish, Nova Scotia Canada B2G 2H8
Darlene Letun 100,000 50,000 * *
107 Douglas Park View SE
Calgary, Alberta Canada
Scott MacKinnon 70,000 35,000 * *
69 Chameau Crescent
Dartmouth, Nova Scotia Canada
Michael MacDonald & Natasha
Pavlinovic 80,000 40,000 * *
14 Stratford Way
Halifax, Nova Scotia Canada
William Mahody 50,000 25,000 * *
Suite 205 - 99 Portland Street
PO Box 1126
Dartmouth, Nova Scotia Canada
Diane Marsh 50,000 25,000 * *
7365 Bradner Road
Mt. Leyman, British Columbia Canada
Curtis Mayert 50,000 25,000 * *
1422 Joliet Avenue, SW
Calgary, Alberta Canada
Brian McAvoy 20,000 10,000 * *
Trysail Circle
Tampa, Florida 33607
James McKillop 75,000 75,000 * *
1875 Century Park East
Los Angeles, California 90067
Christine Musgrave 10,000 5,000 * *
6 Stonepointe Avenue
Napean, Ontario Canada
Sean O'Regan 50,000 25,000 * *
11 Gladstone Avenue
Dartmouth, Nova Scotia Canada
Gary Rubenstein 50,000 25,000 * *
3 Sandhurst Close
Halifax, Nova Scotia Canada
Richard Shirley 30,000 15,000 * *
41 Bayside Drive
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Bayside, Nova Scotia Canada
Seismic Investments Ltd. 577,000 577,000 3.4% 0%
Apartada Postal 1555-1000
San Jose, Costa Rica
Strathglen Capital Limited 479,000 479,000 2.8% 0%
Apartada Postal 1802-1002
Passeo de los Estudiantes
San Jose, Costa Rica
Louis Toth 60,000 30,000 * *
32 Craigburn Drive
Dartmount, Nova Scotia Canada
TPG Capital Corporation (10) 75,000 75,000 * *
1504 R Street, N.W.
Washington DC 20009
Gary West 20,000 10,000 * *
38 Chadwick Street
Dartmouth, Nova Scotia Canada
Donald Wile 100,000 50,000 * *
82 Empire Street
Bridgewater, Nova Scotia Canada
</TABLE>
*Denotes less than 1%.
(1) Assumes 17,066,344 shares of common stock outstanding.
(2) Assumes sale of all the shares and all shares offered by the selling
securityholders resulting in 21,066,344 shares of common stock outstanding.
(3) Of which 200,000 shares are registered herein for sale. The named selling
securityholder is President, Chief Executive Officer and a Director of
thinWEB.com.
(4) Of which 200,000 shares are registered herein for sale. The named selling
securityholder is Vice President and Secretary of thinWEB.com.
(5) Of which 200,000 shares are registered herein for sale. The named selling
securityholder is Vice President and a Director of thinWEB.com.
(6) Of which 200,000 shares are registered herein for sale. The named selling
securityholder is Vice President of thinWEB.com.
(7) Of which 100,000 shares are registered herein for sale. The T. MacLean
Family Trust is controlled by an employee of thinWEB.com and the shares of
common stock held by it are deemed to be beneficially owned by such
employee.
(8) Of which 100,000 shares are registered herein for sale. The J. Smyth
Family Trust is controlled by an employee of thinWEB.com and the shares of
common stock held by it are deemed to be beneficially owned by such
employee.
(9) Of which 200,000 shares are registered herein for sale. James Anthony is
the founder, director and president of The Foundation for the Study of
Objective Art and may be deemed the beneficial owner of the shares held by
it.
(10) TPG Capital Corporation is an affiliate of Cassidy & Associates, the law
firm which prepared this registration statement, and James M. Cassidy is
its controlling shareholder.
In the event the selling securityholders receive payment for the sale of
their selling securityholder shares, thinWEB.com will not receive any of the
proceeds from such sales. ThinWEB.com is bearing all expenses in connection
with the registration of the selling securityholder shares of the selling
securityholders offered hereby.
-34-
<PAGE>
The selling securityholder shares owned by the selling securityholders are
being registered pursuant to Rule 415 of the General Rules and Regulations of
the Securities and Exchange Commission, which Rule pertains to delayed and
continuous offerings and sales of securities. In regard to the selling
securityholder shares offered under Rule 415, thinWEB.com has given certain
undertakings in Part II of the Registration Statement of which this Prospectus
is a part which, in general, commit thinWEB.com to keep this prospectus current
during any period in which offers or sales are made pursuant to Rule 415.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
E-Capital Management Inc. has been engaged by thinWEB.com to assist it in
raising capital. J. Gregory Wilson is the president of E-Capital Management and
it is owned by The Greg Wilson Family Trust, the beneficiaries of which are the
spouse and children of J. Gregory Wilson. J. Gregory Wilson is also the
president and sole shareholder of 583317 British Columbia Ltd. ("583317 B.C.
Ltd.). Neither E-Capital Management nor 583317 B.C. Ltd. are registered broker-
dealers.
ThinWEB.com has issued 1,500,000 shares of Convertible Preferred Stock to
583317 B.C. Ltd. for consideration of $.0001 per share. The holder of these
shares is entitled to convert such shares into shares of common stock of
thinWEB.com on a one-for-one exchange basis at any time before June 30, 2000
provided that the holder was instrumental in arranging an equity financing which
results in the receipt of net proceeds by thinWEB.com of not less than
$5,000,000. After June 30, 2000, thinWEB.com may redeem any remaining
outstanding Convertible Preferred Stock at a redemption price of $.0001 per
share. E-Capital Management assisted thinWEB.com in the sale of certain of
its's securities to 3024701 Nova Scotia Limited, Everest (Private) Trust Company
and Donald Wile for a total investment of $502,500. Brokerwise Communications
Inc. has been engaged by thinWEB.com to handle investor relations.
ThinWEB.com has entered into a loan agreement with E-Capital Management,
Inc.,acting on behalf of Amery Associates Inc., Arrendadora Solarsa S.A.,
Butternut Capital Limited, Cannon Equity Limited, Corporate Solutions Limited,
Greensted Equities Limited, International Shareholdings Corp., Seismic
Investments Limited and Strathglen Capital Limited, all of whom are Selling
Securityholders herein and all of whom are clients of Lines Overseas Management
Limited. The loan agreement set up a two part credit facility for up to an
aggregate available borrowing of CDN $1,335,000 ($867,750US).
One part of the credit facility provides for borrowing up to CDN $375,000
($243,750US), without interest, to be repaid from the proceeds of the first
significant financing event obtained by thinWEB.com. To date, thinWEB.com
has borrowed and repaid CDN $375,000 ($243,750US) from this facility.
The second part of the credit facility provides for borrowing up to CDN
$960,000 ($624,000US) at 12% interest per annum to be repaid from the
proceeds of the first significant financing event obtained by thinWEB.com.
At the option of E-Capital Management Inc.,all or any portion of the
outstanding amount of the interest-bearing credit facility may be converted
into securities of thinWEB.com at the time of and on the same terms and
conditions as such securities are issued pursuant to a significant
financing event. E-Capital Management Inc. will be issued, for no
additional consideration, common stock purchase warrants equal to the
amount drawn down under the interest-bearing facility divided by the price
of thinWEB.com's shares of common stock issued pursuant to a significant
financing event. Such warrants will be exercisable at a per share price
equal to the price at which thinWEB.com's common stock is issued pursuant
to such significant financing event for an exercise period of one year from
the date of closing of such transaction. To date, thinWEB.com has borrowed
CDN $510,000 ($331,500US) under the interest-bearing facility.
E-Capital was involved in arranging an interim $2,000,000 credit facility
with Lines Overseas Management Limited of Bermuda. The credit facility will
bear an interest rate of 12% per annum calculated an payable monthly on the
outstanding balance. ThinWEB.com has agreed to repay the loan out of the
proceeds from the sale of shares.
E-Capital was involved in arranging a private placement which raised
$502,500 for ThinWeb Software Incorporated in March, 1999, and located and
negotiated with the foreign companies who provided a credit facility to
thinWEB.com of up to $1,335,000CDN ($867,750US). E-Capital will attempt to
arrange a private placement equity financing of $5,000,000 for thinWEB.com. E-
Capital has also been involved in identifying applicable government financing
and financial assistance programs for which thinWEB.com may be eligible. E-
Capital's
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approved expenses are being reimbursed by thinWEB.com and it has assigned to a
related company, 583317 B.C. Ltd., the 1,500,000 convertible preferred shares of
thinWEB.com issued to it as consideration for its services. On August 31, 1999
E-Capital Management Inc., further to a corporate reorganization, assigned its
contract with thinWEB.com to an affiliated company, E-Capital Investment Inc. E-
Capital Management Inc. and E-Capital Investment Inc. are both owned by the Greg
Wilson Family Trust.
Mr. Anthony's company, J.S. Anthony & Associates Limited, receives a
monthly fee of $5,000 CDN and reimbursement of reasonable expenses in
consideration of Mr. Anthony's providing advice to thinWEB.com on strategic
corporate, financing and business matters.
ThinWEB.com, Inc. has granted TPG Capital Corporation, a selling
shareholder, a warrant to purchase 50,000 shares of its common stock at an
exercise price of $1.00 per share. James M. Cassidy is the controlling
shareholder of TPG Capital Corporation and principal of Cassidy & Associates,
the law firm which prepared this registration statement and was the sole officer
and director of Warwick Acquisition Corporation.
DESCRIPTION OF SECURITIES
ThinWEB.com has authorized capital of 100,000,000 shares of Common stock,
$.0001 par value, and 20,000,000 shares of preferred stock, $.0001 par value.
As of the date hereof, it has 17,066,344 shares of common stock issued and
outstanding and 1,500,000 shares of Convertible Preferred Stock outstanding.
Effective as of May 27, 1999, thinWEB.com's subsidiary Thinweb.com Inc.
purchased all the outstanding shares of common stock of ThinWeb Software
Incorporated (16,916,344 shares) for an aggregate consideration of:
(i) the issuance of 16,916,344 Class A exchangeable non-voting
participating common shares of common stock of Thinweb.com Inc.;
(ii) the issuance by thinWEB.com to StockTrans, Inc., a Pennsylvania
corporation, as trustee for the ThinWeb Software Incorporated shareholders
(the "Trustee"), 16,916,344 shares of its common stock to be held in trust
under the terms of an exchange and voting agreement dated April 22, 1999;
and
(iii) the issuance by thinWEB.com of 1,500,000 shares of its Convertible
Preferred Stock to 583317 B.C. Ltd., a British Columbia corporation, at
$.0001 per share.
Each beneficial shareholder of the Class A Shares has, through the Trustee,
voting rights in thinWEB.com equal to the number of Class A Shares held for his
benefit by the Trustee. The Class A Shares may be converted into or exchanged
for an equal number of the shares of thinWEB.com held by the Trustee. As a
result of the transaction, ThinWeb Software Incorporated became a wholly owned
subsidiary of Thinweb.com Inc., a wholly-owned subsidiary of thinWEB.com created
solely to effect the purchase of such shares.
Class A Shares
ThinWEB.com's subsidiary, Thinweb.com Inc. has an authorized 20,000,000
Class A exchangeable non-voting shares of which 16,916,344 have been issued to
the ThinWeb Software Incorporated shareholders. The Class A Shares are not
entitled to receive notice of or to attend any meeting of the shareholders of
Thinweb.com Inc. nor to vote on any matters that come before its shareholders.
The Class A Shares have voting rights in thinWEB.com equal to one vote for
each Class A Share held on all matters that properly come before the
shareholders of thinWEB.com at a meeting of shareholders or in connection with
any action taken by shareholder consent. The holders of the Class A Shares are
entitled to receive notice of and attend any meeting of shareholders of
thinWEB.com and to vote at any such meetings.
The Class A Shares may be converted into or exchanged for an equal number
of shares of the thinWEB.com which shares are held by the Trustee for such
conversion or exchange.
The Trust Agreement sets forth the rights and restrictions pertaining to
the Class A Shares and the shares of common stock of thinWEB.com held by the
Trustee. Upon conversion, the shares held by the Trustee will be released
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to the converting holder and an equal number of Class A Shares will be delivered
to thinWEB.com. The holders of the Class A Shares have the right to vote their
interests in thinWEB.com directly or through the Trustee as holder of
thinWEB.com shares.
The shares, while held by the Trustee, will not be entitled to participate
in dividends declared by thinWEB.com; however, thinWEB.com has agreed that
should it declare a dividend on its common stock it will ensure that its
subsidiary, Thinweb.com Inc. has the means to pay a like dividend on its Class A
Shares.
ThinWEB.com has issued to and placed with the Trustee 16,916,344 shares of
its common stock for use in exchange of the Class A Shares pursuant to a certain
exchange agreement. The Class A Shares contain certain rights and provisions as
set forth in the trust Agreement which is incorporated herein by reference and
discussed below. These rights and provisions are a summary only and should be
read in conjunction with the descriptions provided in the documents which were
filed as exhibits with the Form 8-K and are incorporated herein by reference.
(i) Exchange Rights on the Liquidation of the Purchaser. Holders of the
Class A Shares have the right, upon the occurrence and during the continuance of
any proceeding in bankruptcy, insolvency, dissolution or winding up commenced by
Thinweb.com Inc. or against it, to require thinWEB.com to purchase from each or
any holder of the Class A Shares all or any part of the Class A Shares held at
an amount equal to (a) the current market price of thinWEB.com's common stock on
the last business day prior to the day of purchase plus (b) an additional amount
equal to the full amount of all dividends declared and upon on such Class A
Shares and on all dividends declared on thinWEB.com's common stock which have
not been declared on the Class A Shares.
(ii) Automatic Exchange on the Liquidation of the Registrant. In order
that holders of the Class A Shares will be able to participate on a pro rata
basis with the holders of thinWEB.com's common stock in the event of a voluntary
or involuntary dissolution, liquidation or winding-up of thinWEB.com, all of the
then outstanding Class A Shares shall be automatically exchanged for shares of
common stock of thinWEB.com in the absence of an affirmative written election
from a holder of Class A Shares not to participate in the automatic exchange.
(iii) Retraction by Holder. A holder of Class A Shares is entitled at any
time to require Thinweb.com Inc. to redeem any or all of the Class A Shares held
by it in an amount equal to (a) the current market price of thinWEB.com's common
stock on the last business day prior to the retraction date which may be
satisfied in full by the Thinweb.com Inc. causing to be delivered to such holder
one share of common stock of thinWEB.com for each Class A Share held by the
retracting holder plus (b) an additional amount equal to the full amount of all
dividends declared and upon on such Class A Shares and on all dividends declared
on thinWEB.com's common stock which have not been declared on the Class A
Shares.
(iv) Automatic Redemption by the Purchaser. On the 25/th/ anniversary of
the closing date of the stock exchange transactions, unless otherwise extended
or accelerated, the Thinweb.com Inc. shall redeem all the then outstanding Class
A Shares for an amount per Class A Share equal to (a) the current market price
of thinWEB.com's common stock on the last business day prior to the redemption
date which may be satisfied in full by Thinweb.com causing to be delivered to
such holder one share of common stock of thinWEB.com for each Class A Share held
by the retracting holder plus (b) an additional amount equal to the full amount
of all dividends declared and upon on such Class A Shares and on all dividends
declared on thinWEB.com's common stock which have not been declared on the Class
A Shares.
(v) Purchase for Cancellation. Thinweb.com Inc. may at any time and from
time to time offer to purchase for cancellation all or any of the outstanding
Class A Shares at any price by tender to all of the holders of the Class A
Shares then outstanding at any price per share determined by it plus an amount
equal to all declared and unpaid dividends thereon. If in response to such
tender offer, more Class A Shares are tendered than Thinweb.com Inc. is willing
to purchase, then Thinweb.com Inc. shall purchase as nearly as possible pro rata
according to the number of shares tendered by each holder.
(vi) Reciprocal Changes. If thinWEB.com issues or distributes its
warrants, options or other rights to purchase its securities to the holders of
its outstanding common stock or issues shares or securities of any other class
of thinWEB.com than the common stock exchangeable by the Class A Shares, or
evidences of indebtedness of thinWEB.com or assets of thinWEB.com, then
Thinweb.com Inc. shall issue to the holders of the Class A Shares the
economic equivalent on a per share basis of such rights, options, securities,
shares, evidences of indebtedness or other assets.
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(vii) Reclassifications. If thinWEB.com subdivides, redivides or changes
the outstanding number of its common stock into a greater number or reduces,
combines or consolidates the outstanding number of its common stock into a
lesser number or reclassifies or otherwise changes its common stock or effects
an amalgamation, merger, reorganization or other transaction affecting its
common stock, then Thinweb.com Inc. will make the same or an economically
equivalent change simultaneously to, or in the rights of the holders of, the
Class A Shares.
Common Stock
ThinWEB.com is offering 4,000,000 shares for sale at an initial offering
price of $7.00 per share and is registering an aggregate of 6,412,500 shares of
common stock for sale by the 44 Selling Securityholders at a price to be
determined in the future. If the price of the common stock falls below $5.00
per share, then the common stock may be considered "penny stock" as that term
is defined by the Securities and Exchange Commission. Special sales practice
requirements apply to broker-dealers on sales of penny stocks. The sales of
common stock may be subject to such special rules.
Holders of the common stock do not have preemptive rights to purchase
additional shares of common stock or other subscription rights. The common
stock carries no conversion rights and is not subject to redemption or to any
sinking fund provisions. All shares of common stock are entitled to share
equally in dividends from sources legally available therefor when, as and if
declared by the Board of Directors and, upon liquidation or dissolution of
thinWEB.com, whether voluntary or involuntary, to share equally in the assets of
thinWEB.com available for distribution to stockholders. All outstanding shares
are validly authorized and issued, fully paid and nonassessable, and all shares
to be sold and issued as contemplated hereby will be validly authorized and
issued, fully paid and nonassessable.
The Board of Directors is authorized to issue additional shares of common
stock, not to exceed the amount authorized by thinWEB.com's Certificate of
Incorporation, and to issue options for the purchase of such shares, on such
terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
Noncumulative Voting
Each holder of common stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Shares of common stock
do not have cumulative voting rights. The holders of more than 50 percent of
the shares voting for the election of directors can elect all the directors if
they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.
Warrant
ThinWEB.com has granted a warrant to purchase up to 50,000 registered
shares of its common stock at a strike price of $1.00 per share, exercisable for
a period of five years from April 8, 1999, to TPG Capital Corporation, an
affiliated company of Cassidy & Associates, the law firm which prepared this
prospectus.
Preferred Stock
ThinWEB.com has 20,000,000 authorized shares of non-designated preferred
stock, $.0001 par value per share, of which 2,000,000 have been designated
("Convertible Preferred Shares") and 1,500,000 of which have been issued. The
Convertible Preferred Shares are not entitled to dividends and are non-voting.
In the event of the liquidation, dissolution or winding up of thinWEB.com,
whether voluntary or involuntary, the holders of the Convertible Preferred
Shares shall be entitled to receive the par value of each share before any
amount shall be paid or any property or assets distributed to the holders of the
ordinary shares. After payment in full to the holders of the Convertible
Preferred Shares, the surplus assets, if any, shall belong to and shall be
divided among the holders of other stock or shares in thinWEB.com.
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ThinWEB.com may redeem at any time commencing November 1, 1999, any number
of the Convertible Preferred Shares then outstanding by paying to the holder
thereof the par value thereof. The holder of the preferred shares shall be
entitled to convert such shares into ordinary shares of thinWEB.com on a one-
for-one exchange basis at any time before June 30, 2000 provided that the holder
was instrumental in arranging an equity financing which resulted in the receipt
of net proceeds by thinWEB.com of not less than $5,000,000.
The Board of Directors is authorized to provide for the issuance of
additional shares of preferred stock in series and, by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof without any further
vote or action by the shareholders. Any shares of preferred stock so issued
would have priority over the common stock with respect to dividend or
liquidation rights. Any future issuance of preferred stock may have the effect
of delaying, deferring or preventing a change in control of thinWEB.com without
further action by the shareholders and may adversely affect the voting and other
rights of the holders of common stock. At present, thinWEB.com has no plans to
issue any additional preferred stock or adopt any additional series, preferences
or other classification of preferred stock.
Additional Information Describing Stock
Reference is made to thinWEB.com's Certificate of Incorporation and By-Laws
which are available for inspection at its offices or which can be viewed through
the Edgar data base at www.sec.gov as exhibits to the registration statement on
-----------
Form 10-SB filed by Warwick Acquisition Corporation Reference is also made to
the applicable statutes of the State of Delaware for a description concerning
statutory rights and liabilities of shareholders.
Admission to Quotation to Nasdaq SmallCap Market and OTC Bulletin Board
Maintained by Nasdaq
If thinWEB.com meets the qualifications, thinWEB.com intends to apply for
quotation of its securities on the OTC Bulletin Board maintained by Nasdaq.
Until thinWEB.com meets such qualifications, its securities may be quoted in the
daily quotation sheets of the National Quotation Bureau, Inc., commonly known as
the "pink sheets". If thinWEB.com's securities are not quoted on the OTC
Bulletin Board, a securityholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, thinWEB.com's securities.
To have its securities quoted on the OTC Bulletin Board a company must:
(1) be a company that reports its current financial information to the
Securities and Exchange Commission, banking regulators or insurance regulators;
(2) has at least one market maker who completes and files a Form 211 with
the National Association of Securities Dealers, Inc.
The OTC Bulletin Board is a dealer-driven quotation service. Unlike the
Nasdaq Stock Market, companies cannot apply to be quoted on the OTC Bulletin
Board, only market makers can initiate quotes, and quoted companies do not have
to meet any quantitative financial requirement. Any equity security of a
reporting company not listed on Nasdaq or on a national securities exchange is
eligible.
To qualify for admission for listing on the Nasdaq SmallCap Market, an
equity security must, in relevant summary,
(1) be registered under the Securities Exchange Act of 1934;
(2) have at least three registered and active market makers, one of which
may be a market maker entering a stabilizing bid;
(3) for initial inclusion, be issued by a company with $4,000,000 in net
tangible assets, or $50,000,0000 in market capitalization, or $750,000 in net
income in two of the last three years (if operating history is less than one
year then market capitalization must be at least $50,000,000);
(4) have at a public float of at least 1,000,000 shares with a value of at
least $5,000,000;
(5) have a minimum bid price of $4.00 per share; and
(6) have at least 300 beneficial shareholders.
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Penny Stock Regulation
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or listed on the Nasdaq Stock Market, provided that current price and
volume information with respect to transactions in such securities is provided
by the exchange or system. The "penny stock" rules impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving
a penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission relating to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of broker-dealers
to sell thinWEB.com's securities. The foregoing required penny stock
restrictions will not apply to thinWEB.com's securities if such securities reach
and maintain a market price of $5.00 or greater.
Trading of Shares
There are no outstanding options, options to purchase, or securities
convertible into, the shares of thinWEB.com other than the securities described
herein. ThinWEB.com has not agreed with any shareholders, to register their
shares for sale, other than for this registration. ThinWEB.com does not have
any other public offerings in process or proposed.
Transfer Agent and Registrar and Trustee
StockTrans, Inc., Ardmore, Pennsylvania, serves as the transfer agent for
thinWEB.com and as Trustee for the Class A Shares.
Reports to Shareholders
ThinWEB.com will furnish to holders of its common stock annual reports
containing audited financial statements examined and reported upon, and with an
opinion expressed by, an independent certified public accountant. ThinWEB.com
may issue other unaudited interim reports to its shareholders as it deems
appropriate.
PLAN OF DISTRIBUTION
Arbitrary Determination of Offering Price
The initial offering price of the shares has been determined arbitrarily by
thinWEB.com. Among the factors considered were thinWEB.com's potential
operations, current financial conditions and financial requirements, estimates
of its business potential and prospects, the perceived market demand for its
software applications, the economics of the information technology, Internet and
software industries, the general condition of the equities market, and other
factors.
Limited State Registration
ThinWEB.com will qualify or register its sales of the shares in a limited
number of states. It will not accept subscriptions from investors resident in
other states.
Sale of the Shares
The shares are being offered by thinWEB.com on a "direct participation"
basis through its officers and directors. ThinWEB.com anticipates that its
executive officers will primarily sell the shares, including Messrs. Hannah,
Fraser, and Anthony. No sales commission will be paid to any officer or
director.
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ThinWEB.com will pay all expenses incurred in connection with the offer and
sale of its shares by its officers and directors. The officers and directors are
relying on Rule 3a4-1 of the Exchange Act as a "safe harbor" from registration
as a broker-dealer in connection with the offer and sales of the shares.
ThinWEB.com may extend the offering if in its sole discretion it determines
that such extension is in its best interests. ThinWEB.com will file an post-
effective amendment to this registration statement for such extension if
required.
Use of a Broker-Dealer
ThinWEB.com may locate a broker-dealer who may offer and sell the shares on
terms acceptable to it. If thinWEB.com determines to use a broker-dealer, such
broker-dealer must be a member in good standing of the National Association of
Securities Dealers, Inc. and registered, if required, to conduct sales in those
states in which it would sell the shares. ThinWEB.com anticipates that it would
not pay in excess of 10% as a sales commission for any sales of the shares. If a
broker-dealer were to sell the shares, it is likely that such broker-dealer
would be deemed to be an underwriter of the securities as defined in Section
2(11) of the Securities Act and thinWEB.com would be required to obtain a no-
objection position from the National Association of Securities Dealers, Inc.
regarding the underwriting and compensation terms entered into between
thinWEB.com and such potential broker-dealer. In addition, thinWEB.com would be
required to file a post-effective amendment to the registration statement of
which this prospectus is a part to disclose the name of such selling broker-
dealer and the agreed underwriting and compensation terms. ThinWEB.com
currently has no agreements or understandings with any broker-dealer to offer
its shares for sale.
In order to comply with the applicable securities laws, if any, of certain
states, the shares will be offered or sold in such states through registered or
licensed brokers or dealers in those states.
Sale of the Selling Securityholder Shares
ThinWEB.com will not receive the proceeds of any sale of shares by the
selling securityholders. The selling securityholder shares may be sold to
purchasers from time to time directly by and subject to the discretion of the
selling securityholders. The selling securityholders may from time to time
offer their securities for sale through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the selling securityholders and/or the purchasers of the
securities for whom they may act as agents. Any underwriters, dealers or agents
who participate in the distribution of the securities may be deemed to be
"underwriters" under the 1933 Act and any discounts, commissions or concessions
received by any such underwriters, dealers or agents may be deemed to be
underwriting discounts and commissions under the 1933 Act.
At the time a particular offer is made by or on the behalf of the selling
securityholders, a prospectus, including any necessary supplement thereto, will
be distributed which will set forth the number of shares of common stock and
other securities being offered and the terms of the offering, including the name
or names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the selling securityholder shares purchased from the selling
securityholders, any discounts, commissions and other items constituting
compensation from the selling securityholders, any discounts, commissions or
concessions allowed, reallowed or paid to dealers, and the proposed selling
price to the public.
Pursuant to Regulation M of the General Rules and Regulations of the
Securities and Exchange Commission, any person engaged in a distribution of
securities, including on behalf of a selling security holder, may not
simultaneously bid for, purchase or attempt to induce any person to bid for or
purchase securities of the same class for a period of five business days prior
to the commencement of such distribution and continuing until the selling
security holder (or other person engaged in the distribution) is no longer a
participant in the distribution.
If, at some time, thinWEB.com meets the requirements of the Nasdaq SmallCap
Market it will apply for listing thereon. If is should be accepted for listing
thereon, then certain underwriters may engage in passive market making
transactions in thinWEB.com's common stock in accordance with Rule 103 of
Regulation M.
The shares sold by the selling securityholders may be sold from time to
time in one or more transactions:
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(i) at an offering price that is fixed or that may vary from transaction
to transaction depending upon the time of sale or
(ii) at prices otherwise negotiated at the time of sale.
Such prices will be determined by the selling securityholders or by
agreement between the selling securityholders and any underwriters.
In order to comply with the applicable securities laws, if any, of certain
states, the securities will be offered or sold in such states through registered
or licensed brokers or dealers in those states. In addition, in certain states,
the securities may not be offered or sold unless they have been registered or
qualified for sale in such states or an exemption from such registration or
qualification requirement is available and with which thinWEB.com has complied.
Under applicable rules and regulations promulgated under the Exchange Act,
any person engaged in a distribution of securities may not simultaneously bid
for or purchase securities of the same class for a period of two business days
prior to the commencement of such distribution. In addition and without
limiting the foregoing, the selling securityholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder in connection with transactions in the securities during the
effectiveness of the registration statement of which this Prospectus is a part.
ThinWEB.com will pay all of the expenses incident to the registration of
the shares for sale by the selling securityholders (including registration
pursuant to the securities laws of certain states) other than commissions,
expenses, reimbursements and discounts of underwriters, dealers or agents, if
any.
LEGAL MATTERS
Legal Proceedings
ThinWEB.com is not a party to any litigation and management has no
knowledge of any threatened or pending litigation against thinWEB.com.
Legal Opinion
Cassidy & Associates, Washington, D.C. has given its opinion as attorneys-
at-law that the shares offered herein when issued pursuant to the terms hereof,
will be fully paid and non-assessable and that the shares offered by the selling
securityholder have been fully paid, validly issued and non-assessable. Cassidy
& Associates has passed on the validity of the securities being issued but
purchasers of the securities offered by this prospectus should not rely on
Cassidy & Associates with respect to any other matters.
James M. Cassidy, a principal of Cassidy & Associates, is an officer and
director and controlling shareholder of TPG Capital Corporation, which owns
150,000 shares of common stock of thinWEB.com, is a selling securityholder and
holds a warrant to purchase 50,000 shares of common stock of thinWEB.com.
EXPERTS
The audited financial statements for the period from April 22, 1998 to
December 31, 1998 included in this prospectus have been so included in reliance
on the report of PricewaterhouseCoopers LLP, Halifax, Canada, independent
accountants, given on the authority of such firm as experts in auditing and
accounting.
FINANCIAL STATEMENTS
The audited financial statements for the period from April 22, 1998 to
December 31, 1998 are included herein on F-1 to F-12.
The unaudited consolidated balance sheet of thinWEB.com Corporation as of
June 30, 1999 and the unaudited consolidated interim statement of operations and
deficit for the periods from April 22, 1998 to June 30, 1998 and 1999 and for
the three-month and six-month periods ended June 30, 1999 and the unaudited
consolidated interim statement of cash flow for the periods from April 22, 1998
to June 30, 1998 and 1999 and the six-month period ended June 30, 1999 are
included herein on F-15[14] to F-28.
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ThinWeb Software Incorporated
(A Development Stage Company)
Financial Statements
December 31, 1998
F-1
<PAGE>
Report of Independent Accountants
To the Board of Directors of
ThinWeb Software Incorporated
We have audited the balance sheet of ThinWeb Software Incorporated as of
December 31, 1998 and the statements of operations and deficit and cash flows
for the period from April 22, 1998 to December 31, 1998. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as of December 31, 1998 and the
results of its operations and its cash flows for the period then ended in
accordance with generally accepted accounting principles in Canada.
PricewaterhouseCoopers LLP
-----------------------------
Halifax, Canada
May 20, 1999 Chartered Accountants
F-2
<PAGE>
Comments by Auditors for U.S. Readers on Canada - U.S. Reporting Difference
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
note 1 to the financial statements. Our report to the board of directors of
ThinWeb Software Incorporated dated May 20, 1999 is expressed in accordance with
Canadian reporting standards which do not permit a reference to such events and
conditions in the auditors' report when these are adequately disclosed in the
financial statements.
/s/ PricewaterhouseCoopers LLP
-------------------------------
Halifax, Canada
May 20, 1999 Chartered Accountants
F-3
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Balance Sheet
As of December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollar)
<TABLE>
<CAPTION>
$
<S> <C>
Assets
Current assets
Cash 31,566
Investment tax credits receivable (note 3) 65,908
Other 5,784
--------------
103,258
Capital assets (notes 3 and 4) 10,895
Trademarks 555
--------------
114,708
==============
Liabilities
Current liabilities
Accounts payable and accrued liabilities 21,470
Accrued salaries 89,657
Current portion of long-term debt (note 6) 2,957
Loan payable 65,338
Amounts due to shareholders 21,484
--------------
200,906
Long-term debt (note 6) 13,754
--------------
214,660
--------------
Shareholders' Deficiency
Capital stock (note 7) 1
Foreign currency translation adjustments 343
Deficit accumulated during the development stage (100,296)
--------------
(99,952)
--------------
114,708
==============
</TABLE>
Approved by the Board of Directors
________________________ Director ____________________________ Director
F-4
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Statement of Operations and Deficit
For the period from April 22, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
$
<S> <C>
Revenue 1,156
----------------
Expenses
Research and development (note 3) 43,888
Selling, general and administration 55,896
Amortization 1,668
----------------
101,452
----------------
Loss for the period and deficit accumulated during the development
stage - End of period (100,296)
================
Loss per share 28.30
================
Weighted average number of shares outstanding during the period 3,544
================
</TABLE>
F-5
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Statement of Cash Flows
For the period from April 22, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
$
<S> <C>
Cash provided by (used in)
Operating activities
Loss for the period (100,296)
Amortization 1,668
Net change in non-cash working capital balances related to operations
Increase in investment tax credits receivable (66,918)
Increase in other current assets (5,873)
Increase in accounts payable and accrued liabilities 21,799
Increase in accrued salaries 91,031
----------------
(58,589)
----------------
Financing activities
Proceeds from long term debt 16,966
Proceeds from loan payable 66,339
Issue of common shares 1
Proceeds from shareholder loans 20,627
----------------
103,933
----------------
Investing activities
Acquisition of capital assets (12,731)
Acquisition of trademarks (564)
----------------
(13,295)
----------------
Effect of exchange rate changes in cash (483)
----------------
Increase in cash during the period and cash - End of period 31,566
================
</TABLE>
F-6
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
1 Nature of operations and basis of presentation
The company incorporated on April 22, 1998 and is primarily a software
research and development company that has not yet commenced commercial
operations. All of the company's operations are in Canada. These statements
are prepared on a going-concern basis. There is substantial doubt as to
whether or not the company will be able to continue as a going concern. The
ability of the company to continue as a going-concern is dependent upon it
obtaining the necessary financing to commercialize and market its products
and upon future profitable operations. Like other companies at this stage
of development, the company is subject to numerous risks, including the
uncertainty of its chosen market, its ability to develop its markets and
other risks. The company plans to raise funds through a private placement;
however, there are no commitments for the private placement and there can
be no assurance that the company will be successful in raising the required
capital to finance operations.
2 Accounting policies
a) Financial statement presentation
These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. The significant
differences between these principles and those that would be applied
under U.S. generally accepted accounting principles are disclosed in
note 10.
b) Foreign currency translation
The company's currency of measurement is Canadian dollars; however,
the reporting currency is U.S. dollars. The assets and liabilities of
the company are translated into U.S. dollars at year-end exchange
rates, and income and expense items are translated at rates
approximating the average rates of exchange for the year. Gains and
losses from the translation are excluded from the statement of
operations and deficit and are accumulated in the cumulative foreign
currency translation adjustment account.
c) Capital assets and amortization
Amortization of the following capital assets is calculated using the
declining balance method at annual rates which will amortize their
cost over their estimated useful lives. These rates are:
Computer hardware 30%
Computer software 100%
Office furniture and equipment 20%
d) Income taxes
The company uses the liability method of accounting for income taxes.
Under this method, current income taxes are recognized for the
estimated income taxes payable for the current year. Future income tax
assets and liabilities are recognized for temporary differences
between the tax and accounting bases of
(1)
F-7
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
assets and liabilities as well as for the benefit of losses available
to be carried forward to future years for tax purposes. Future income
tax assets are evaluated and if realization is not considered "more
likely than not", a valuation allowance is provided.
Investment tax credits relating to scientific research and
experimental development expenditures are recorded in the accounts in
the fiscal period the qualifying expenditures are incurred provided
there is reasonable assurance that the tax credit will be realized.
Investment tax credits in connection with research and development
activities are accounted for using the cost reduction method which
recognizes the credits as a reduction of the cost of the related
assets or expenditures.
e) Revenue recognition
The company recognizes revenue at the time of delivery of its licensed
software products to customers, provided collectibility of proceeds
from the sale of licensed software is reasonably assured. Currently,
all sales are made from the company's web site. An electronic order
form is filled out on-line by the customer; payment for the order is
then received when the customer provides a credit card number; the
product is then downloaded by the customer. The product is not
returnable; therefore, no provision is required for sales returns.
f) Research and development
Research costs are expensed in the period incurred. Where, in the
opinion of management, the deferral criteria established by the
Canadian Institute of Chartered Accountants are satisfied in all
material respects, development expenditures are capitalized and
amortized over the estimated earning life of the related products. To
date, no development costs have been deferred.
g) Loss per common share
Loss per common share is calculated using the weighted number of
common shares issued and outstanding during each period. Fully diluted
loss per share are not presented as the exercise of warrants and
options would be antidilutive.
h) Use of estimates
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities at the date of
the financial statements and the reported amounts of revenues and
expenditures during the reported period. Actual results could differ
from those reported.
(2)
F-8
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
i) Financial instruments
The fair value of the company's cash, investment tax credits
receivable, other current assets, accounts payable and accrued
liabilities, accrued salaries, long-term debt, loan payable and
amounts due to shareholders approximate their carrying values.
3 Investment tax credits receivable
For small, closely held Canadian corporations, a credit of approximately
40% of eligible scientific research and experimental development
expenditures is available, refundable in cash if no taxes are owed. For all
other Canadian corporations, the credit is reduced to approximately 20% on
a non-refundable basis, available only against taxes otherwise payable.
Eligible scientific research and experimental development expenditures
include direct current and capital costs and an allowance for overhead in
the amount of 65% of specified salaries and wages.
During 1998, investment tax credits in the amount of $63,862 have been
applied to reduce research and development expenditures and $3,056 have
been credited to the cost of capital assets.
4 Capital assets
1998
--------------------------------------
Accumulated
Cost amortization Net
$ $ $
Computer hardware 9,618 913 8,705
Computer software 1,567 595 972
Office furniture and equipment 1,353 135 1,218
--------------------------------------
12,538 1,643 10,895
======================================
5 Income Taxes
The company has approximately $160,000 in losses for income tax purposes,
with an expiry date of 2005, which are available to reduce future taxable
income. This potential benefit is offset by $53,000 in temporary
differences between income for accounting purposes and income for tax
purposes. The net potential future tax benefit, calculated at the statutory
rate of approximately 45%, amounts to $48,000. This future income tax asset
has been reduced to $nil through the application of a valuation allowance
based on the likelihood of realization.
(3)
F-9
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
6 Long-term debt
<TABLE>
<CAPTION>
1998
$
<S> <C>
Business Development Bank of Canada, authorized amount $18,900, bearing interest at
8.7% per annum, repayable in one principal payment of $108 and 72 principal
payments of $261, secured by personal guarantees of certain shareholders in the
amount of $4,100. 16,711
Less: Current portion 2,957
------
13,754
======
</TABLE>
The loan was repaid in full subsequent to December 31, 1998.
7 Capital Stock
Authorized
10,000,000 common shares, without nominal or par value
<TABLE>
<CAPTION>
Ascribed
Number of Value
Shares $
<S> <C> <C>
Issued
Issued in 1998 pursuant to share subscription agreements 900,000 32,669
Subscriptions receivable - (32,668)
-----------------------------
Balance - December 31, 1998 900,000 1
=============================
</TABLE>
Subscriptions receivable are presented as a reduction from capital stock
unless paid subsequent to the period end.
On March 31, 1999, the company increased its authorized capital to
100,000,000 common shares by the creation of 90,000,000 common shares
without nominal or par value.
(4)
F-10
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
8 Uncertainty due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect the
company's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 Issue affecting the
company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.
9 Subsequent events
a) Repayment of loan payable
Subsequent to December 31, 1998, the company repaid in full, the loan
payable of $65,338 which was outstanding at December 31, 1998. The
company also paid a premium in the amount of $16,565 to the lender.
The premium was agreed with the lender in April 1999 and one-half of
this premium has been accrued in the financial statements as financing
costs as of December 31, 1998, the remaining one-half will be accrued
subsequent to December 31, 1998. As part of the loan repayment, the
company also issued, for no cash consideration, 100,000 shares to the
lender and 10,000 shares to the individual who arranged the initial
loan. Both individuals deal at arm's length with the company.
b) Share issuances
Subsequent to December 31, 1998, the company issued shares as
follows:
<TABLE>
<CAPTION>
Ascribed
Number of value
shares $
<S> <C> <C>
For cash 8,878,677 157,000
Pursuant to share subscription agreements 7,027,667 462,097
Related to the repayment of loan payable 110,000 -
-------------------------
16,016,344 619,097
=========================
</TABLE>
The company appointed a new chief executive officer subsequent to December
31, 1998. As part of the terms of the employment agreement, the chief
executive officer was issued 1,181,344 common shares (included above) from
treasury for nominal consideration of $8, with 28.58% of the shares vesting
immediately, 35.71% vesting in one year and the balance of 35.71% vesting
in two years.
(5)
F-11
<PAGE>
ThinWeb Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
c) Corporate Re-organization
On April 22, 1999, the company entered into a combination agreement
with Warwick Acquisition Corporation ("Warwick"). This agreement was
adopted by the Board of Directors of Warwick and approved by the
shareholders of Warwick on May 20, 1999. Thinweb.com Inc.
("Thinweb.com"), formerly 3028184 Nova Scotia Limited, a wholly-owned
subsidiary of Warwick, will acquire all of the issued and outstanding
shares of the company through the issuance of 16,916,344 Class "A"
exchangeable, non-voting, participating common shares without par
value ("Exchangeable Shares") of Thinweb.com. The Exchangeable Shares
entitle the holder to voting rights in Warwick as if the shareholder
held an equivalent number of common shares in Warwick. The
Exchangeable Shares are exchangeable for shares in Warwick on a share-
for-share basis without any further consideration.
Pursuant to this agreement, 4,850,000 of the issued and outstanding
shares of Warwick were redeemed and retired resulting in 150,000
common shares of Warwick being issued and outstanding. On closing of
this transaction, Warwick issued 16,916,344 common shares to be held
in trust pending receipt of the Exchangeable Shares. Warwick also
issued 1,500,000 preferred shares on closing of this agreement for
deemed consideration of $0.0001 per share. The holders of the
preferred shares of Warwick are entitled to convert them into common
shares of Warwick on a share-for-share basis any time prior to
November 1, 1999, provided the holders were instrumental in arranging
financing for the company of not less that $5,000,000. In addition,
Warwick will grant a five year transferable warrant entitling the
holder to acquire up to 50,000 common shares of Warwick for
consideration of $1 per share.
If all Exchangeable Shares and preferred shares are converted into
shares of Warwick, the former shareholders of ThinWeb Software
Incorporated will own approximately 91% of the issued shares of
Warwick.
10 Differences between Canadian and U.S. Generally Accepted Accounting
Principles
The financial statements of the company have been prepared in accordance
with generally accepted accounting principles in Canada ("Canadian GAAP")
which are different in certain respects from those applicable in the United
States ("U.S. GAAP"), as described below.
(6)
F-12
<PAGE>
Thin Web Software Incorporated
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
a) Comprehensive income
Under Statement of Financial Accounting Standards No. 130 (SFAS
130), "Comprehensive income", the company is required to show the
change in net assets, excluding shareholder investments and
distributions. The following summarizes the company's comprehensive
loss:
<TABLE>
<CAPTION>
1998
$
<S> <C>
Loss for the period (100,296)
Change in foreign currency translation adjustment 343
---------
Comprehensive loss (99,953)
=========
</TABLE>
b) Recent pronouncements
In 1998, SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued and is effective for fiscal years commencing
after June 15, 1999. The company will comply with the requirements of
SFAS 133 in fiscal year 2000 and does not expect the adoption of SFAS
133 will be material to the company's results of operations.
In 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position 98-5 (SOP 98-5), "Reporting on
the Costs of Start-up Activities". SOP 98-5 is effective in fiscal
years beginning after December 15, 1998 with earlier adoption
permitted. SOP 98-5 requires costs of start-up activities and
organization costs to be expenses as incurred. The company has
complied with the requirements of SOP 98-5.
(7)
F-13
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
(expressed in U.S. dollars)
F-14
<PAGE>
thinWeb.com Corporation
(A Development Stage Company)
Consolidated Interim Balance Sheet
(Unaudited) As of June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
$ $
<S> <C> <C>
Assets
Current assets
Cash (note 3) 88,585 31,566
Investment tax credits receivable (note 4) 68,527 65,908
Other 31,838 5,784
------------------------------------
188,950 103,258
Capital assets (notes 4 and 5) 64,853 10,895
Deferred charges (note 6) 1,981,268 -
Trademarks 679 555
------------------------------------
2,235,750 114,708
====================================
Liabilities
Current liabilities
Accounts payable and accrued liabilities 170,344 21,470
Accrued salaries 16,382 89,657
Current portion of long-term debt - 2,957
Loans payable (note 7) 193,614 65,338
Amounts due to shareholders 33,918 21,484
------------------------------------
414,258 200,906
Long-term debt - 13,754
------------------------------------
414,258 214,660
Commitments (note 8) ------------------------------------
Shareholders' Equity
Capital stock (note 9) 1,857 1
Additional paid in capital 7,933,252 -
Share subscriptions receivable (32,896) -
Deferred compensation (375,318) -
Warrants 15,000 -
Foreign currency translation adjustments 73,396 343
Deficit accumulated during the development stage (5,793,799) (100,296)
------------------------------------
1,821,492 (99,952)
------------------------------------
2,235,750 114,708
====================================
</TABLE>
F-15
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Consolidated Interim Balance Sheet
(Unaudited)
As of June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Cumulative Three- Period from
April 22, months April 22, Six-months
1998 to ended 1998 to ended
June 30, June 30, June 30, June 30,
1999 1999 1998 1999
$ $ $ $
<S> <C> <C> <C> <C>
Revenue 2,577 1,168 - 1,421
----------------------------------------------------------------------
Expenses
Research and development (note 4) 3,113,117 633,692 12,238 3,069,229
Selling, general and administration 2,532,438 1,134,664 5,130 2,485,564
Interest 141,892 124,325 - 132,870
Amortization 8,929 5,640 102 7,261
----------------------------------------------------------------------
5,796,376 1,898,321 17,470 5,694,924
----------------------------------------------------------------------
Loss for the period (5,793,799) (1,897,153) (17,470) (5,693,503)
Deficit accumulated during the development
stage - Beginning of period - (3,896,646) - (100,296)
----------------------------------------------------------------------
Deficit accumulated during the development
stage - End of period (5,793,799) (5,793,799) (17,470) (5,793,799)
======================================================================
Basic and fully diluted loss per common share (0.12) (17,470) (0.66)
===================================================
Weighted average number of shares outstanding during
the period 16,047,904 1 8,562,620
===================================================
</TABLE>
F-16
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Consolidated Interim Statement of Cash Flows
(Unaudited)
- -------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Cumulative
April 22, Period from
1998 to Six months April 22,
June 30, ended 1998 to
1999 June 30, 1999 June 30, 1998
$ $ $
<S> <C> <C> <C>
Cash provided by (used in)
Operating activities
Loss for the period (5,793,799) (5,693,503) (17,470)
Items not affecting cash
Amortization 8,929 7,261 102
Shares issued for employee compensation 4,849,497 4,849,497 -
Shares issued for financing costs 123,915 123,915 -
Shares and warrants issued for services 88,956 88,956 -
Net change in non-cash working capital balances related to operations
Increase in investment tax credits receivable (66,918) - (17,267)
Increase in other current assets (31,348) (25,475) (1,123)
Increase in accounts payable and accrued liabilities 167,821 146,022 864
Increase (decrease) in accrued salaries 15,230 (75,801) 26,751
-------------------------------------------
(637,717) (579,128) (8,143)
-------------------------------------------
Financing activities
Proceeds of long-term debt 17,611 -- 17,611
Repayments of long-term debt (17,785) (17,140) --
Proceeds of loans payable 257,339 191,000 --
Repayments of loans payable (67,017) (67,017) --
Issue of common shares 575,539 575,538 1
Proceeds from shareholder loans 32,548 11,920 21,446
-------------------------------------------
798,235 694,301 39,058
-------------------------------------------
Investing activities
Acquisition of capital assets (72,793) (60,062) --
Acquisition of trademarks (665) (101) --
-------------------------------------------
(73,458) (60,163) --
-------------------------------------------
Effect of exchange rate changes in cash 1,525 2,009 (407)
-------------------------------------------
Increase in cash during the period 88,585 57,019 30,508
Cash - Beginning of period - 31,566 -
-------------------------------------------
Cash - End of period 88,585 88,585 30,508
===========================================
</TABLE>
F-18
<PAGE>
thinWEB.com Corporation
Consolidated Interim Statement of Changes of Shareholders' Equity
(Unaudited)
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Less
Common shares Preferred shares Additional Less deferred
--------------------- ---------------------- paid in subscription compen-
Amount Amount capital receivable sation
Number $ Number $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Shares issued for subscriptions 900,000 90 - - 32,579 (32,668) -
Change in foreign currency
translation account - - - - - - -
Loss for the period - - - - - - -
------------------------------------------------------------------------------------------
Balance - December 31, 1998 900,000 90 - - 32,579 (32,668) -
Shares issued for cash 1,505,000 151 - - 535,683 - -
Shares issued for compensation 10,401,344 1,040 - - 5,213,205 (51) (375,318)
Shares issued for financing costs 4,110,000 411 - - 2,076,800 (27) -
Shares issued for a corporate
reorganization 150,000 15 - - 74,985 - -
Warrants issued for services - - - - - - -
Convertible shares issued for a
financing arrangement - - 1,500,000 150 - (150) -
Change in foreign currency translation
account - - - - - - -
Loss for the period - - - - - - -
------------------------------------------------------------------------------------------
Balance - June 30, 1999 17,066,344 1,707 1,500,000 150 7,933,252 (32,896) (375,318)
==========================================================================================
<CAPTION>
Deficit
accumulated Foreign
Warrants during the currency Total Share- Compre-
--------------------- Development translation holders' hensive
Amounts Stage adjustments Equity Loss
Number $ $ $ $ <C> $
<S> <C> <C> <C> <C> <C>
Shares issued for subscriptions - - - - 1 -
Change in foreign currency translation
account - - - 343 343 343
Loss for the period - - (100,296) - (100,296) (100,296)
----------------------------------------------------------------------------
Balance - December 31, 1998 - - (100,296) 343 (99,952) (99,953)
========
Shares issued for cash - - - - 535,834 -
Shares issued for compensation - - - - 4,838,876 -
Shares issued for financing costs - - - - 2,077,184 -
Shares issued for a corporate
reorganization - - - - 75,000 -
Warrants issued for services 50,000 15,000 - - 15,000 -
Convertible shares issued for a
financing arrangement - - - - - -
Change in foreign currency translation
account - - - 73,053 73,053 73,053
Loss for the period - - (5,693,503) - (5,693,503) (5,693,503)
----------------------------------------------------------------------------
Balance - June 30, 1999 50,000 15,000 (5,793,799) 73,396 1,821,492 (5,620,450)
============================================================================
</TABLE>
F-18
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
1 Nature of operations and basis of presentation
Effective April 22, 1999, Thinweb.com Inc. (formerly 3028184 Nova Scotia
Limited), a wholly owned subsidiary of thinWEB.com Corporation (formerly
Warwick Acquisition Corporation), acquired all the outstanding common
shares of ThinWeb Software Incorporated in exchange for 16,916,344 Class
"A" exchangeable, non-voting, participating common shares of Thinweb.com
Inc. Each of these exchangeable shares are exchangeable into common shares
of thinWEB.com Corporation for no additional consideration on or before
April 21, 2024. Under the provisions of various agreements between
thinWEB.com Corporation and Thinweb.com Inc., the holders of the
exchangeable shares are entitled to voting, dividend and liquidation rights
as if the holder held the equivalent number of common shares in thinWEB.com
Corporation. thinWEB.com Corporation has issued 16,916,344 common shares
held in trust to be issued to the holders of the exchangeable shares upon
the exchange.
Prior to April 22, 1999, Warwick Acquisition Corporation did not have any
operations and had 5,000,000 common shares issued and outstanding. As part
of the transaction, Warwick Acquisition Corporation redeemed and retired
4,850,000 common shares and issued 50,000 warrants for no additional
consideration. The warrants which expire in five years entitle the holder
to acquire up to 50,000 common shares of thinWEB.com Incorporated for $1
per share. For accounting purposes, the acquisition has been treated as an
issuance of 150,000 shares and 50,000 warrants by ThinWeb Software
Incorporated for the services related to the corporate reorganization.
These shares and warrants have been attributed a value of $90,000 based on
the value of services received. The historical financial statements prior
to April 22, 1999 are those of ThinWeb Software Incorporated. ThinWeb
Software Incorporated was incorporated on April 22, 1998. Pro forma
financial information giving effect to the acquisition has not been
provided as the transaction is not a business combination.
The company is primarily a software research and development company that
has not yet commenced commercial operations. All of the company's
operations are in Canada. These statements are prepared on a going-concern
basis. There is substantial doubt as to whether or not the company will be
able to continue as a going concern. The ability of the company to continue
as a going-concern is dependent upon it obtaining the necessary financing
to commercialize and market its products and upon future profitable
operations. Like other companies at this stage of development, the company
is subject to numerous risks, including the uncertainty of its chosen
market, its ability to develop its markets and other risks. The company
plans to raise funds through a public offering of its securities; however,
there are no commitments for the public offering and the public offering
has not yet been approved by the Securities and Exchange Commission. There
can be no assurance that the company will be successful in raising the
required capital to finance operations.
(1)
F-19
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
2 Accounting policies
a) Financial statement presentation
These consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles and
include the accounts of thinWEB.com Corporation and its wholly owned
subsidiaries.
In the opinion of management, the accompanying financial statements
include all adjustments (consisting of normal recurring items)
considered necessary for a fair presentation of the results of
operations for the interim periods covered and of the financial
condition of the company at the date of interim balance sheet. The
results for the interim periods are not necessarily indicative of the
results for the entire year.
b) Foreign currency translation
The company's functional currency is Canadian dollars; however, the
reporting currency is U.S. dollars. The assets and liabilities of the
company are translated into U.S. dollars at period-end exchange rates,
and income and expense items are translated at rates approximating the
average rates of exchange for the period. Gains and losses from the
translation are excluded from the statement of operations and deficit
and are accumulated in the cumulative foreign currency translation
adjustment account.
c) Capital assets and amortization
Amortization of the following capital assets is calculated using the
declining balance method at annual rates which will amortize their
cost over their estimated useful lives. These rates are:
Computer hardware 30%
Computer software 100%
Office furniture and equipment 20%
d) Deferred charges
Deferred charges represent prepaid costs of financing and are being
charged to expense over the estimated term of the financing
arrangement.
e) Income taxes
The company uses the liability method of accounting for income taxes.
Under this method, current income taxes are recognized for the
estimated income taxes payable for the current year. Future income tax
assets and liabilities are recognized for temporary differences
between the tax and accounting bases of assets and liabilities as well
as for the benefit of losses available to be carried forward to future
years for tax purposes. Future income tax assets are evaluated and if
realization is not considered "more likely than not", a valuation
allowance is provided.
(2)
F-20
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
Investment tax credits relating to scientific research and
experimental development expenditures are recorded in the accounts in
the fiscal period the qualifying expenditures are incurred provided
realization of the tax credit is considered "more likely than not".
Investment tax credits in connection with research and development
activities are accounted for using the cost reduction method which
recognizes the credits as a reduction of the cost of the related
assets or expenditures.
f) Revenue recognition
The company recognizes revenue at the time of delivery of its licensed
software products to customers, provided collectibility of proceeds
from the sale of licensed software is reasonably assured. Currently,
all sales are made from the company's web site. An electronic order
form is filled out on-line by the customer; payment for the order is
then received when the customer provides a credit card number; the
product is then downloaded by the customer. The product is not
returnable; therefore, no provision is required for sales returns. The
customer is charged for future updates to the version purchased and
there is minimal support offered subsequent to the purchase.
g) Research and development
Research and development costs are charged to expense when incurred,
unless, in the opinion of management, the technological feasibility of
the product has been established in accordance with Statement of
Financial Accounting Standards (SFAS) 86, in which case the costs are
capitalized. Capitalization of computer software costs ceases when the
product is available for general release. As of June 30, 1999, no
computer software costs have been capitalized.
h) Loss per common share
Basic loss per common share is calculated using the weighted number of
common shares issued and outstanding during each period. The exercise
of warrants and the conversion of convertible preferred shares would
be antidilutive. Accordingly, fully diluted loss per common share is
the same as basic loss per common share.
i) Use of estimates
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities at the date of
the financial statements and the reported amounts of revenues and
expenditures during the reported period. Actual results could differ
from those reported.
(3)
F-21
<PAGE>
thinWeb.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
j) Financial instruments
The fair value of the company's cash, subscriptions receivable,
investment tax credits receivable, other current assets, accounts
payable and accrued liabilities, accrued salaries, long-term debt,
loans payable and amounts due to shareholders approximate their
carrying values.
k) Recent pronouncements
In 1998, SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued and is effective for fiscal years commencing
after June 15, 2000. The company will comply with the requirements of
SFAS 133 in fiscal year 2000 and does not expect the adoption of SFAS
133 will be material to the company's results of operations.
In 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-5, "Reporting on the
Costs of Start-up Activities". SOP 98-5 is effective in fiscal years
beginning after December 15, 1998 with earlier adoption permitted. SOP
98-5 requires costs of start-up activities and organization costs to
be expenses as incurred. The company has complied with the
requirements of SOP 98-5.
3 Restrictions on cash
Included in cash is $88,217 held in a trust account by the company's
solicitors, which requires the approval of two shareholders in order to be
released. The cash is to be used to fund certain expenditures within the
next year.
4 Investment tax credits receivable
For small, closely held Canadian corporations, a credit of approximately
40% of eligible scientific research and experimental development
expenditures is available, refundable in cash if no taxes are owed. For all
other Canadian corporations, the credit is reduced to approximately 20% on
a non-refundable basis, available only against taxes otherwise payable.
Eligible scientific research and experimental development expenditures
include direct current and capital costs and an allowance for overhead in
the amount of 65% of specified salaries and wages.
During the year ended December 31, 1998, investment tax credits in the
amount of $63,862 have been applied to reduce research and development
expenditures and $3,056 have been credited to the cost of capital assets.
During the six months ended June 30, 1998, investment tax credits in the
amount of $17,039 have been applied to reduce research and development
expenditures.
(4)
F-22
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
5 Capital assets
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
------------------------------------------ ------------
Accumulated
Cost Amortization Net Net
$ $ $ $
<S> <C> <C> <C> <C>
Computer hardware 35,529 4,313 31,216 8,705
Computer software 6,894 2,719 4,175 972
Office furniture and equipment 31,228 1,766 29,462 1,218
---------------------------------------------------------
73,651 8,798 64,853 10,895
=========================================================
</TABLE>
6 Deferred charges
During the period, the company issued 4,000,000 common shares at nominal
values for the commitment to provide debt financing of up to $907,000 until
such time as the company has raised funds pursuant to a major private
placement, public offering or other significant financing event (the
"Significant Financing Event"), if any (see note 7). These shares have been
recorded at the price established through an arm's length transaction which
occurred within 14 days of the date the shares were issued. The excess of
the recorded value of the shares over the nominal issue price is recorded
as financing costs. The portion of the financing costs related to future
periods has been recorded as deferred charges and is being charged to
expense over the estimated term of the financing arrangement estimated to
be from June 4, 1999 to October 31, 1999.
7 Loans payable
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
$ $
<S> <C> <C>
Demand loan, bearing interest at prime, plus 2.5% 50,951 --
Loan payable, authorized amount $255,000, without interest or fixed
terms of repayment ("Credit Facility A"), $153,098 of Credit
Facility A is available and unused. 101,902 --
Loan payable, authorized amount $652,000, bearing interest at the rate
of 12%, without fixed terms of repayment ("Credit Facility B"),
$611,239 of Credit Facility B is available and unused. 40,761 --
Loan repaid during the period ended June 30, 1999 -- 65,338
------------------------------
193,614 65,338
==============================
</TABLE>
(5)
F-23
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
The lenders may, at their sole option, elect to convert all, or any portion
of the outstanding amount, including interest, of Credit Facility B, into
securities of the company on the same terms and conditions as such
securities are issued pursuant to a Significant Financing Event, if any.
Credit Facility A and B become due and payable immediately upon completion
of a Significant Financing Event, subject to the option noted above.
The lenders of Credit Facility B shall have issued to them, for no
additional consideration, share purchase warrants of the company equal in
number to the amount of the facility which has been drawn down, divided by
the price of the company's shares issued pursuant to a Significant
Financing Event. These warrants will be exercisable on the basis of one
warrant for one common share, at a strike price equal to the price at which
the company shares are issued pursuant to a Significant Financing Event,
for a period of one year from the closing of such event. As these warrants
will be issued upon a Significant Financing Event, if any, they will be
valued at that time and recorded as a cost of financing.
In conjunction with the commitment to provide financing, the company issued
4,000,000 shares to the lender of Credit Facility A and B. For accounting
purposes, the issuance of these shares have been treated as financing costs
and have been attributed a value of $2,021,821.
8 Commitments
The minimum annual payments under long-term agreements for premises and
services are as follows:
<TABLE>
<CAPTION>
Premises Services Total
$ $ $
<S> <C> <C> <C>
Year ending June 30, 2000 28,271 14,200 42,471
2001 25,915 -- 25,915
</TABLE>
9 Capital stock
Authorized
100,000,000 common shares, of the par value of $0.0001 each
20,000,000 preferred shares, of the par value of $0.0001 each
The preferred shares issued at June 30, 1999 are convertible into common
shares of the company on a share-for-share basis at any time prior to June
30, 2000, provided the holders were instrumental in arranging financing for
the company of not less than $5,000,000. Starting June 30, 2000, the
company may redeem any of the outstanding preferred shares at a redemption
price of $0.0001 per share. As the preferred shares are convertible only if
the holders are instrumental in arranging financing of not less than
$5,000,000 the beneficial conversion feature will be valued at that time
and recorded as a cost of financing.
(6)
F-24
<PAGE>
thinWEB.com Corporation
(A Development Stage Company)
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
Subscriptions receivable are presented as a reduction from capital stock
unless paid subsequent to the period end.
10 Subsequent event
On September 10, 1999, the company signed a Memorandum of Agreement with
Agritek Bio Ingredients Corporation ("Agritek") establishing a new
corporation to operate as a joint venture ("JV") with an equal and
undivided interest for the company and Agritek. The company has transferred
to the JV, an exclusive perpetual license for thinAccess for the wireless
database access market.
In exchange for transferring the license to the JV, Agritek has agreed to
pay CDN$1,000,000 to the company, payable one-half upon signing of the
Memorandum of Agreement and one-half on signing of the definitive JV
agreement. Subject to regulatory approval, Agritek shall deliver 500,000
units of the capital stock of Agritek (each unit consisting of one freely
tradable common share and one non-transferrable share purchase warrant
exercisable for two years from the date of the signing of the definitive JV
agreement at an exercise price of CDN$0.50 each) to the company upon
signing of the definitive JV agreement.
The company shall issue to Agritek 100,000 non-transferrable share purchase
warrants exercisable for shares of the company on a one-for-one basis at an
exercise price equal to the lower of $5.00 or the price at which the
company next issues equity pursuant to a financing event.
The JV shall pay the company a royalty of 5% of net revenues realized by
the JV, paid quarterly in arrears. These royalty payments will only
commence once the JV has reimbursed to the parties all advances made to the
JV.
The company shall be the manager of the JV, in return for a fee payable by
Agritek of 2.5% of Agritek's share of the JV's operating costs. Each party
shall provide advances to fund operating expenses of the JV. If a party is
unable or unwilling to continue funding operating expenses, that party's
interest in the JV shall be subject to dilution by the other party or a
third party, which is prepared to fund operating expenses.
(7)
F-25
<PAGE>
thinWEB.com Corporation
Consolidated Interim Schedule of Issues of Capital Stock
(Unaudited). For the six-month period ended
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Price per
Number of share Total value
shares $ $ Comments
<S> <C> <C> <C> <C>
Common shares
April 22, 1998 1 1.00000 1 Share subscriptions
December 31, 1998 449,999 0.03630 16,334 Share subscriptions
December 31, 1998 450,000 0.03630 16,334 Share subscriptions
-- (32,668) Unpaid share subscriptions
--------------- ---------------
Balance - December 31,
1998 900,000 1
March 31, 1999 2,216,667 0.50000 1,108,334 Shares issued for compensation
March 31, 1999 2,216,667 0.50000 1,108,334 Shares issued for compensation
March 31, 1999 2,666,666 0.50000 1,333,333 Shares issued for compensation
March 31, 1999 195,000 0.50000 97,500 Shares issued for compensation
March 31, 1999 175,000 0.50000 87,500 Shares issued for compensation
March 31, 1999 891,000 0.50000 445,500 Share subscriptions
March 31, 1999 100,000 0.50000 50,000 Share subscriptions
March 31, 1999 14,000 0.50000 7,000 Share subscriptions
April 5, 1999 500,000 0.16678 83,389 Shares issued for financing costs
April 5, 1999 100,000 0.50340 50,340 Shares issued for financing costs
April 5, 1999 10,000 0.50340 5,034 Shares issued for compensation
April 7, 1999 1,181,344 0.50340 594,690 Shares issued for financing costs
April 14, 1999 613,000 0.50546 309,847 Shares issued for financing costs
April 14, 1999 387,000 0.50546 195,613 Shares issued for financing costs
April 14, 1999 577,000 0.50546 291,650 Shares issued for financing costs
April 14, 1999 473,000 0.50546 239,082 Shares issued for financing costs
April 14, 1999 398,000 0.50546 201,173 Shares issued for financing costs
April 14, 1999 602,000 0.50546 304,286 Shares issued for financing costs
April 14, 1999 479,000 0.50546 242,115 Shares issued for financing costs
April 14, 1999 471,000 0.50546 238,071 Shares issued for financing costs
April 14, 1999 423,333 0.50546 213,978 Shares issued for compensation
April 14, 1999 423,333 0.50546 213,978 Shares issued for compensation
April 14, 1999 423,334 0.50546 213,978 Shares issued for compensation
April 14, 1999 105,000 0.50546 53,073 Shares issued for compensation
April 14, 1999 125,000 0.50546 63,182 Shares issued for compensation
April 14, 1999 250,000 0.50546 126,365 Shares issued for compensation
May 27, 1999 150,000 0.50000 75,000 Shares issued for a corporate
reorganization
(78) Change in unpaid share
subscriptions
(375,318) Deferred compensation
(50,055) Share issue costs
--------------- ---------------
Balance - June 30, 1999 17,066,344 7,576,949
=============== ===============
</TABLE>
Shares subscribed for have been recorded at the value received for the shares
which is considered to be fair value. Shares issued for compensation, financing
costs, and a corporate reorganization were issued at nominal values. These
issues have been recorded at the price established through an arm's length
transaction. The excess of the recorded value of the shares over the nominal
issue price is recorded as compensation, financing and professional fees expense
over the estimated term of the related service. The unearned portion of the
compensation related to the share issues has been recorded as a reduction of
shareholders' equity. The portion of the financing costs related to future
periods has been recorded as deferred charges.
F-26
<PAGE>
thinWEB.com Corporation
Consolidated Interim Schedule of Issues of Capital Stock ...continued
(Unaudited) For the six-month period ended
June 30, 1999
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Price per
Number of share Total value
shares $ $ Comments
<S> <C> <C> <C> <C>
Preferred shares
Balance - December 31, 1998 -- --
May 27, 1999 1,500,000 0.00010 150 Convertible shares issued for a
financing arrangement
(150) Unpaid share subscriptions
------------ -----------
Balance - June 30, 1999 1,500,000 --
============ ===========
</TABLE>
F-27
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations may not
be relied on as having been authorized by thinWEB.com or by any of the
Underwriters. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that there has
been no change in the affairs of thinWEB.com since the date hereof. This
Prospectus does not constitute an offer to sell, or solicitation of any offer to
buy, by any person in any jurisdiction in which it is unlawful for any such
person to make such offer or solicitation. Neither the delivery of this
Prospectus nor any offer, solicitation or sale made hereunder, shall under any
circumstances create any implication that the information herein is correct as
of any time subsequent to the date of the Prospectus.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information......................................................
Prospectus Summary.........................................................
Risk Factors...............................................................
The Company................................................................
Use of Proceeds............................................................
Dilution...................................................................
Dividend Policy............................................................
Business...................................................................
Plan of Operation..........................................................
Management.................................................................
Security Ownership of Certain
Beneficial Owners and Management.........................................
Selling Securityholders....................................................
Certain Relationships and Related Transactions.............................
Description of Securities..................................................
Plan of Distribution.......................................................
Legal Matters..............................................................
Experts....................................................................
Index to Financial Statements..............................................
</TABLE>
Until 90 days after 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.
THINWEB.COM CORPORATION
4,000,000 shares of common stock
and
6,412,500 shares of common stock
to be sold by the holders thereof
-------
PROSPECTUS
-------
_______________, 1999
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ThinWeb.com is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceeding. The Certificate of Incorporation
and the By-laws of thinWEB.com provide for indemnification of directors and
officers to the fullest extent permitted by the General Corporation Law of the
State of Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock) of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit.
ThinWEB.com's Certificate of Incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers or persons controlling
thinWEB.com pursuant to the foregoing provisions, it is the opinion of the
Securities and Exchange Commission that such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
registration statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 8,000
Fees and Expenses of Accountants and legal counsel 100,000
Blue Sky Fees and Expenses 4,000
Printing and Engraving Expenses 5,000
Miscellaneous Expenses 1,000
Total $118,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
ThinWEB.com (and ThinWeb Software Incorporated prior to becoming a
subsidiary of thinWEB.com) issued shares of common stock, par value $.0001 per
share, to the following individuals or entities for the consideration as listed
in cash.
If any of these sales were made within the United States or to United
States citizens or residents, such sales were made in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 except 5,000,000 shares of common stock issued by Warwick Acquisition
Corporation prior to the stock exchange transaction, which shares were issued in
reliance on Rule 506 of Section 4(2) of the Securities Act and Rule 701 of
Section 3(b) of the Securities Act. The two shareholders to whom stock was
issued by Warwick Acquisition Corporation are accredited investors. Of the
5,000,000 shares issued by Warwick Acquisition Corporation 4,850,000 were
redeemed pursuant to the stock exchange transaction.
Pursuant to the stock exchange transaction among thinWEB.com Corporation
(thinWEB.com), ThinWeb Software Incorporated, and Thinweb.com Inc., thinWEB.com
issued 16,916,344 shares of common stock to a trustee
-II-1-
<PAGE>
as part of the consideration for the purchase of the outstanding stock of
ThinWeb Software Incorporated by thinWEB.com's subsidiary, Thinweb.com Inc.
Thinweb.com Inc. issued 16,916,344 Class A shares entitling the holders voting
rights in thinWEB.com. As part of the stock exchange, ThinWeb Software
Incorporated became a subsidiary of thinWEB.com.
Some of holders of the shares listed below may have subsequently
transferred or disposed of their shares and the below list does not purport to
be a current listing of shareholders of thinWEB.com.
<TABLE>
<CAPTION>
Number of Number of
Date Shareholder Pre-Exchange Post-Exchange
Shares Shares or Right
to Direct Vote Consideration
<S> <C> <C> <C> <C>
6/9/98 Pierce Mill Associates, Inc. 4,250,000 redeemed $425
6/9/98 TPG Capital Corporation 750,000 150,000 75
Butternut Capital Limited 613,000 613,000 4*
International Shareholdings Corp. 387,000 387,000 3*
Seismic Investments Ltd. 577,000 577,000 4*
Amery Associates Inc. 473,000 473,000 3*
Cannon Equity Limited 398,000 398,000 3*
Corporate Solutions Limited 602,000 602,000 4*
Strathglen Capital Limited 479,000 479,000 3*
Greensted Equities Limited 471,000 471,000 3*
Arrendadora Solarsa S.A. 500,000 500,000 83,389*
Transatlantic Co., S.A. 250,000 250,000 2*
Cheetah Systems Ltd. 500,000 500,000 3*
Shaftesbury Global Limited 500,000 500,000 3*
Midland Shareholdings Limited 500,000 500,000 3*
B. MacLean Family Trust 2,666,667 2,666,667 16,349*
C. Reid Family Trust 2,666,667 2,666,667 16,349*
Enman Family Investment Trust 2,666,666 2,666,666 33,130*
J. Smyth Family Trust 175,000 175,000 1*
T. MacLean Family Trust 195,000 195,000 1*
3024704 Nova Scotia Limited 891,000 891,000 445,500*+
Donald Wile 100,000 100,000 50,000*
Everest (Private) Trust Company 14,000 14,000 7,000*
Gary Hannah 1,181,344 1,181,344 8*
Paul Landry Sr. 100,000 100,000 0*
Paul Landry Jr. 10,000 10,000 0*
</TABLE>
.Amount paid for original investment in shares of ThinWeb Software
Incorporated which were subsequently exchanged for Class A Shares of
Thinweb.com Inc. and accompanying voting rights in thinWEB.com Corporation
+ 3024704 Nova Scotia Limited was subsequently dissolved and shares of
ThinWeb Software Incorporated distributed pro rata to shareholders.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1** Certificate of Incorporation, filed with the Registration Statement of
Warwick Acquisition Corporation on Form 10-SB (file no. 0-25419) filed
with the Commission on February 19, 1999 and incorporated herein by
reference.
3.2** By-Laws of the Company, filed with the Registration Statement of
Warwick Acquisition Corporation on Form 10-SB (file no. 0-25419) filed
with the Commission on February 19, 1999 and incorporated herein by
reference.
3.3* Amendment to Certificate of Incorporation
-II-2-
<PAGE>
3.4 Certificate of designation for Series 1 Preferred Share
4.1** Share Exchange and Share Purchase Agreement among Warwick Acquisition
Corporation, Thinweb.com Inc., ThinWeb Software Incorporated, and all
of the shareholders of ThinWeb Software Incorporated, filed with the
Form 8-K of Warwick Acquisition Corporation (file no. 0-25419) filed
with the Commission on May 28, 1999, and incorporated herein by
reference.
4.2** Exchange and Voting Agreement among Warwick Acquisition Corporation,
ThinWeb Software Incorporated, the Trustee, and all of the
shareholders of ThinWeb Software Incorporated, and all of the
shareholders of ThinWeb Software Incorporated, filed with the Form 8-K
of Warwick Acquisition Corporation (file no. 0-25419) filed with the
Commission on May 28, 1999, and incorporated herein by reference.
5.1* Opinion of Cassidy & Associates
10.1 License Agreement with Sun Microsystems
10.2 Reseller agreement with New Atlanta Communications, LLC
10.3 License agreement with Cloudscape, Inc.
10.4 List of Beneficial Selling Securityholders
10.5 Agreement with E-Capital Management
10.6 Employment agreement with Mr. Hannah
10.7 Agreement with Brokerwise Communication, Inc.
10.8 Memorandum of Agreement with Agritek Bio Ingredients Corporation
10.9 License Agreement with Informix Software, Inc.
10.10 Loan Agreement with E-Capital Management, Inc.
10.11 Memorandum of Agreement with Lines Overseas Management Limited
10.12 Stock Option Plan
23.1 Consent of Accountants
23.2* Consent of Cassidy & Associates (included in Exhibit 5)
27* Financial Data Schedule
__________
* To be filed by amendment
** Previously filed
(b) The following financial statement schedules are included in this
Registration Statement.
None.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
-II-3-
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
-II-4-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
thinWEB.com Corporation certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and has duly
caused this Registration Statement on Form SB-2 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the _________________ on the
29th day of October, 1999.
THINWEB.COM CORPORATION
By /s/ Gary Hannah
-------------------------------
Gary Hannah
President
By /s/ George R. Fraser
-------------------------------
George R. Fraser
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ James S. Anthony Director October 29, 1999
- --------------------
James S. Anthony
/s/ Gary T. Hannah Director October 29, 1999
- --------------------
Gary T. Hannah
/s/ Bryan C. MacLean Director October 29, 1999
- --------------------
Bryan C. MacLean
/s/ George R. Fraser Director October 29, 1999
- --------------------
George R. Fraser
-II-5-
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF DESIGNATION
SETTING FORTH THE PREFERENCES, RIGHTS
AND LIMITATIONS OF PREFERRED STOCK OF
THINWEB.COM CORPORATION
thinWEB.com Corporation, a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Corporation has
the authority to issue 20,000,000 shares of Preferred Stock, par value $0.0001
per share. The Board of Directors of the Corporation has the authority to issue
any or all of such shares in one or more series and by resolution to provide for
the designation of each series to be issued pursuant to the foregoing authority.
The Board of Directors has adopted the following resolution creating a
series of its Preferred Stock to be designated Series 1 Preferred Stock and
consisting of 1,500,000 shares:
RESOLVED: that a series of the authorized Preferred Stock is hereby created with
the following designation, preferences and rights:
Designation and Amount; Par Value. The shares of such series are
---------------------------------
designated as Series 1 Preferred Shares (the "Series 1 Preferred Shares") and
the number of shares constituting such series is 1,500,000. The par value of
each share of the series is $0.0001.
Dividends. The holders of the series 1 Preferred Shares shall not be
---------
entitled to receive dividends.
Dissolution. In the event of the liquidation, dissolution or winding
-----------
up of the Corporation or other distribution of assets of the Corporation among
its shareholders of the purpose of winding up its affairs, whether voluntary or
involuntary, the holders of the Series 1 Preferred Shares shall be entitled to
receive the par value of each share before any amount shall be paid or any
property or assets of the Corporation distributed to the holders of the common
stock. After payment in full to the holders of the Preferred Shares, the
surplus assets, if any, shall belong to and shall be divided among the holders
of other stock or shares in the Corporation in accordance with their respective
rights.
Redemption. Subject to the provisions of the General Corporation Law
----------
of Delaware, the Corporation may redeem at any time commencing November 1, 1999,
any number of the Series 1 Preferred Shares then outstanding by paying to the
holder or holders thereof the par value thereof.
Conversion. The holder or holders of the Series 1 Preferred Shares
----------
shall be entitled to convert them into ordinary shares of the Corporation on a
share-for-share exchange basis at any time before November 1, 1999 (the
"Expiration Date"), provided that the holder or holders were instrumental in
arranging an equity financing, upon terms acceptable to the Corporation, which
results in the receipt of net proceeds to the Corporation of not less then
US$5,000,000. The Expiration Date may be extended at the sole and exclusive
option of the Corporation.
<PAGE>
2
Voting. The holders of the Series 1 Preferred Shares shall not have
------
any voting rights for the election of directors or for any other purpose and
shall not be entitled to receive notice of or attend any annual or extraordinary
meeting of shareholders of the Corporation.
IN WITNESS WHEREOF, THINWEB.COM CORPORATION has caused this
Certificate of Designation to be executed by its President and attested to by
its Secretary this ____ day of ____________________, 1999.
THINWEB.COM CORPORATION
By: ____________________________
President
ATTEST:
____________________________
Secretary
<PAGE>
EXHIBIT 10.1
100% PURE JAVA LOGO LICENSE AGREEMENT
This Logo License Agreement including Exhibits ("Agreement") is entered into by
and between Sun Microsystems, Inc., a Delaware corporation acting by and through
its JavaSoft division and having its principal place of business at 901 San
Antonio Road, Palo Alto, California 94303 ("Sun"), and Licensee as Identified
below ("Licensee").
LICENSEE (Company): ThinWeb Software Inc.
----------------------------------------------------------
Mailing Address: _____________________________________________________________
Attention (Name & Title):_____________________________________________________
Voice & Facsimile:____________________________________________________________
Licensee's URL:_______________________________________________________________
PRODUCT: JDBC Remote, WebCrumbs
---------------------------------------------------------------------
WHEREAS, Sun wishes to protect and promote its 100% PURE JAVA Logo as an
indicator of products incorporating software written completely and exclusively
in Sun's JAVA programming language and capable of running in a similar fashion
on numerous of the predominant browsers and platforms and wishes to license that
Logo to Licensee; and
WHEREAS, Licensee wishes to certify that its product meets the above identified
criteria as more fully set out below and wishes to license the 100% PURE JAVA
Logo from Sun;
NOW THEREFORE, in consideration of the mutual promises arid covenants set forth
below, and for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows;
1. DEFINITIONS
1.1 "JAVA Trademarks" means Sun's JAVA trademark, Sun's Coffee Cup Logo,
Sun's 100% PURE JAVA word mark, Sun's Jump to Java Logo, Sun's "Duke" logo and
all of Sun's JAVA based trademarks and logos, whether now in use or adopted in
the future.
1.2 "Logo" means the Logo depicted in Exhibit A or such additional or
replacement logo(s) as Sun may provide from time to time under this Agreement,
and no other logo, mark, or designation.
1.3 "Product" means only Licensee's above described software product,
component or applet.
1.4 "For Java Tagline" means only the words "For Java", and no other Sun
trademark.
2. GRANT OF LICENSE
2.1 Grant To Licensee. Subject to all restrictions set forth in this
Agreement, Sun grants to Licensee, for the Term and within the Territory, a non
exclusive non-transferable, personal, royalty-free license to use the Logo only
in connection with the Product in accordance with this Agreement (a) on the
Product splash screens and Product packaging; and (b) in the marketing,
advertising, distribution, and sale of the Product. Licensee may state in
materials used in the marketing advertising, distribution, and sale of the
Product that the Product complies with the requirements of Suns 100% Pure Java
Program. In addition, Sun grants to Licensee, for the Term and within the
Territory a non-exclusive, non-transferable, personal, royalty-free license to
use the For Java Tagline in conjunction with the name of the Product. Licensee
is granted no other right, title, or license to the Logo, any JAVA Trademark or
any other Sun trademark for any other purpose, and is specifically granted no
right to sublicense the Logo or any other Sun trademarks or logos.
2.2 Territory. (a) Licensee may use the Logo only in the countries
appearing in Exhibit B (the "Territory"). This Territory restriction applies to
all materials bearing the Logo whether distributed via any tangible media or via
electronic transmission: specifically, Licensee shall not distribute materials
bearing the Logo in any manner outside the Territory. Notwithstanding the
foregoing, use of the Logo on a website within the Territory but accessible from
countries outside of the Territory shall not be considered a breach of this
Territory restriction.
(b) Licensee may request expansion of the Territory but no
expansion shall occur unless Sun expressly agrees in writing beforehand to
extend the Territory, which Sun may refuse to do in its sole discretion.
Licensee shall pay all costs, including fees for legal services, registrations,
recordals, and foreign language translations, associated with any Territory
extension requested by Licensee. Sun may eliminate any country from the
Territory if it determines in its sole judgment that use or continued use of the
Logo in such country may subject Sun or any third party to legal liability or
may jeopardize Sun's rights in the Logo or any Sun trademark or logo in that or
any other country. In such event within sixty (60) calendar days of receipt of
Notice from Sun, Licensee shall cease all use of the Logo in such countries.
2.3 No Limitation On Use. Nothing contained in this Agreement
shall be construed to limit or restrict in any way or manner, any right of Sun
to encumber, transfer, license, access, reference, use, or practice JAVA
Trademarks or the Logo in anyway for any purpose or use (subject only to the
rights specifically granted Licensee
<PAGE>
hereunder), including, without limitation. Sun's use, licensing, and/or
registration of JAVA Trademarks or the Logo anywhere in the world for any
purpose.
3. PROTECTION OF THE JAVA TRADEMARKS AND LOGO
3.1 Sun's Ownership and Rights. Licensee acknowledges and agrees that Sun
is the sole owner of all right, title, and interest in and to the Logo and the
JAVA Trademarks and all associated goodwill and other interests for use on and
in connection with computer hardware, software. Peripherals, technologies,
services and other related goods and services. Licensee shall not (a) do
anything that might harm the reputation or goodwill of the Logo or the JAVA
Trademarks; (b) take any action inconsistent with Sun's ownership of the Logo or
the JAVA Trademarks; or (c) challenge Sun's rights or interests in or attempt to
register the Logo or the JAVA Trademarks, or any mark or logo substantially
similar thereto. Licensee's use of the Logo inures solely to Sun's benefit.
3.2 Assignment Of Rights. If, at any time, Licensee acquires any rights
in, or, trademark registrations or applications for, the Logo or any JAVA
Trademark by operation of law or otherwise, Licensee will immediately upon
request from Sun and at no expense to Sun, assign such rights, registration or
applications to Sun, along with any and all associated goodwill.
3.3 Further Assurances. Licensee agrees to cooperate with Sun and take all
reasonable actions required to vest and secure in Sun the ownership rights and
appurtenant interests as provided in this Agreement, and shall assist Sun to the
extent necessary to protect and maintain the Logo and the JAVA Trademarks
worldwide, including but not limited to (a) giving prompt Notice to Sun of any
known or potential infringement of the Logo or any JAVA Trademark of which
Licensee becomes aware, and (b) cooperating with Sun in the preparation,
execution or recordal of any documents necessary to register or otherwise
protect the Logo or any JAVA Trademark, or to record this Trademark License with
the appropriate trademark authorities of any country.
3.4 Third Party Claims. In its sole discretion, Sun may commence,
prosecute or defend any action or claim concerning the Logo or any JAVA
Trademark, in the name of Sun or Licensee, or join Licensee as a party thereto.
Sun shall have the right to control any such litigation, and Licensee shall
reasonably cooperate with Sun in any such litigation at Sun's cost. Licensee
shall not commence any action regarding the Logo or any JAVA Trademark, without
Sun's prior written consent which Sun may withhold in its sole discretion.
4. CERTIFICATION STANDARDS
4.1 Certification Tests. This Agreement applies only to versions of
Product that have successfully passed the technical certification tests
("Certification Tests") developed and updated from time to time by Sun and run
by a third party certification center chosen by Sun in Sun's sole discretion
("Certification Center"). The Certification Tests verify that a submitted
software product meets the 100% Pure Java certification standards
("Certification Standards"), which are that the software is written completely
and exclusively in Sun's JAVA programming language, that it contains no native
method calls, that it conforms to core JAVA API specifications, and that such
software product will function similarly on appropriate browsers or platforms
including but not limited to: HotJava Browser, Microsoft Internet Explorer,
Netscape Navigator, Solaris, JavaOS, Windows 95/3.l/NT MacOS ("Required
Environments"). Sun reserves the right to add or delete browsers or platforms
from the Required Environments from time to time.
4.2 New Versions Licensee must submit any new version of the Product that
offers feature or functionality enhancements not present in the immediately
preceding Product version ("New Version") to the Certification Center for
testing. Licensee may only use the Logo to connection with New Versions that
have passed the Certification Tests that were current at the time of submission
of the New Version to the Certification Center.
4.3 Maintenance Updates Licensee shall not be required to submit to the
Certification Center for retesting a release of a Product containing only error
corrections but not containing any new functionalities or features compared to
those functionalities or features present in the immediately preceding Product
version ("Maintenance Updates"). However, Licensee shall provide Notice to Sun
(JavaSoft Division) and Certification Center at least seven (7) calendar days
prior to release of the Maintenance Update confirming that the Maintenance
Update is written completely and exclusively in Sun's JAVA computer language,
that it contains no native method calls, that it conforms to core JAVA API
specifications, and that it will function similarly and as intended in all of
the Required Environments. Upon Sun's receipt of such compliance confirmation
from Licensee, Licensee may use the Logo in connection with such Maintenance
Update pursuant to the terms of this Agreement. Sun may determine, in its sole
discretion, that a new release of a Product does not qualify as a Maintenance
Update and instead is a New Version, requiring its own certification pursuant to
the above sub-section 4.2. In addition, at Sun's sole discretion and at any time
Sun may require Licensee, at Licensee's expense, to submit any Maintenance
Update to the Certification Center for Certification Testing. If the Maintenance
Update does not pass the Certification Tests, Licensee shall cease all use of
the Logo on or in connection with the Maintenance Update until such Maintenance
Update passes the Certification Tests.
4.4 Java Developer's Kit Compliance. Licensee shall indicate the latest
version of Sun's Java Developer's Kit software toolkit to which the Product
complies in prominent places on product packaging, splash screens and other
marketing collateral.
4.5 Audits, Record Retention and Complaints. Licensee shall keep
written records of all Certification Tests performed and make such records
available to Sun promptly upon written request. In Sun's sole discretion and at
any time, Sun may evaluate and test in any manner any Product, New Version or
Maintenance Update bearing the Logo to verify conformance to the Certification
standards and all other requirements of this Agreement ("Audit"). Sun shall pay
the cost of an Audit except when it relates to a Maintenance Update pursuant to
paragraph 4.3 above, under which circumstances Licensee shall pay for the
Certification Testing. Licensee shall give prompt Notice to Sun of any
<PAGE>
complaint or other indication by any customer or other third party that any
version of Product or Maintenance Update bearing the Logo may not conform to the
Certification Standards and all other requirements of this Agreement. Licensee
shall provide all assistance necessary for Sun to perform Audits and to ensure
compliance with the Certification Standards and all other requirements of this
Agreement. If following an Audit, Sun determines in its sole discretion, that
the audited Product does not meet the Certification Standards or any other
requirement of this Agreement ("Non-Complying Product"), then Licensee shall
immediately cease using the Logo in connection with such Product until it is in
compliance with the Certification Standards or any other requirement of this
Agreement, which Sun shall determine in its sole discretion. Any Non-Complying
Products bearing the Logo shall be subject to recall in Sun's sole discretion
after thirty (30) calendar days Notice to Licensee of the non-compliance, if
Licensee has not made publicly available, for no additional cost to purchasers
or owners of Non-Complying Product, a software patch which can be used with the
Non-Complying Product to make such Product compliant with the Certification
Standards and all other requirements of this Agreement.
4.6 Damage to Sun's Reputation. Licensee shall not use the Logo in any
manner which, in Sun's sole discretion, will diminish or otherwise damage
Sun's reputation or its goodwill in the Logo, including but not limited to, uses
which would be deemed to be obscene, pornographic, excessively violent or
otherwise in poor taste or unlawful, or which purpose or objective is to
encourage unlawful activities.
4.7 Reputation and Industry Standards. Licensee shall maintain the quality
of the Product with which Licensee uses the Logo at a level that meets or
exceeds industry standards and that is at least commensurate with Licensee's
overall reputation for quality.
LOGO USAGE AND ATTRIBUTION
5.1 Logo Usage, Licensee may use the Logo only in the exact form of
approved camera-ready logo artwork or electronic logo artwork received from Sun
or Sun's designee. The reproduction of the Logo appearing in Exhibit A is for
reference only, and Licensee shall not copy it for use on or in connection with
any product, packaging or collateral materials. Licensee's use of the Logo shall
comply with the then current JAVA Trademark Guidelines (currently found at
http:java.sun.com/trademarks.html and the then current 100% Pure Java Logo
Usage guidelines (currently found at
http:java.sun.com/100percent/logousage.html) provided by Sun to Licensee, both
of which are incorporated herein by reference and both of which Sun may modify
from time to time in its sole discretion. Whenever Licensee displays the Logo,
Licensee shell display it (a) in a size and style less prominent than, and
separately from any of, Licensee's own names, marks or logos, (b) accompanied by
(TM) symbol, (c) not in combination with any other name, mark or logo, and (d)
in such a manner that it is clear that the Logo only refers to the specific
Product which has passed the relevant Certification Tests and not any other
product of Licensee's or any third party. Specifically, when the Product with
which the Logo is used is bundled with other Licensee or third party products
that have not passed the appropriate Certification Tests, Licensee shall always
display the Logo in such a manner that it is clear, in Sun's sole discretion,
that the Logo only refers to the Certified Product and not to any product in the
bundle which has not passed the Certification Tests.
5.2 Attribution. Licensee shall display the following trademark legend on
all materials in or on which Licensee displays the Logo:
"Java, 100% Pure Java, and all Java-based trademarks and logos are
trademarks or registered trademarks of Sun Microsystems, Inc. in the U.S.
and other countries."
6 SUPPORT
6.1 Support Sun shall not be responsible under this Agreement for
providing any support to Licensee's customers acquiring Licensee's Products.
7 WARRANTIES; LIMITATION OF LIABILITY
7.1 No Warranties. SUN WARRANTS AND REPRESENTS THAT IT HAS THE RIGHT TO
GRANT THE LICENSES GRANTED HEREIN, AND THAT IT IS NOT AWARE OF ANY CLAIM OF
TRADEMARK INFRINGEMENT AGAINST THE MARKS IN THE UNITED STATES. SUN MAKES NO
OTHER REPRESENTATIONS OR WARRANTIES, AND DISCLAIM ALL WARRANTIES THAT MAY BE
IMPLIED BY LAW, INCLUDING ANY WARRANTIES OF NON-INFRINGEMENT.
7.2 Damages, SUN AGREES TO INDEMNIFY AND DEFEND LICENSEE FROM AND AGAINST
ANY AND ALL DAMAGES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS FEES)
INCURRED IN CONNECTION WITH A CLAIM, PROVED TRUE, WHICH WOULD CONSTITUTE A
BREACH OF THE FOREGOING WARRANTY PROVIDED SUN IS NOTIFIED PROMPTLY, IN WRITING,
OF ANY SUCH CLAIM. SUN SHALL HAVE SOLE CONTROL OVER DEFENSE AND SETTLEMENT OF
SUCH CLAIM AND LICENSEE SHALL PROVIDE REASONABLE ASSISTANCE FOR SUCH DEFENSE.
NOT WITHSTANDING THE ABOVE, IN NO EVENT SHALL SUN BE LIABLE FOR ANY
CONSEQUENTIAL, INCIDENTAL, OR SPECIAL DAMAGES (INCLUDING LOSS OF BUSINESS
PROFITS) ARISING FROM OR RELATED TO LICENSEE'S USE OF THE LOGO.
8 ASSIGNMENT
<PAGE>
Sun may assign this Agreement or any of its rights or obligations
hereunder in any manner in its sole discretion. Licensee may not assign or
otherwise transfer this Agreement or any of its rights or obligations
hereunder without Sun's written consent, which Sun may withhold in its sole
discretion. This Agreement shall be binding upon and inure to the benefit
of the permitted successors and assigns of the parties hereto.
9. INDEMNIFICATION
Licensee shall indemnify and defend Sun against any loss, liability,
damage, cost, or expense, including reasonable attorneys' fees, arising out
of any claim or action brought against Sun alleging liability on the basis
of the manufacturing, marketing, advertising, distribution, export, sale,
or use by any person of any Product using or bearing the Logo. However,
Licensee shall not be obligated to indemnify or defend Sun on account of
any claim of trademark infringement where Licensee is in compliance with
this Agreement.
10. TERM AND TERMINATION
10.1 Term. This Agreement shall commence upon (a) the date Sun is
informed by the Certification Center that Licensee's Product has passed the
Certification Tests, and (b) both parties' execution of this Agreement,
whichever occurs later ("Effective Date") and shall have an initial term of
one (1) year. Thereafter this Agreement shall renew for additional one (1)
year periods unless either party notifies the other party in writing of its
intent not to renew at least thirty (30) calendar days prior to the end of
the then current term.
10.2 Termination. This Agreement may be terminated:
(a) by either party effective thirty (30) calendar days after
Notice of termination to the other party for breach of any provision of
this Agreement if such breach has not been cured within such thirty (30)
day period:
(b) by either party, in its sole discretion, upon sixty (60)
calendar days' Notice to the other party:
(c) by Sun immediately upon Notice to Licensee if any Product
has been found by any government agency or court to be defective in any
way: or;
(d) by Sun immediately and automatically without notice of any
kind from Sun (i) in the event of the direct or indirect taking over or
assumption of control of Licensee or of substantially all of its assets by
any government, governmental agency, or other third party, or the transfer
of more than twenty percent (20%) equitable ownership of Licensee to a
direct competitor of Sun: (ii) if Licensee commits an act of bankruptcy, or
files any petition under the bankruptcy or insolvency laws of any
jurisdiction, country or place; (iii) If a receiver or trustee is appointed
for Licensee's business or property; or, (iv) if Licensee is adjudicated
bankrupt or insolvent.
10.3 Obligations and Termination. Upon termination of this
Agreement, Licensee shall immediately discontinue all use of the Logo, and
the license and rights granted hereunder shall terminate completely.
Notwithstanding the foregoing, unless this Agreement is terminated by
breach, Licensee may distribute then-existing units of the Product
containing the Logo for a period of thirty (30) days from the termination
date.
10.4 Survival Rights and obligations under this Agreement which by
their nature should survive, including, but not limited to, all rights and
obligations in Sections 3, 7, 8, 9, 10.4. and 11, will remain in effect
after termination or expiration hereof.
11. GENERAL
11.1 Relationship Of The Parties. This Agreement is not intended to
and shall not create a relationship such as a partnership, franchise, joint
venture, agency or employment relationship. Neither party may act in a
manner which expresses or implies a relationship other than that of
independent contractor, nor bind the other party.
11.2 Notices. All notices or demands hereunder must be in writing and
delivered either in person or by certified mail or registered mail, postage
prepaid, return receipt requested, to the person and at the addresses
specified on page 1 for the Licensee or as follows for Sun ("Notice")
100% Pure Java Program Manager with a copy to:
----------- --
Sun Microsystems, Inc., JavaSoft Division Trademark Counsel
901 San Antonio Road Sun Microsystems, inc.
Mail Stop UCUPO1-302 901 San Antonio Road
Palo Alto' CA 94303 USA MailStop UCUPOI-303
E-mail: [email protected] Palo Alto, CA 94303 USA
Email :[email protected]
Such Notice shall be effective upon receipt. Changes in the Notice
addresses shall be given in writing and in accordance with this section.
<PAGE>
11.3 Waiver Or Delay. Any waiver of any term or provision of this
Agreement, or any delay by any party in the enforcement of any tight
hereunder, shall neither be construed as a continuing waiver nor create an
expectation of non-enforcement, of that or any other term, provision or
right.
11.4 Headings. The headings used herein are for convenience only and
shall not be considered in the interpretation and construction of this
Agreement.
11.5 Governing Law; Venue. Any action related to this Agreement shall
be governed by California law and controlling U.S, federal law, and the
choice of law rules of any jurisdiction shall not apply. The parties agree
that any action shall be brought in the United States District Court for
the Northern District Of California or the California Superior Court for
the County of Santa Clara, as applicable, and the parties hereby submit
exclusively to the personal jurisdiction and venue of the United States
District Court for the Northern District of California and the California
Superior Court of the County of Santa Clara.
11.6 Injunctions. Licensee agrees that a material breach of any
obligations in Sections 2 through 9 of this Agreement is likely to cause
irreparable harm to Sun for which damages would not be an adequate remedy.
Therefore, in addition to its rights and remedies otherwise available at
law, including, without limitation, the recovery of damages for breach of
this Agreement, and upon an adequate showing of material breach, and
without further proof of irreparable harm other than this acknowledgement,
Sun shall be entitled to (a) immediate equitable relief, specifically
including, but not limited to, both interim and permanent restraining
orders and injunctions, and (b) to such other and further equitable relief
as the court may deem proper under the circumstances.
11.7 Entire Agreement. This Agreement is the parties' entire
agreement relating to its subject matter. It supersedes all prior or
contemporaneous oral or written communications, proposals conditions,
representations, and warranties, and prevails over any conflicting or
additional terms of any quote, order, acknowledgment, or other
communication between the parties relating to its subject matter during the
term of this Agreement No modification to this Agreement will be binding,
unless in writing and signed by an authorized representative of each party.
11.8 Severability. Each provision of this Agreement is severable and
any findings of invalidity of any pan of this Agreement shall not effect
the validity of the remaining portions thereof.
IN WITNESS WHEREOF, the parties hereby execute this Agreement through
the authorized representatives whose names appear below.
SUN MICROSYSTEMS, INC., by Its JAVASOFT DIVISION
LICENSEE
ThinWeb Software Inc.
By:________________________ By:______________________________
Name:______________________ Name:____________________________
Title:_____________________ Title:___________________________
Date:______________________ Date: September 2, 1998
----------------------------
<PAGE>
EXHIBIT 10.2
New Atlanta
JAVA SERVLET TECHNOLOGY LEADERS
SERVLETEXEC RESELLER AGREEMENT
----------- -------- ---------
THIS AGREEMENT is made and entered into this 15 day of Dec., 1998, by and
-- ----
between New Atlanta Communications, LLC, a Georgia limited liability company
("NAC") and ThinWeb Software Corporation, a Canada company ("Reseller").
WHEREAS, Reseller markets a software product called "WebCrumbs" and may
develop and market other software products in the future ("Products"); and
WHEREAS, NAC has developed a software product called "ServletExec"; and
WHEREAS, NAC and Reseller desire to enter into a contractual arrangement
under which Reseller will acquire the right to license and market ServletExec in
connection with the sale of its Products;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. NAC hereby grants to Reseller during the term of this Agreement a
nonexclusive right to license and a privilege to market, sell, and distribute
ServletExec, Version 2.0 (the "License") subject to the conditions set forth in
this Agreement.
2. The License shall be granted to Reseller for the marketing, sale, and
distribution of ServletExec to customers of Reseller, so long as ServletExec is
bundled with Reseller's Products. Reseller shall not have the right to license
the use of ServletExec in any other manner, including, but not limited to, its
use as a standalone product.
3. NAC shall provide Reseller with the source code for the installation
scripts for ServletExec for all supported servers, which Reseller may use and/or
modify for integrated installation of the Products with ServletExec. NAC shall
provide technical assistance to Reseller in modifying the installation scripts.
4. a. Reseller shall have the right to purchase the License from NAC for
use with WebCrumbs version 1.0 in accordance with the following schedule:
A bundle of 50 Licenses -$1,000
<PAGE>
b. Reseller shall have the right to purchase the License from NAC for
use with WebCrumbs version 2.0, and other software products that may be
developed and marketed in the future in accordance with the following pricing
schedule:
(1) A bundle of 20 Licenses - $3,900
(2) A bundle of 50 Licenses - $8,500
(3) A bundle of 100 Licenses - $14,500
(4) A unlimited number of Licenses, so long as any such License is sold
and distributed within 3 years after the execution date of this
Agreement - $90,000
b. At any time during the term of this Agreement, Reseller shall have
the right to up-grade to the unlimited License option under Section 4.a.(4) by
paying NAC an amount equal to the difference between the price for the unlimited
License option and the price for the License options previously purchased by
Reseller under Section 4 prior to such upgrade.
c. The pricing terms set forth in this Section 4 shall continue to
apply to any upgrades of the ServletExec Version 2.x series made by NAC during
the term of this Agreement. Customers of Reseller shall be entitled to receive
free of charge any upgrades to the ServletExec Version 2.x series made by NAC
during the term of this Agreement.
5. If at any time during the term of this Agreement Reseller markets,
sells, or distributes WebCrumbs version 2.0 without bundling ServletExec 2.0 as
provided herein, this Agreement will immediately be terminated, and Reseller
will pay the sum of $10,000 to NAC as liquidated damages.
6. NAC shall provide technical support to Reseller and Reseller's
customers as is customarily provided by NAC to ServletExec retail customers.
Currently, NAC provides unlimited support to such customers for ServletExec
installation and configuration problems via telephone and email during normal
business hours (9:00 am to 6:00 pm EST).
7. Reseller agrees to perform such services which NAC may reasonably
request to assist in the marketing and sales of ServletExec to customers of
Reseller.
8. NAC shall have the right to identity Reseller as a customer and
licensee of ServletExec software in NAC's marketing literature, including press
releases. This shall include the right to display Licensee's corporate logo on
NAC's web site. Such marketing material and use of Licensee's logo shall require
the prior approval of Licensee; such approval shall not be unreasonably
withheld.
9. This Agreement shall have a term of one (1) year beginning on February
1, 1999 and ending on January 31, 2000. This Agreement shall automatically
renew for an additional one (1) year term, unless Reseller gives NAC written
notice of its intent not to renew this Agreement at least thirty (30) days prior
to the expiration of the initial one (1) year term. The pricing terms set forth
in Section 4 shall remain in effect during such renewal term; provided that the
cost of any
<PAGE>
Licenses purchased during the initial term under Sections 4.a.(1)-(3) shall not
be credited against the cost of an upgrade under Section 4.a (4) if such option
is exercised during the renewal term. If the unlimited License option under
Section 4.a (4) is exercised during the renewal term, the 3 year period for
selling and distributing such Licenses shall begin on the commencement date of
the renewal term.
10. Payments for Licenses under the terms of this Agreement shall be made
prior to the transfer of any Licenses purchased hereunder. NAC will deliver
ServletExec serial numbers in the appropriate quantities to Reseller within two
(2) business days after receipt of payment. For unlimited licenses under Section
4.a.(4), NAC shall deliver an initial quantity of 300 serial numbers; subsequent
quantities of 300 serial numbers shall be delivered within two (2) business days
of receipt of a written request from Reseller.
11. Reseller agrees to include a copy of NAC's license agreement of
ServletExec with each shipment and sale of such product and further agrees to
take such steps as may be necessary to insure that its customers comply with the
terms and conditions of such license agreement.
12. Reseller agrees to keep all of the terms and conditions of this
Agreement confidential and shall not disclose any provision of this Agreement to
any other party without the prior written consent of NAC. This confidentiality
provision shall remain in full force and effect subsequent to the termination
of this Agreement.
13. a. Reseller acknowledges that NAC may disclose to Reseller certain
Confidential Information during the course of Reseller's activities pursuant to
this Agreement. Reseller acknowledges and agrees that the Confidential
Information is the sole and exclusive property of NAC and that NAC owns all
property rights related thereto. Reseller acknowledges and agrees that the
disclosure of the Confidential Information to Reseller does not confer upon
Reseller any license, interest, or rights of any kind in or to the Confidential
Information except as otherwise provided in this Agreement.
b. Except as otherwise provided in this Agreement, Reseller will hold
in confidence and not use, reproduce, distribute, transmit, reverse engineer,
decompile, disassemble, or transfer, indirectly or directly, in any form, or for
any purpose, the Confidential Information made available to Reseller under this
Agreement, without the prior written consent of NAC.
C. To the extent that Confidential Information constitutes a trade
secret under applicable law, the obligations of Reseller with respect to the
Confidential Information shall remain in effect for as long as such information
shall remain a trade secret under applicable law. To the extent such
Confidential Information does not constitute a trade secret, its obligations
with regard to the Confidential Information shall remain in effect during the
term of this Agreement and for two years thereafter. Such obligations shall not
apply if and to the extent that (1) Reseller establishes that the information
communicated was already known to Reseller, without obligation to keep it
confidential, at the time of its receipt from NAC; (2) Reseller establishes that
the information communicated was received by Reseller in good faith from a third
party lawfully in
<PAGE>
possession thereof and having no obligation to keep such information
confidential; or (3) Reseller establishes that the information communicated was
publicly known at the time of its receipt by Reseller or has become publicly
known other than by a breach of this Agreement or other action by Reseller.
d. Confidential Information shall include, but is not limited to,
trade secrets, customer or account lists, supplier lists, pricing information,
receipts, financial information relating to NAC's business, marketing
arrangements, strategic plans, and any other information and data relating to
the business of NAC which is disclosed to Reseller by NAC as a consequence of or
through its relationship with NAC and which has value to NAC and is not
generally known by its competitors.
14. This Agreement may be terminated by either party upon giving the other
party at least 30 days prior written notice to the addresses listed below if the
other party materially breaches any of the terms and conditions of this
Agreement and such breach is not cured within 30 days of receipt of written
notice describing the breach. No such termination shall affect any rights or
obligations which arise hereunder prior to such termination.
15. All notices or other communications made pursuant to this Agreement
shall be given in writing by registered or certified mail which shall be
addressed to the following addresses (or to such other addresses as may have
been provided by the parties subsequent to the execution of this Agreement):
New Atlanta Communications, LLC ____________________________
c/o Vincent Bonfanti ____________________________
10510 Timberstone Road ____________________________
Alpharetta, Georgia 30022-5838 ____________________________
Unless otherwise specifically provided herein, each such notice or communication
shall be deemed given at the time it is mailed by certified mail, return receipt
requested, postage prepaid, in any post office or branch post office regularly
maintained by the United States Government.
16. Subject to paragraph 17 below, the ServletExec software provided by
NAC to Reseller is provided on an "as is" basis, without any warranty of any
kind, either express or implied, including, but not limited to, the implied
warranties of merchantability and fitness for a particular purpose. NAC's
liability, if any, shall be limited to the price paid by Reseller for the
License granted to its customer for the ServletExec software and in no event
will NAC be liable to Reseller or to any other person for any damages,
including incidental or consequential damages, arising out of the use or
inability to use the ServletExec software, or any other program, data, material,
or information provided by NAC under this Agreement.
17. Notwithstanding anything to the contrary in paragraph 16 above, NAC
agrees to indemnify and hold Reseller harmless from any and all claims or causes
of action, including any
<PAGE>
and all costs, expenses and attorney's fees related thereto, asserting that
ServletExec (including any upgrades, updates or new releases thereof) as
delivered by NAC to Reseller or as bundled by Reseller with the Products
infringes any proprietary rights of any third party.
18. Except to the extent that NAC would be obligated to indemnify Reseller
pursuant to paragraph 17 above, Reseller agrees to indemnify and hold NAC
harmless from any claims or cause of action, including any costs, expenses, and
attorney's fees related thereto, brought against NAC by any party with respect
to any matter arising under this Agreement, including, but not limited to, the
bundling and sale or distribution by Reseller of ServletExec with its Products.
19. All of the terms, covenants, agreements, and conditions herein
contained shall be binding upon and shall inure to the benefit of the parties
hereto, and their respective successors, assigns, and legal representatives.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia in all respects.
21. If any provision of this Agreement, or the application thereof to any
person or circumstances shall, for any reason and to any extent, be invalid and
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
IN WITNESS WHEREOF, the parties hereby execute this Agreement on the day
and year first above written.
RESELLER NEW ATLANTA COMMUNICATIONS, LLC
By: By:
----------------------------- ----------------------------------
Printed Name: Cory Reid Vincent Bonfanti
Title: VP Technology President
<PAGE>
EXHIBIT 10.3
FAST START LICENSE AGREEMENT
----------------------------
This Fast Start License Agreement including Exhibits A and B (the "Agreement")
-----------
is made as of March 31, 1999 (the "Effective Date"), by and between Cloudscape,
----------------
Inc., a California corporation with its principal place of business at 180 West
Grand Avenue, Suite 300, Oakland, CA 94612 ("Cloudscape"), and ThinWeb Software
------------
Inc., a Nova Scotia, Canada corporation maintaining its principal place of
business at Purdy's Wharf Tower 1959 Upper Water Street Halifax Nova Scotia,
Canada B3J 3N2 ("Customer").
In consideration for the mutual covenants and promises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which both
parties hereby acknowledge, Cloudscape and Customer agree as follows:
1. LICENSE GRANT. Cloudscape grants to Customer a non-exclusive, non-
transferable, subscription (i.e. including maintenance as provided in Section 5)
license to (i) use the object code copy (the "Copy") of the software identified
in Exhibit A ("Software") along with related documentation during the term of
this Agreement, to develop a limited use version of the Software; and (ii)
distribute or otherwise deploy to end users the object code copy of the limited
use version of the Software (the "Limited Use Copy"). Customer's use for
development purposes and Customer's deployment to end users is limited to the
number of development seats and deployment seats, respectively, for which
Customer has paid the applicable license fees.
2. LICENSE RESTRICTIONS. Customer (a) may not modify, disassemble, decompile or
reverse-engineer the Software; (b) may not rent, lease, loan, or use the
Software to provide time sharing or similar services to any third party, except
as expressly provided in this Agreement; (c) may not make any copy of the
Software except for a reasonable number of backup copies or as otherwise
provided in this Agreement; and (d) may not delete the copyright and other
proprietary rights notices on the Software. Any attempt by Customer to transfer
any of the rights, duties or obligations hereunder except as expressly provided
for in this Agreement is void.
3. DEPLOYMENT. Customer agrees not to deploy the Limited Use Copy to any end
user unless such end user is subject to an end user software license agreement
that: (i) protects Cloudscape's proprietary rights in the Software to at least
the same extent as the terms and conditions of this Agreement; (ii) requires
such end user not to reverse engineer, reverse compile, or disassemble the
object code of the Products; (iii) makes no representation or warranties on
behalf of Cloudscape; (iv) grants no license rights to an end user beyond the
scope of these terms and conditions; (v) contains a government restricted rights
legend in the form set forth in Section 10; and (vi) requires the end user to
comply fully with all applicable laws and regulations in any of its dealings
with respect to the Software. Customer also agrees to reproduce and display on
each Limited Use Copy deployed any copyright or other proprietary rights notices
of Cloudscape or its licensors appearing on the Software.
4. FEES AND DELIVERY. Customer will pay the applicable license fees set forth
in Exhibit A within ___ (__) days of the Effective Date of this Agreement.
Cloudscape will deliver
<PAGE>
the Copy and related documentation to Customer electronically (or as otherwise
provided in Exhibit A) as soon as practicable after Cloudscape's receipt of the
applicable license fees in full from Customer.
5. MAINTENANCE. Cloudscape will provide maintenance and support of the Software
for one (1) year following the date of delivery of the Software, including
updates, upgrades, new versions, and new products within the embedded Software
product family, pursuant to its then current standard maintenance and support
policies.
6. REFUND; DISCLMMER OF WARRANTIES. Cloudscape agrees for the period of thirty
(30) days from the date of delivery of the Software to Customer (the "Refund
Period") that Cloudscape will refund to Customer the money paid for the Software
if Customer is unsatisfied with the Software, provided that within the Refund
Period, Customer requests such a refund in writing and notifies Cloudscape in
writing of Customer's reason for requesting a refund.
THE SOFTWARE IS PROVIDED ON AN "AS IS" BASIS WITHOUT WARRANTY OF ANY KIND.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, CLOUDSCAPE DISCLAIMS ALL WARANTIES,
BOTH EXPRESS AND IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES AND
CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ANY
WARRANTIES OF NONINFRINGEMENT.
7. OWNERSHIP; PUBLICITY. Subject to the express rights granted in this
Agreement, Customer agrees that Cloudscape and/or its suppliers own and retain
all right, title and interest in and to the Limited Use Copy and the Software,
including without limitation any and all copyrights, patents, trade secrets,
trademarks and other intellectual property and proprietary rights therein.
Customer agrees neither to publish any report or statement or make any public
comment concerning the performance, features or functionality of the Software or
that compares the Software to any other software, product or system nor
authorize any such report, statement or comment, without Cloudscape's prior
written consent.
8. LIMITATION OF LIABILITY. IN NO EVENT WILL CLOUDSCAPE BE LIABLE TO CUSTOMER
OR ANY OTHER PARTY, AND CUSTOMER EXPRESSLY ASSUMES ALL RESPONSIBILITY, FOR
DAMAGES OF ANY KIND ARISING FROM USE OF THE SOFTWARE, WHETHER RESULTING FROM
TORT (INCLUDING NEGLIGENCE), BREACH OF CONTRACT OR OTHER FORM OF ACTION,
INCLUDING BUT NOT LIMITED TO INDIRECT, SPECIAL, INCIDENTAL AND CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS) OF ANY KIND, ARISING IN ANY WAY OUT OF THIS
AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. CLOUDSCAPE'S
TOTAL LIABILITY UNDER THIS AGREEMENT WILL BE LIMITED TO THE LICENSE FEE.
9. Term. Unless terminated earlier as set forth below, the initial term of
this Agreement shall commence on the Effective Date and remain in full force and
effect until the first anniversary of the Effective Date. Unless
<PAGE>
Application Distributor gives Cloudscape written notice ninety (90) days before
the last day of the initial term or any renewal term, this Agreement shall
automatically be renewed for one year renewal terms, and all terms and
conditions of this Agreement shall remain in full force and effect during such
renewal term.
10. TERMINATION. Cloudscape will have the right to terminate this Agreement if
Customer breaches any material term or condition of this Agreement and fails to
cure such breach within thirty (30) days of written notice from Cloudscape.
This Agreement will automatically terminate if Customer requests a refund in
accordance with Section 6 of this Agreement. Upon termination of this Agreement,
the rights and licenses granted to Customer under this Agreement shall
automatically terminate. Within five (5) days after termination, Customer will
destroy all copies of the Software and documentation in Customer's possession.
Upon request, Customer will certify to Cloudscape that all copies of the
Software have been destroyed. The exercise by Cloudscape of any remedies under
this Agreement will be without prejudice to its other remedies under this
Agreement or otherwise. The rights and obligations of the parties under Sections
6, 7, 8, 9 and 11 will survive the expiration or termination of this Agreement.
11. GOVERNMENT LICENSEE. If the Software is licensed by or for any unit or
agency of the United States Government, then the Software shall be classified as
"commercial computer software", as that term is defined in the applicable
provisions of the Federal Acquisition Regulation (the "FAR") and supplements
thereto, including the Department of Defense ("DoD") FAR Supplement (the
"DFARS"). Cloudscape represents that the Software was developed entirely at
private expense, and that no part of the Software was first produced in the
performance of a United States Government contract. If the Software is supplied
for use by DoD, the Software is delivered subject to the terms of this Agreement
and either (i) in accordance with DFARS 227.7202-1(a) and 227.7202-3(a), or (ii)
with restricted rights in accordance with DFARS 252.227-7013(c)(l)(ii) (OCT
1988), as applicable. If the Software is supplied for use by a Federal agency
other than DoD, the Software is restricted computer software delivered subject
to the terms of this Agreement and (i) FAR 12.212(a); (ii) FAR 52.227-19; or
(iii) FAR 52.227-14(ALT III), as applicable.
12. EXPORT CONTROL. Customer agrees to comply with all export laws and
restrictions and regulations of the United States Department of Commerce or
other United States or other sovereign agency or authority, and not to export,
or allow the export or re-export of any technical data or any direct product
thereof in violation of any such restrictions, laws or regulations, or unless
and until all required licenses and authorizations are obtained to the countries
specified in the applicable U.S. Export Administration Regulations (or any
successor supplement or regulations).
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, excluding its conflicts of
law principles. The parties agree that the United Nations Convention on
Contracts for the International Sale of Goods
<PAGE>
will not apply to this Agreement. Customer hereby consents to the personal and
exclusive jurisdiction and venue of the state and federal courts located in the
Northern District of California.
14. AUDIT. Upon thirty (30) days prior written notice, Cloudscape may inspect
Customer's records related to Customer's use of the Software to ensure that
Customer complies with the terms of this Agreement. Such audit will be conducted
during Customer's regular business hours, and will occur no more than once
annually. The costs of conducting an audit will be paid by the Customer if the
audit discloses that Customer is using unauthorized copies of the Software.
Customer must also pay Cloudscape for such unauthorized copies of the Software
being used by Customer.
15. MISCELLANEOUS. This Agreement constitutes the complete and exclusive
agreement between the parties with respect to its subject matter, and supersedes
any and all written or oral agreements previously existing between the parties
with respect to such subject matter. Any modifications of this Agreement must be
in writing. This Agreement will bind and inure to the benefit of each party's
successors and assigns, provided that Customer may not assign this Agreement, in
whole or in part, without Cloudscape's prior written consent. If any provision
of this Agreement is found illegal or unenforceable, it will be enforced to the
maximum extent permissible, and the legality and enforceability of the other
provisions of this Agreement will not be affected. No failure of either party to
exercise or enforce any of its rights under this Agreement will act as a waiver
of such rights. No purchase order, invoice or similar document will by its terms
amend or supplement the terms and conditions of this Agreement, even if accepted
or signed by the receiving party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective on the Effective Date.
CLOUDSCAPE. INC. ThinWeb Software Inc.
- ---------------- ---------------------
Signature:_____________________ Signature: ___________________
Printed Name: _________________ Printed Name: ________________
Title: ________________________ Title: _______________________
Payment Schedule
----------------
Initial payment at contract signing $1,000
Second Payment June 30, 1999 $1,000
<PAGE>
Third Payment September 30, 1999 $1,000
Fourth Payment December 30, 1999 $1,000
Fifth Payment Much 30, 2000 $1,000
. If in any quarter, the royalty payment exceeds the minimum guaranteed
quarterly payment the difference is then due immediately
Reports
1. Within tiny (30) days of the end of each calendar quarter, Customer shall
provide to Cloudscape a written report substantially in the form displayed
below, which shall provide information reasonably necessary for
computation and/or confirmation of the payments, if any due or credited to
Cloudscape for such quarterly period.
Reporting Form:
Sales Made
Company Location Date of Net Royalty
Name (city, country) Sale Proceeds Amount
Exhibit A
---------
Pricing
1. Software description: JBMS embedded client and workgroup server
deployment licenses
2. Evaluation Licenses (Unlimited) No Charge
<PAGE>
3. Development Kit for internal use (Unlimited) No Charge
4. Cloudscape restricted limited use license for distribution with customers
development copies only, will be charged at 3% royalty of customer
selling price. Cloudscape unrestricted licenses to be distributed with
customers deployment licenses, will be charged at 10% royalty of customer
selling price.
Support
1. Support will be charged on a per call basis with the minimum 10 pack of
support calls at $1,000 to be charge against the initial prepay.
2. Software updates after the first year will be charged at 9% of the total
royalty payments.
<PAGE>
Exhibit 10.4
LIST OF BENEFICIAL HOLDERS OF
SHARES BEING SOLD BY ENTITIES
OTHER THAN THOSE OF INDIVIDUALS
Corporate Name Beneficial Owner
Anjula Ltd. - Diana Chaverri
Amery Associates Inc. - Julio Flores
Arrendadora Solarsa S.A. - Patricia Del Solar
Butternut Capital Limited - Pilar Pacado
Cannon Equity Limited - Hernan Cruz
Corporate Solutions Limited - Alfonso Jimenez
Dale Chaisson Auto Sales Inc. - Dale Chaisson
Everest Private Trust Company - The family of Danesh K. Varma
Greensted Equities Limited - Maria Rodriguez
Iguana Investments Ltd. - Kevin Gunther
International Shareholdings Corp. - Floria Vargas Segura
Seismic Investments Ltd. - Ricardo Rojas
Strathglen Capital Limited - Diana Chaverri
<PAGE>
Exhibit 10.5
THIS AGREEMENT made this day of May , 1999, effective the 15th day of
March,1999.
BETWEEN:
E-CAPITAL MANAGEMENT INC.
a body corporate, duly incorporated under the laws of Canada
(hereinafter "E-Capital")
OF THE FIRST PART
- and -
thinWEB.com CORPORATION
a body corporate, duly incorporated under the laws of Delaware
(hereinafter "thinWEB")
OF THE SECOND PART
WHEREAS E-Capital has expertise in arranging financing for companies and
assisting in the going public process;
AND WHEREAS E-Capital made an agreement with ThinWeb Software Incorporated
("Software") on or about March 15, 1999 and has been providing services to
Software since that time while the detailed terms of its engagement were being
finalized. Reference hereinafter to "thinWEB" is intended to also include
Software where the context requires;
AND WHEREAS thinWEB acknowledges the services provided to Software to date and
desires to continue to utilize the services of E-Capital and to confirm the
terms thereof.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set out, the
parties agree as follows:
1. thinWEB hereby retains E-Capital and E-Capital hereby agrees to assist
thinWEB in its efforts to obtain financing and go public, subject to the terms,
conditions and provisions hereof.
2. E-Capital hereby agrees to provide its services to thinWEB, and thinWEB
agrees to retain E-Capital on an exclusive basis, until the earlier of:
(a) 60 days after the date upon which thinWEB becomes publicly traded;
(b) December 31, 1999; or
(c) the date upon which the directors of thinWEB unanimously agree that E-
Capital has failed in its efforts to obtain acceptable financing and assist
in taking thinWEB public to the extent that it is no longer in the best
interests of thinWEB to continue this agreement.
<PAGE>
3. The services to be rendered to thinWEB shall be subject to the approval and
direction of thinWEB's board of directors and designated management to whom E-
Capital and its President shall report.
4. E-Capital shall use such employees, consultants and contractors as it deems
necessary to assist in the performance of its activities on thinWEB's behalf.
5. E-Capital is not precluded from engaging in similar business activities on
behalf of third parties provided such activities do not interfere with the
performance of its duties and responsibilities to thinWEB.
6. The general services to be provided shall include:
(a) introduction of thinWEB to suitable financial institutions, merchant
banks, investment funds, broker-dealers, underwriters, sophisticated
investors, and the like, both in North America and abroad, for the purpose
of arranging financings and underwriting or investment commitments;
(b) assistance in negotiating, or negotiating on behalf of thinWEB, with
those parties referred to in 6(a) above;
(c) providing strategic advice to thinWEB with respect to financing and
going public planning;
(d) assisting in the identification and evaluation of going public
alternatives;
(e) assisting in identifying qualified advisors and consultants to aid
thinWEB in its efforts to obtain financing and go public; and
(f) all such other activities which may be considered necessarily
ancillary to the foregoing.
7. In addition to the general services described above E-Capital agrees to
arrange the following transactions:
(a) a seed investment of not less than $500,000 USD by way of private
placement of common shares of thinWEB at a price of $.50 USD per share
(which may be subject to a "finders fee" of up to 10% to a third party
consultant);
(b) the locating, negotiating for and acquiring by reverse takeover of a
suitable US shell for going public purposes;
(c) locating, introducing and negotiating with sophisticated foreign
investors to invest in thinWEB and to provide bridge financing on terms to
be negotiated, until such time as thinWEB goes public or completes a
significant financing;
(d) introducing a knowledgeable consultant to assist in investigating the
feasibility of establishing an R&D affiliate in a low tax foreign
jurisdiction; and
<PAGE>
(e) arranging a private placement equity financing, on terms acceptable to
thinWEB, resulting in the receipt by thinWEB of net proceeds of not less
than $5,000,000 USD.
8. E-Capital shall at all times observe and comply with all applicable
federal, state and provincial securities laws, rules and regulations in
connection with any of its aforementioned activities and will take all
reasonable steps within its control to prohibit any persons affiliated with E-
Capital from engaging in any activities in contravention of such laws, rules and
regulations.
9. In consideration of the services to be performed by E-Capital it shall
receive the following compensation:
(a) it shall be reimbursed all reasonable out of pocket expenses incurred by
it, its employees, contractors and consultants while engaged in activities on
behalf of thinWEB, the reasonableness of which shall be determined by thinWEB's
management;
(b) it, or its nominee, shall be issued for nominal consideration 1,500,000
convertible preferred shares of thinWEB, which shares shall be convertible into
common shares of thinWEB on a one for one basis, provided that the conversion of
the shares shall only occur if E-Capital has been instrumental in arranging an
acceptable $5,000,000 USD net equity financing as described in paragraph 7(e)
above by November 1, 1999 (unless extended by thinWEB).
10. E-Capital shall be responsible for the payment of all of its employees
remuneration. The costs and expenses of any contractors retained by E-Capital
shall be the sole responsibility of E-Capital, unless otherwise approved by
thinWEB.
11. Either party may terminate this agreement for cause, immediately upon
notice to the other party upon occurrence of any of the following events:
(a) a material breach of any term or provision of this Agreement,
(b) violation of any law, rule or regulation.
12. E-Capital shall keep all information it receives about thinWEB, its
operations and technology confidential except as is necessary for its activities
described above. E-Capital shall, wherever reasonably possible, obtain non-
disclosure agreements before providing information about thinWEB to any third
parties.
13. This Agreement and matters of its construction, validity and performance
shall be governed by the laws of Ontario. If any legal action or other
proceeding is brought for the enforcement or interpretation of this Agreement,
such legal proceeding shall be brought in Ontario.
14. Notice given by either party to the other shall be considered received on
the day of actual receipt. Notice to the parties shall be at the following
addresses:
To E-Capital:
Greg Wilson, President
14 Slade Crescent
<PAGE>
Kanata, Ontario
K2K 2L1
To thinWEB:
Gary T. Hannah, President
Suite 101, Phase 3, 6 Antares Drive
Nepean, Ontario
K2E 8A9
15. This Agreement shall not be assigned without prior written consent.
16. The provisions of this Agreement shall enure to the benefit of and are
binding on the successors and permitted assigns of the parties.
IN WITNESS WHEREOF the parties have approved and executed this Agreement.
E-CAPITAL MANAGEMENT INC.
per:_______________________________
thinWEB.com CORPORATION
per:________________________________
<PAGE>
SCHEDULE "A"
LIST OF SHAREHOLDERS
AMERY ASSOCIATES INC.
ARRENDADORA SOLARSA S.A.
BUTTERNUT CAPITAL LIMITED
CANNON EQUITY LIMITED
CORPORATE SOLUTIONS LIMITED
GREENSTED EQUITIES LIMITED
INTERNATIONAL SHAREHOLDINGS CORP.
SEISMIC INVESTMENTS LIMITED
STRATHGLEN CAPITAL LIMITED
<PAGE>
Exhibit 10.6
April, 1999
Mr. Gary Hannah
1250 Squire Drive
Manotick, Ontario
K4M 1B8
Dear Gary,
This letter constitutes our offer to you of the position of President and Chief
Executive Officer of ThinWeb Software Inc. (herein referred to as the
Corporation). As President and Chief Executive Officer, all functions of the
Corporation will report to you. You will be positioned in Ottawa and will report
directly to the Board of Directors, of which you will also be a member of as
Director. As discussed with you, we expect you to have a close working
partnership with the technical and administrative leadership of the Company,
perhaps in the form of a Management Committee.
Your base compensation with be C$200,000 per year reviewed annually by the
Compensation Committee of the Board. Salary increases and bonuses will be tied
to performance measured against corporate objectives which you participate in
setting.
Should you be terminated for reasons other than cause, you will be paid a
severance of one years annual salary. Annual salary means the sum of:
(i) the annual salary payable by the Corporation at the Date of Termination or
as at the end of the month immediately preceding the month in which
termination occurs (the "Prior Month"), whichever is greater, and if an
annual salary has not been established, it shall be calculated by
multiplying the monthly salary in effect for the Prior Month by 12, and
(ii) the aggregate amount of all remuneration, salaries, bonuses and benefits
(including, without limitation, health, dental and disability coverage)
not included in clause (i) above that the board of directors of the
Corporation acting reasonably estimates would be payable to the Executive
during the 12 month period following the termination of the Executive's
employment by the Corporation assuming: )1) the employment of the
Executive was not terminated during such period; and (2) the Executive
benefited from and participated in such remuneration, salaries, bonuses
and benefits on a basis consistent with practices in effect for senior
executives of the Corporation immediately prior to the Date of
Termination;
(iii) if, at the Date of Termination, there were any memberships in any clubs,
social or athletic organizations paid for by the Corporation that were for
the regular use of the executive at the Date of Termination, the
Corporation will not take any action to terminate such memberships but
need not renew any such membership that expires; and
(iv) the Corporation shall pay to the Executive all outstanding and accrued
vacation pay to the Date of Termination.
In addition to salary and bonuses as described above, you will be invited to
participate in the Corporations stock option plan. Options will be set by the
Board and will be vested subject to meeting certain specified objectives which
you will participate in setting. Although it is not possible at this stage to
quantify your option position, you expect, as the most senior officer of the
Corporation, to have the largest single option position of any employee. The
total amount of Options available will be according to generally approved
industry standards.
ThinWeb does not yet have policies with respect to paid holidays and health
benefits. As President, you will assist in establishing such policies and to
participate in them. A C$600 car allowance will be paid monthly in addition to
reimbursement for all work-related business expenses.
<PAGE>
You will also have a 7% equity interest in ThinWeb as a private corporation
prior to the Corporation going public. We will endeavor to make this transaction
non taxable in your hands but any tax which should become payable will be your
responsibility. Your equity position will translate into the equivalent interest
in the public company at the time that it goes public. These shares will vest to
you as follows: 2% upon your assuming the position as President; 2.5% on the
first anniversary date of your assuming your role as President; and a further
2.5% on the second anniversary date.
If as President your employment is terminated by the Corporation other than for
Just Cause, Disability, retirement or death, the Corporation shall ensure that
all options to acquire common shares of the Corporation held by you on the Date
of Termination shall continue to vest and be exercisable for the full period
during which the Executive is compensated by the Corporation. As of the last day
of such period, the executive shall have 30 days to exercise all vested options.
On the 31st day, all unexercised options vested or unvested are cancelled.
Notwithstanding the foregoing, all options held by the Executive, whether then
vested or not, shall immediately become exercisable (and shall remain
exercisable for the period of thirty day following the Date of Termination in
the event that the Executive's employment is terminated by the Corporation
(other than for Just Cause, Disability or Death) within one year following: the
acquisition by any third party of greater than 50% of the then issued and
outstanding common shares.
As an employee shareholder of the Corporation, you will be invited to
participate in a three year pooling agreement covering the disposition of your
shares. The terms of this pooling agreement will be exactly the same for all
employee shareholders in the private company. You may participate in the initial
sale of shares which is contemplated in the going public process. Your exact
participation in this sale and details of the three year pooling agreement will
be negotiated with you prior to the completion of this transaction.
We understand that you will be unavailable for work-related items from June 14,
1999 to June 25, 1999 for personal reasons. We would appreciate your response to
this offer as soon as possible and should you decide to join ThinWeb, we would
like to set an early start date with you. We look forward to working with you in
the building of a successful and exciting software company.
Yours truly,
Bryan MacLean
ThinWeb Software Inc.
I agree and accept these terms.
Signed: Gary Hannah
Dated: April 7, 1999
<PAGE>
Exhibit 10.7
THIS AGREEMENT made this day of July, 1999
BETWEEN:
BROKERWISE COMMUNICATIONS INC.
a body corporate, duly incorporated under the laws of Canada
(hereinafter "Brokerwise")
OF THE FIRST PART
- and -
thinWEB.com CORPORATION
a body corporate, duly incorporated under the laws of Delaware
(hereinafter "thinWEB")
OF THE SECOND PART
WITNESSES THAT:
WHEREAS Brokerwise, its principal, employees and contractors, is experienced in
matters relating to the provision of Investor Relations services;
AND WHEREAS thinWEB desires to utilize the services of Brokerwise.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set out, the
parties hereto agree as follows:
1. thinWEB hereby retains Brokerwise and Brokerwise hereby agrees to provide
thinWEB with investor relations services subject to all of the terms, conditions
and provisions hereof.
2. Brokerwise hereby agrees to provide the investor relations services for a
term of one year commencing August 1, 1999, unless the agreement is terminated
as hereinafter provided for.
3. Investor relations shall be rendered to thinWEB subject to the approval and
direction of thinWEB's board of directors and designated management to whom
Brokerwise and its designated employees shall report.
4. Brokerwise shall furnish and have available qualified and designated full-
time staff personnel for all investor relations activities as required by
thinWEB and contained herein, together with such contractors as it deems
necessary to assist in the performance of its investor relations activities.
5. Brokerwise and its employees shall, throughout the term hereof, diligently
devote such time and effort as is reasonably required to thinWEB's investor
relations needs. Brokerwise and its employees shall perform the necessary
services conscientiously, efficiently and to the best of their abilities.
Brokerwise is not precluded from engaging in business activities with third
parties provided such activities do not interfere with the performance of its
duties and responsibilities to thinWEB.
6. The investor relations services to be provided shall include:
(a) roadshows and investor forums,
<PAGE>
(b) investment community contact and relations,
(c) shareholder relations,
(d) news releases, and
(e) such other normal IR activities as are approved by thinWEB.
7. It is understood that until such time as thinWEB is publicly traded the
activities of Brokerwise shall be limited to:
(a) compiling a database of investment dealers, fund managers, investment
banks and the like for contact following SEC approval of thinWEB's
registration statement,
(b) compiling a database of people contacting thinWEB seeking investment
information, and
(c) responding to investor inquiries by referring them to information
contained in and to the link to the SB-2 registration statement filing on
the SEC website.
8. Brokerwise shall at all times observe and comply with all federal, state
and provincial securities laws, rules and regulations incident to the issuance
and trading of the securities of thinWEB and will take all steps reasonably
required within its control to prohibit any persons affiliated with Brokerwise
or thinWEB from engaging in any activities in contravention of such laws, rules
and regulations.
9. In consideration of investor relations services to be performed by
Brokerwise it shall be paid a monthly fee of $10,000 and shall be reimbursed
approved expenses incurred on behalf of thinWEB to a maximum of $4,500 per
month. The monthly fee shall be payable at the first of each applicable month
and expenses shall be reimbursed within 10 days following the month they are
incurred, subject to presentation and approval.
10. Brokerwise shall be responsible for the payment of all of its employee
remuneration, office and normal operating expenses. The costs and expenses of
any contractors retained by Brokerwise shall be the sole responsibility of
Brokerwise.
11. This agreement may be terminated by either party upon 30 days prior written
notice to the other party. Any monies owed to Brokerwise shall be paid within 10
days following the effective date of termination.
12. Either party may terminate this agreement for cause, immediately upon
notice to the other party upon occurrence of any of the following events:
(a) a material breach of any term or provision of this Agreement,
(b) violation of any law, regulation or rule.
13. Brokerwise expressly agrees that all books and records relating in any
manner whatsoever to the business of thinWEB, and all other files, books and
records and other material owned by thinWEB or used by it in connection with the
conduct of its business shall be the exclusive property of thinWEB regardless of
who actually prepared the original material, books or records. All such books
and records and other materials shall be returned immediately to thinWEB upon
termination of the Agreement.
14. This Agreement and all rights and obligations hereunder, including matters
of construction, validity and performance shall be governed by the laws of
Ontario. If any legal action or other proceeding is brought for the enforcement
of this Agreement, or because of an
<PAGE>
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable legal fees and other costs incurred in
addition to any other relief to which such party or parties may be entitled. Any
such legal proceeding shall be brought in Ontario.
15. Notice given by either party to the other shall be considered received on
the day of actual physical delivery by courier or by confirmed facsimile
transmission. Notice to either party shall be directed as follows:
To Brokerwise:
Dwayne Bigelow, President
Suite 1405 Purdy's Wharf Tower I
1959 Upper Water Street
Halifax, Nova Scotia
B3J 2N2
Facsimile: (902) 490-4470
To thinWEB:
Gary T. Hannah, President
Suite 101, Phase 3, 6 Antares Drive
Nepean, Ontario
K2E 8A9
Facsimile: (613) 225-0721
15. This Agreement shall not be assignable without written consent of both
parties.
16. The parties hereto agree that this Agreement constitutes the entire and
exclusive agreement between them pertaining to the subject matter contained
herein and supersedes all prior agreement relating to same.
17. The provisions of this Agreement shall enure to the benefit of and are
binding on the successors and permitted assigns of the parties.
IN WITNESS WHEREOF the parties have approved and executed this Agreement.
BROKERWISE COMMUNICATIONS INC.
per:_________________________________
thinWEB.com CORPORATION
per:_________________________________
<PAGE>
Exhibit 10.8
MEMORANDUM OF AGREEMENT ("MoA")
between
thinWeb.com Corporation ("thinWeb")
and
Agritek Bio Ingredients Corporation ("AGK")
Dated September 10, 1999
WHEREAS thinWeb has developed and exclusively owns free and clear of all
encumbrances certain software technologies collectively known as thinAccess (the
"Technology") more fully described in Appendix A hereto;
AND WHEREAS AGK wishes to share in the opportunities and costs of developing the
Technology for application to the wireless database access market (the
"Opportunity");
AND WHEREAS the parties have agreed to form a joint venture to develop said
Opportunity;
AND WHEREAS it is in the interests of both parties that development work on the
Opportunity commence as quickly as possible notwithstanding the inability of the
parties to have prepared all necessary formal documentation;
AND WHEREAS the parties have agreed that this memorandum shall constitute a
binding statement of principles and obligations between them which shall be
supplemented by more formal documentation to be entered into between them which
shall contain all of the customary terms and conditions normally found in
documents of this type in Canada;
AND WHEREAS the parties have further agreed that if for any reason they are
unable to complete the formal documentation because of disputes as to intentions
or for any other reasons then either of the parties may submit the matter to
final and binding arbitration under the provisions of the Ontario Arbitration
Act before one arbitrator selected in conformity therewith. Such arbitrator
shall have all necessary power and authority to complete the documentation, fill
in any gaps and generally do what is required to complete all the documentation
foreseen by this and which documentation shall then be binding upon the parties
hereto;
NOW THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
1. thinWeb has heretofore caused to be incorporated a new corporation
("Newco") under the laws of Canada and Newco shall be the joint venture
vehicle in which each party shall have an equal and undivided interest (the
"JV");
2. thinWeb shall transfer to Newco concurrently with the signing of this MoA
an exclusive perpetual license (the "License") to the Technology for the
purposes of developing the Opportunity;
Initial here _______ _______
Memorandum of Agreement between thinWeb and AGK - September 8, 1999 page 2
<PAGE>
3. New technologies developed by Newco shall become the exclusive intellectual
property of the JV. The parties hereto agree that if such new technologies
have application outside of the Opportunity being pursued by the JV then
Newco shall mandate thinWeb to exploit such new technologies. Should such
new technologies be licenced or sold to third parties Newco shall receive
the royalties and /or proceeds of sale and same shall be distributed from
time to time to Newco's shareholders, with thinWeb being entitled to
compensation to be agreed upon through negotiations between the JV members
for its services in commercializing such licences or sales. Should such new
technologies be embedded in thinWeb products then the JV members shall at
such time or times negotiate fair and reasonable royalties for the use
thereof by thinWeb;
4. Applications developed for the Opportunity by Newco and any revenues from
sales fees, or royalties shall also be for the benefit of Newco and subject
to distribution between the parties;
5. thinWeb shall be the manager (the "Manager") of Newco and shall as the
Manager act in a prudent and workmanlike manner;
6. The Manager shall report to a management committee consisting of two
representatives from each party to the JV, said committee to be governed by
such procedures as are customary in joint ventures including a provision to
arbitrate differences;
7. Operating expenses of Newco shall be funded by advances to be furnished by
each of the parties as per budgets to be prepared by Newco. Each party
shall make such advances when required pursuant to the budget. Should a
party be unable or unwilling to continue furnishing its portion of the
operating expenses then such party's (the "Unable Party") interest in Newco
shall be subject to dilution by the other party or a third party which is
prepared to fund the Unable Party's share of operating expenses. Such
dilution to be calculated on the basis of Newco having as a value an amount
equal to the aggregate of the sum of $2,500,000 together with the total of
all advances made between the parties to Newco to fund operating expenses,
to the time when the Unable Party ceases making advances. For example:
i. At the time the Unable Party ceases to make advances, if the total
advances made by both parties is $1,200,000 then value of the Unable
Party's shareholdings shall be equal to the quotient of ($2,500,000 +
$1,200,000) x 50% or $3,700,000 x 50%, which is $1,8500,000. For every
dollar advanced thereafter by the other or a third party, $0.50 will
be applied to the dilution of the Unable Party's shareholdings as
follows:
a. If a total of $300,000 is subsequently advanced by the other party
or a third party, the Unable Party's interest shall be equal to
the quotient of $1,850,000 / ($3,700,000 + ($300,000 x 50%) or
48.1%.
b. If a total of $300,000 is subsequently advanced by the other party
or a third party, the Unable Party's interest shall be equal to
the quotient of $1,850,000 / ($3,700,000 + $150,000 + ($500,000 x
48.1%) or 45.2%.
Initial here _______ _______
Memorandum of Agreement between thinWeb and AGK - September 8, 1999 page 3
<PAGE>
7.1 Notwithstanding the foregoing dilution shall not take place after the
Unable Party's shareholder interest in Newco has been diluted to 10%
of Newco's issued and outstanding shareholdings.
8. thinWeb employees assigned to the JV by thinWeb shall continue to be the
employees of thinWeb and the severance costs for such employees shall be
borne by thinWeb. While seconded to Newco such employees "discoveries"
shall be the exclusive intellectual property of Newco. Each of said
employees shall enter into the appropriate agreements with Newco in regard
to confidentiality and ownership of "discoveries" relating to the
Opportunity;
COMPENSATION
9. In exchange for thinWeb assigning the License to Newco:
9.1 AGK shall pay to thinWeb the amount of C$1,000,000 (one million
Canadian dollars), payable as to C$500,000 upon signing of this MoA
and C$500,000 on the signing of the definitive JV agreement;
9.2 Subject to regulatory approval, AGK shall deliver to thinWeb 500,000
(five hundred thousand) units of the capital stock of AGK upon the
signing of the JV agreement, each unit consisting of one freely
tradeable common share and one non-transferable share purchase
warrant, such warrant to be exercisable by the holder for a period of
two years from the signing of the JV agreement at an exercise price of
C$0.50 (fifty cents Canadian);
9.3 A royalty payable by the JV to thinWeb of 5% of the net revenues
(revenues from all sources less returns) realized by the JV, paid
quarterly in arrears. Such royalty payments to commence, however only
subsequent to Newco having reimbursed to the parties all advances made
to Newco for development and other expenses;
10. Provided thinWeb shall not charge back to Newco management time for
supervising Newco's activities, as compensation for its role as Manager,
Agritek shall pay a surcharge of 2.5% on its share of Newco's costs to
thinWeb, such fee to be invoiced monthly in arrears;
11. thinWeb shall issue to AGK 100,000 (one hundred thousand) non-transferable
share purchase warrants conferring the right to the holder to purchase an
equal number of common shares of thinWeb for a period of two years, such
warrants to be exercisable at the lower of US$5.00 per share and the price
at which thinWeb next issues equity pursuant to a financing;
12. This MoA and the definitive JV agreement shall be subject to the laws of
Ontario.
13. Miscellaneous
Initial here _______ _______
Memorandum of Agreement between thinWeb and AGK - September 8, 1999 page 4
<PAGE>
13.1 The Preamble shall form part hereof as though incorporated herein;
13.2 The parties agree that as it is not the intention of Newco to build
up cash resources as a consequence of royalties or sales and that
distributions shall be made to the parties on a regular basis of cash
flow which is surplus to its needs;
13.3 All disputes between the parties arising out of this MoA or the
definitive JV agreement shall be finally resolved by arbitration
under the provisions of the Arbitration Act (Ontario). The seat of
the Arbitration shall be Toronto. If the parties cannot agree upon
the choice of one arbitrator then each party shall select an
arbitrator and the two so selected shall choose the third.
IN WITNESS WHEREOF the parties hereto have affixed their signatures as follows:
__________________________________ _____________________________________
Gary Hannah, President Neil Raymond, Chairman and CEO
thinWeb.com Corporation Agritek Bio Ingredients Corporation
<PAGE>
EXHIBIT 10.9
SOLUTIONS ALLIANCE AGREEMENT
Informix Software, Inc. ("Informix") and the entity listed in the signature
block below ("Licensee") hereby agree that the terms of this agreement
("Agreement") shall apply to Licensee's use of the Informix products
("Products") made available to Licensee from time to time under this Agreement
and the Informix Solutions Alliance Program (the "Program"). Checked or
blackened boxed below indicate the corresponding terms as applicable to
Licensee.
1. APPOINTMENT OF Licensee Informix appoints Licensee under the Program to act
as (check all that apply):
X Independent Software Vendor ("ISV"). An ISV develops, owns and licenses to
more than one end user, on or more software products (not applications) that are
used in conjunction with a Product.
Platform Provider ("PP") manufactures and/or develops, owns, sells, and
licenses to more than one end user, one or more hardware products that may be
used in connection with a Product. A PP may also manufacture, develop, own,
sell and license software in connection with the hardware.
DataBlade Module Developer ("DMD") develops, owns and licenses, to more than
one end user, one or more DataBlade modules, independently or in conjunction
with a server Product. DMDs shall obtain training from Informix prior to
obtaining Product from Informix.
2. PRODUCTS AND SERVICES
(a) Products
(i) Informix grants and Licensee accepts the grant of a nonexclusive, non-
transferable license to use the Products internally solely for Licensee's
development and support purposes in accordance with the then current Program.
(ii) Licensee shall have no rights to distribute Products to any other third
party.
(iii) If Licensee wishes to internally use the Products outside of the U.S.
Licensee shall purchase the license for such Products from the Informix local
office, or at Informix's direction, an Informix distributor.
(iv) The terms of this Agreement and the Informix "shrink-wrap" end user
license agreement that accompanies each copy of the Products shall govern
Licensee's use of the Products. In the event of a discrepancy between this
Agreement and such end user licenses agreement, the terms of this Agreement
shall prevail.
(b) Services. Licensee shall purchase INFORMIX-Open Line for Partners
("Services") for the Products. Informix may require that Services be provided
through the Informix local office, or at Informix's direction, an Informix
distributor.
(c) Training. Licensee shall be entitled to the training discounts, if any,
as set forth in the then current Program.
3. FEES
(a) Products. Licensee shall pay a license fee ("License Fee") to Informix
for each Product licensed. Such License Fees shall be as set forth in the then
current Program.
(b) Services. For each Product licensed, Licensee shall purchase Services at
the prices set forth in the then current Program.
4. MARKETING
Licensee shall be entitled to marketing tools in accordance with the then
current Program at such time as Licensee's solution becomes generally available.
<PAGE>
5. TERM
The term of this Agreement shall be one year from the Effective Date. This
Agreement will automatically renew for additional one year periods, unless
either party delivers written notice of termination at least 30 days prior to
the expiration of the then current term. Additionally, this Agreement may be
terminated at any time on 30 days prior written notice by either party
specifying a breach of the terms and conditions of the Agreement, provided the
other party does not cure the breach within that period.
6. GENERAL
Informix shall not be responsible for failure to fulfill, or delay in fulfilling
its obligations under this Program due to causes beyond its control. INFORMIX'S
LIABILITY TO LICENSEE ANY OTHER THIRD PARTY, FOR A CLAIM OF ANY KIND ARISING AS
A RESULT OF, OR RELATED TO, ANY PRODUCT OR SERVICE PROVIDED UNDER THIS
AGREEMENT, WHETHER IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE OR STRICT
LIABILITY) UNDER ANY WARRANTY, OR OTHERWISE, SHALL BE LIMITED TO MONETARY
DAMAGES, AND THE AGGREGATE AMOUNT OF SUCH DAMAGES FOR ALL CLAIMS RELATING TO ANY
PARTICULAR PRODUCT OR SERVICE SHALL IN NO EVENT EXCEED THE AMOUNT PAID TO
INFORMIX FOR THE PRODUCT OR SERVICE WHICH GAVE RISE TO THE CLAIM. UNDER NO
CIRCUMSTANCES SHALL INFORMIX BE LIABLE TO LICENSEE OR ANY THIRD PARTY FOR
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
INFORMIX HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
LICENSEE:
thinWEB.com
6 Antares Drive, Phase 3, Suite 101
Ottawa, Ontario K2E 8A9
Randall Hughes, Manager Alliances
July 29, 1999
INFORMIX
Informix Software, Inc.
4100 Bohannon Drive
Menlo Park, California 94025
Attn: General Counsel
Phone: (650) 926-6300
J. Scott Harlan
Senior Managing Counsel, Corporate and Technology
Assistant Secretary
8/2/99
<PAGE>
EXHIBIT 10.10
LOAN AGREEMENT
BETWEEN:
E-CAPITAL MANAGEMENT INC.
14 Slade Crescent
Kanata, Ontario
K2K 2L1
(the "Lender")
OF THE ONE PART
-and-
thinWEB.com CORPORATION
Suite 101, Phase 3
6 Antares Drive
Ottawa, Ontario
K2E 8A9
("ThinWEB")
OF THE OTHER PART
WHEREAS ThinWEB has and will continue to have a need of bridge financing to fund
its operations until such time as it completes a major private placement, public
offering or other significant financing event ("the Significant Financing
Event");
AND WHEREAS the Lender is acting on behalf of shareholders of ThinWEB who are
clients of Lines Overseas Management Limited (listed in Schedule "A") and who
have provided financial assistance to date and have agreed to continue to assist
in thinWEB's financing requirements;
AND WHEREAS the parties agree that it is in the interests of all concerned to
formalize their financing arrangements.
IN CONSIDERATION of the mutual covenants hereinafter set out each party agrees
with the other as follows:
1. The continuing financial support consists of two separate credit
arrangements:
(i) a component of $375,000 CDN to be advanced in tranches of $75,000
every two weeks commencing June 4, 1999 ("Credit Facility A");
(ii) a component of up to $960,000 CDN to be drawn down on an as needed
basis ("Credit Facility B") which is expected to fund ThinWEB
operations through October, 1999.
2. Credit Facility A shall not bear interest.
3. Credit Facility A shall become due and payable upon completion of a
Significant Financing Event and ThinWEB covenants to immediately repay to the
Lender all advances made under Credit Facility A following completion of such
transaction.
4. Credit Facility B shall bear interest at an annual rate of 12%. Interest
shall be calculated and be payable monthly at a rate of 1% per month on the
outstanding balance. ThinWEB shall have the option to pay the interest or have
it added to the outstanding principal balance.
<PAGE>
5. Credit Facility B shall become due and payable upon completion of a
Significant Financing Event and ThinWeb covenants to immediately repay to the
Lender all advances made under Credit Facility B together with accrued interest,
subject to the Lender's option under paragraph 6.
6. In respect of Credit Facility B, the Lender may, at its sole option, elect
to convert all or any portion of the outstanding amount, including accrued
interest, into securities of ThinWEB on the same terms and conditions as such
securities are issued pursuant to a Significant Financing Event, at the time of
such Event.
7. In respect of Credit Facility B, the Lender shall have issued to it, for no
additional consideration, share purchase warrants equal in number to the amount
of the facility which was drawn down divided by the price of ThinWEB shares
issued pursuant to a Significant Financing Event, which warrants shall be
exercisable on the basis of one warrant for one common share, at a strike price
equal to the price at which ThinWEB shares are issued pursuant to a Significant
Financing Event, for a period of one year from the closing of such Event.
8. If a Significant Financing Event occurs which is denominated in U.S.
currency the outstanding amount under Credit Facility B shall be converted from
Canadian dollars accordingly by reference to the Royal Bank of Canada's currency
conversion rate on the date of the Significant Financing Event.
9. The Lender shall be entitled from time to time, if and when it considers
such action to be prudent, to appoint an agent to review any financial, legal or
business records of ThinWEB in order to monitor ThinWEB's use of funds and
operations. Provided that such agent's access to confidential information about
impending sales and alliances may be restricted in such manner as ThinWEB
considers necessary to ensure compliance with any disclosure requirements of the
United States Securities Exchange Commission or similar regulatory authority.
IN WITNESS WHEREOF the parties have executed this Agreement this day of
July, 1999.
E-CAPITAL MANAGEMENT INC.
per:_________________________________
thinWEB.com CORPORATION
per:_________________________________
<PAGE>
EXHIBIT 10.11
MEMORANDUM OF AGREEMENT
between
thinWEB.com Corporation ("thinweb")
and
Lines Overseas Management Limited ("Lines")
Dated September 14, 1999
WHEREAS thinweb has filed an SB-2 registration statement with the Securities and
Exchange Commission ("SEC") for the purposes of a planned initial public
offering ("IPO") in the fall of 1999;
AND WHEREAS thinweb wishes to engage the services of an NASD registered selling
agent to assist with the IPO on a best efforts basis;
AND WHEREAS thinweb requires interim financing, in an amount not to exceed Two
Million United States Dollars ($2,000,000USD) while awaiting approval of the SB-
2 registration statement and commencement of the IPO;
AND WHEREAS Lines wishes to provide the necessary interim financing and arrange
for an NASD registered affiliate to act as selling agent for the IPO.
Now Therefore The Parties Have agreed as follows:
1. Lines will provide, if required, an NASD registrant to act as exclusive
agent to lead the thinweb IPO. Appointment of said agent to be mutually agree
upon by both parties.
2. thinweb agrees to pay a selling commission equal to 5% of the gross
proceeds raised by the IPO on a maximum of four million shares.
3. Lines will make available to thinweb a credit facility of up to USD $2
million. This credit facility can be drawn down by thinweb as required and will
carry an interest rate of 12% per annum. Interest will be calculated and
repayable monthly on any outstanding balance. Any unpaid balance is to be repaid
out of the proceeds of the IPO. Lines has the right to cancel the credit
facility on 5 days written notice in the event that it becomes aware of an
material adverse change in thinweb's financial position or business.
4. The NASD registrant provided by Lines will have the right to include other
NASD members in a selling syndicate provided such NASD members are acceptable to
thinweb.
5. The parties agree to enter into a definitive credit facility agreement and,
if required, a definitive agency agreement with the NASD registrant.
IN WITNESS WHEREOF the parties hereto have affixed their signatures.
.............................. ...................................
Gary T. Hannah, President Brian Lines, President
thinWEB.com Corporation Lines Overseas Management Limited
<PAGE>
EXHIBIT 10.12
THINWEB.COM CORPORATION
STOCK OPTION PLAN
-----------------
1. A Stock Option Plan (herein called the "Plan") for key employees and
directors and officers is hereby established with the intent of advancing the
interests of the Corporation by encouraging and enabling the acquisition of a
share interest in the Corporation by the participants.
2. The Board of Directors, or any committee thereof specifically
designated by the Board of Directors to be responsible therefor, shall from time
to time by resolution designate those key employees, directors and officers if
any, who, in the opinion of the Board of Directors, are largely responsible for
the management and growth of the Corporation and who, as an additional
inducement to promote the best interests of the Corporation, are entitled to
participate in the Plan (herein referred to as the "Participant(s)") and shall
determine the extent and terms of such participation by said participants.
Directors, as directors, and others who are not otherwise bona fide full time
employees of the Corporation shall not be eligible to become Participants in the
Plan unless notice of the participation in the Plan of such person has been
accepted by or approved by any stock exchange or exchanges upon which any of the
Corporation's securities are from time to time listed for trading and any other
applicable regulatory authority. The judgement of the said Board of Directors or
committee thereof in designating Participants and the extent of their
participation shall be final and conclusive; provided, however, that each
designated Participant shall have the right not to participate in the Plan and
any decision not to participate therein shall not affect his employment by or
engagement with the Corporation.
3. The total number of authorized but unissued shares allocated to and
made available to be granted to participants under the Plan shall not exceed
seventeen per cent (17%) of the common shares, as such may from time to time be
issued and outstanding in the capital stock of the Corporation as the same is
presently constituted.
4. Except as provided in paragraph 10 hereof or by the laws of descent
and distribution, the rights of any Participant hereunder are personal to him
and are not assignable.
5. No resident of the United States of America or any territory or
possession thereof may be a Participant in the Plan unless such is done in
accordance with and without violating any securities or other legislation of the
United States of America or any state, territory or possession thereof.
6. The Board of Directors, or any committee thereof specifically
designated by the Board of Directors to be responsible therefor, shall have the
unfettered right to interpret the provisions of this Plan and to make such
regulations and formulate such administrative provisions for carrying this Plan
into effect and to make such changes therein and in the regulations and
administrative provisions therein as, from time to time, the said Board or
committee thereof deems appropriate in the best interests of the Corporation.
The Board
<PAGE>
of Directors shall also have the unfettered right from time to time and at any
time to rescind or terminate the Plan as it shall deem advisable; provided,
however, that no such rescission or termination shall impair or change the
rights and options theretofore granted under the Plan without the prior written
consent of the Participant or Participants affected.
7. The Corporation shall pay all costs of administering the Plan.
8. The exercise price of the shares purchased pursuant to stock options
granted hereunder shall be not less than that from time to time permitted by the
applicable regulations and policies of any stock exchange or exchanges upon
which any securities of the Corporation may from time to time be listed and of
any applicable regulatory authorities.
9. Each option granted hereunder shall be for a term not exceeding five
(5) years, unless the Board of Directors determines otherwise. Each participant
shall execute a Stock Option Agreement in substantially the form annexed hereto
as Exhibit "A" prior to the grant of any stock option to a Participant becoming
effective.
10. In the event of the physical or mental disability, retirement with the
consent of the Corporation or death of the Optionee on or prior to the expiry
date while engaged as a key employee or director or officer of the Corporation,
any option granted hereunder may be exercised up to the full amount of the
optioned shares by the legal personal representative(s) of the Participant at
any time up to and including eighteen (18) months following the physical or
mental disability, retirement or death of the Participant after which date the
option shall forthwith expire and terminate and be of no further force or effect
whatsoever.
11. In the event the Participant's employment by or engagement with (as a
director or otherwise) the Corporation is terminated by the Corporation or the
Participant for any reason other than the Participant's physical or mental
disability, retirement with the consent of the Corporation or death before
exercise of any options granted hereunder, the participant shall have ninety
(90) days from the date of such termination to exercise only that portion of the
option he is otherwise entitled to exercise at the termination date and
thereafter his option shall expire and all rights to purchase shares hereunder
shall cease and expire and be of no further force or effect. Options shall not
be affected by any change of employment so long as the Participant continues to
be employed by the Corporation or any of its subsidiaries or continues to be a
director or officer of one of the foregoing.
12. Subject to the provisions of the Plan, the options granted hereunder
may be exercised from time to time by delivery to the Corporation at its head
office of a written notice of exercise specifying the number of shares with
respect to which the option is being exercised and accompanied by payment in
full of the purchase price of the shares then being purchased by way of cash or
certified cheque in favour of the Corporation. Such notice shall contain the
Participant's undertaking to comply, to the satisfaction of the Corporation and
its counsel, with all applicable requirements of any other stock exchange
<PAGE>
or exchanges upon which any securities of the Corporation are from time to time
listed and any applicable regulatory authorities.
13. Subject to any required action by its shareholders, if the Corporation
shall be a party to any reorganization, merger, dissolution or sale or lease of
all or substantially all its assets, whether or not the Corporation is the
surviving entity, the option shall be adjusted as to apply to the securities to
which the holder of the number of shares of capital stock of the Corporation
subject to the option would have been entitled by reason of such reorganization,
merger or sale or lease of all or substantially all of its assets, provided,
however, that the Corporation may satisfy any obligations to a Participant
hereunder by paying to the said participant in cash the difference between the
exercise price of all unexercised options granted hereunder and the fair market
value of the securities to which Participant would be entitled upon exercise of
all unexercised options, regardless of whether all conditions of exercise
relating to continuous employment have been satisfied. Adjustments under this
paragraph or any determinations as to the fair market value of any securities
shall be made by the Board of Directors, or any committee thereof specifically
designated by the Board of Directors to be responsible therefor, and any
reasonable determination made by the said Board or committee thereof shall be
binding and conclusive.
14. In the event of any subdivision or subdivisions of the common shares
of the Corporation as said common shares were constituted at the time any
options granted hereunder were granted, into a greater number of common shares,
the Corporation will thereafter deliver at the time of exercise thereof in
addition to the number of shares in respect of which the option is then being
exercised, such additional number of shares as a result from said subdivision or
subdivisions of the shares for which the option is being exercised without the
Participant exercising the option making any additional payment or giving any
other consideration therefor.
15. In the event of any consolidation or consolidations of the common
shares of the Corporation as said common shares were constituted at the time
while any options granted hereunder were granted, into a lesser number of common
shares, the Participant shall accept, at the time of the exercise thereof in
lieu of the number of shares in respect of which the option is then being
exercised, the lesser number of shares as result from such consolidation or
consolidations of the shares for which the option is being exercised.
16. In the event of any change of the common shares of the Corporation as
said common shares are constituted at the time while any options granted
hereunder were granted the Corporation shall thereafter deliver at the time of
the exercise thereof the number of shares of the appropriate class resulting
from the said change as the Participant exercising the option would have been
entitled to receive in respect of the number of shares so purchased had the
option been exercised before such change.
17. If the Corporation at any time while any options granted hereunder are
outstanding shall pay any stock dividend or stock dividends upon the shares of
the Corporation in respect of which any options were granted hereunder, the
Corporation will
<PAGE>
thereafter deliver at the time of exercise thereof in addition to the number of
shares in respect of which the option is then being exercised, the additional
number of shares of the appropriate class as would have been payable on the
shares so purchased if they had been outstanding on the record date for the
payment of said stock dividend or dividends.
18. The Corporation shall not be obligated to issue fractional shares in
satisfaction of any of its obligations hereunder.
19. If at any time the Corporation grants to the holders of its capital
stock rights to subscribe for and purchase pro rata additional securities of the
Corporation or of any other corporation or entity, there shall be no adjustments
made to the number of shares or other securities subject to the option in
consequence thereof and the said stock option of the participant shall remain
unaffected.
20. Any stock option granted under the Plan may include a stock
appreciation right, either at the time of grant or by amendment adding it to an
existing stock option; subject, however, to the grant of such stock appreciation
right being in compliance with the applicable regulations and policies of any
stock exchange or exchanges upon which any securities of the Corporation may
from time to time be listed and of any applicable regulatory authorities. The
provisions of the Plan respecting the exercise of stock options and the
adjustments to options arising from certain corporate actions shall apply
mutatis mutandis to all stock appreciation rights granted hereunder.
21. Stock appreciation rights granted hereunder are exercisable to the
extent, and only to the extent, the option to which it is included is
exercisable. To the extent a stock appreciation right included in or attached to
an option granted hereunder is exercised, the option to which it is included or
attached shall be deemed to have been exercised to a similar extent.
<PAGE>
22. A stock appreciation right granted hereunder shall entitle the
participant to elect to surrender to the Corporation unexercised the option in
which it is included, or any portion thereof, and to receive from the
Corporation in exchange therefor that number of shares, disregarding fractions,
having an aggregate value equal to the excess of the value of one share over the
purchase price per share specified in such option, times the number of shares
called for by the option, or portion thereof, which is so surrendered. The value
of a share shall be determined for these purposes by reference to the weighted
average sale price per share on the relevant stock exchange(s) of the shares of
the Corporation subject to the option for the ten (10) trading days preceding
the date the notice provided for in paragraph 23 hereof is received by the
Corporation.
23. Subject to the provisions of the Plan, a stock appreciation right
granted hereunder may be exercised from time to time by delivery to the
Corporation at its head office of a written notice of exercise, which notice
shall specify the number of stock appreciation rights to be exercised and
options to be forfeited and the number of shares the participant elects to
receive thereby. Such notice shall contain the participant's undertaking to
comply, to the satisfaction of the Corporation and its counsel, with all
applicable requirements of any stock exchange or exchanges upon which any
securities of the Corporation are listed for trading and any other applicable
regulatory authority.
Exhibit "A"
STOCK OPTION AGREEMENT
----------------------
This Agreement made as of the day of 19 between THINWEB.COM
CORPORATION, a corporation incorporated under the laws of the State of Delaware
("Corporation"), and
(hereinafter called the "Optionee") as
follows:
1. The Corporation hereby grants to the Optionee the irrevocable option
to purchase up to shares of the authorized and unissued
capital stock of the Corporation, as presently constituted, for cash, at a price
of US$ per share, upon the following terms and conditions:
(a) The option shall be nonexercisable until . On ,
and on each subsequent , to and including , , the
option shall become exercisable with respect to thirty three and one
third percent (33.33%) of the total number of shares subject to the
option (computed in each case to the nearest full share), and all or
any part of the shares as to which the option shall have become
exercisable may be purchased at any time, or from time to time,
thereafter, until expiration or termination of the option. The option
may only be exercised by the Optionee, or by the person or persons
entitled to exercise the same pursuant to the provisions of
subparagraph (d) below, on or prior to, 19 , by the delivery to
----
<PAGE>
the Corporation at its head office of written notice of election to
exercise the same, specifying the number of shares with respect to
which the option is being exercised and accompanied by payment in full
of the purchase price of the shares then purchased by way of cash or
certified cheque in favour of the Corporation. Such notice shall
constitute the Optionee's acknowledgement of and undertaking to comply
to the satisfaction of the Corporation and its counsel, with all
applicable requirements of any stock exchange or exchanges upon which
any securities of the Corporation may from time to time be listed and
of any applicable regulatory authorities. Such requirements may
include the placement of legends on share certificates restricting
transfer of such shares, the making of representations by the Optionee
that he is acquiring such shares for investment and not with a view to
distribution, the filing of any required information or statements
with the aforesaid authorities and the making of arrangements with the
Optionee's employer to withhold income taxes which may become payable
under the Optionee's exercise of an option under this Agreement.
Concurrently with its receipt of any such notice and payment, the
Corporation shall issue the shares purchased by the Optionee. The
Corporation may at its election require that this Agreement be
presented for appropriate endorsement upon any such exercise.
(insert stock appreciation right, if applicable)
(b) The option shall be non-assignable and non-transferable by the
Optionee otherwise than by will or the laws of descent and
distribution or as contemplated in subparagraph (d) hereof.
(c) The option shall expire and all rights to purchase shares hereunder
shall cease and become null and void at 5:00 o'clock p.m. time on
19 _, and the option hereby granted shall expire and all rights
hereunder shall cease at such time or upon the happening of certain
events as hereinafter provided.
(d) In the event of the physical or mental disability, retirement with the
consent of the Corporation or death of the Optionee on or prior to the
expiry date while engaged as an employee, or director or officer of
the Corporation, the option granted may be exercised, up to the full
amount of the optioned shares by the Optionee or the legal personal
representative(s) of the Optionee, as the case may be, at any time up
to and including eighteen (18) months following the physical or mental
disability, retirement or death of the Optionee after which date the
option shall forthwith expire and terminate and be of no further force
or effect whatsoever. For greater certainty, any Optionee who is
deemed to be an employee of the Corporation pursuant to any medical or
disability plan of the Corporation shall be deemed to be an employee
for the purposes of the Plan.
<PAGE>
(e) In the event the Optionee's employment by or engagement with the
Corporation is terminated by the Corporation or the Optionee for any
reason other than the Optionee's physical or mental disability,
retirement or death before exercise of the option contained herein,
the Optionee shall have ninety (90) days from the date of such
termination to exercise only that portion of the option he is
otherwise entitled to exercise at that point of time and thereafter
this option shall expire and all rights to purchase shares hereunder
shall cease and expire and be of no further force or effect. Options
shall not be affected by any change of employment so long as the
Optionee continues to be employed by the Corporation or one of its
subsidiaries or continues to be a director or an officer of one of the
foregoing.
(f) The Corporation shall be entitled at any time to include in or attach
to the stock option contemplated herein a stock appreciation right as
contemplated in the Stock Option Plan referred to in paragraph 4
hereof and where such a stock appreciation right is so included or
attached, the Corporation shall be entitled to require the Optionee
delivering a notice of exercise pursuant to paragraph 1(a) hereof to
elect to exercise his or her stock appreciation right in lieu thereof.
To the extent a stock appreciation right included in or attached to an
option contained herein is exercised, this option shall be deemed to
have been exercised to a similar extent.
(g) Subject to any required action by its shareholders, if the Corporation
shall be a party to any reorganization, merger, dissolution or sale of
all or substantially all of its assets, whether or not the Corporation
is the surviving entity, the option shall be adjusted as to apply to
the securities to which the holder of the number of shares of the
Corporation subject to the option would have been entitled by reason
of such reorganization, merger, dissolution or sale of all or
substantially all of its assets had the option been exercised before
such event provided, however, that Corporation may satisfy any
obligations to the Optionee hereunder by paying to the Optionee in
cash the difference between the exercise price of all unexercised
options granted hereunder and the fair market value of the securities
to which the Optionee would be entitled, upon exercise of all
unexercised options, regardless of whether all conditions of exercise
relating to continuous employment have been satisfied. Adjustments
under this subparagraph (g) or any determinations as to the fair
market value of any securities shall be made by the Board of Directors
of the Corporation, or any committee thereof specifically designated
by the Board of Directors to be responsible therefor, and any
reasonable determination made by the said Board or committee thereof
shall be binding and conclusive.
(h) In the event of any subdivision or subdivisions of the common shares
of the Corporation as said common shares were constituted at the time'
any options granted hereunder were granted, into a greater number of
common shares, the Corporation will thereafter deliver at the time of
exercise thereof in
<PAGE>
addition to the number of shares in respect of which the option is
then being exercised, such additional number of shares as a result
from said subdivision or subdivisions without the Optionee exercising
the option being obligated to make any additional payment or giving
any other consideration therefor.
(i) In the event of any consolidation or consolidations of the common
shares of the Corporation as said common shares were constituted at
the time while any options granted hereunder were granted, into a
lesser number of common shares, the Optionee shall accept, at the time
of the exercise thereof in lieu of the number of shares in respect of
which the option is then being exercised, the lesser number of shares
as result from such consolidation or consolidations.
(j) In the event of any change of the common shares of the Corporation as
said common shares are constituted at the time while any options
granted hereunder were granted, the Corporation shall thereafter
deliver at the time of the exercise thereof the number of shares of
the appropriate class resulting from the said change as the Optionee
exercising the option would have been entitled to receive in respect
of the number of shares so purchased had the option been exercised
before such change.
(k) If the Corporation at any time while any options granted hereunder are
outstanding shall pay any stock dividend or stock dividends upon the
shares of the Corporation in respect of which any options were granted
hereunder, the Corporation will thereafter deliver at the time of
exercise thereof in addition to the number of shares in respect of
which the option is then being exercised, the additional number of
shares of the appropriate class as would have been payable on the
shares so purchased if they had been outstanding on the record date
for the payment of said stock dividend or dividends.
(l) The Corporation shall not be obligated to issue fractional shares in
satisfaction of its obligations hereunder.
(m) If at any time the Corporation grants to its shareholders the right to
subscribe for and purchase pro rata additional securities of the
Corporation or of any other corporation or entity, there shall be no
adjustments made to the number of shares or other securities subject
to the option in consequence thereof and the said option of the
Optionee shall remain unaffected.
2. Nothing in this Agreement shall confer upon the Optionee any right to
continue in the employ of the Corporation or its subsidiaries and nothing herein
contained shall interfere in any way with the right of the Corporation or any of
its subsidiaries to terminate the employment of the Optionee at any time.
3. The Corporation hereby represents to and agrees with the Optionee that
if for any reason, other than the failure or default of the Optionee, the
Corporation is unable
<PAGE>
to issue and deliver the shares of the Corporation as contemplated herein to the
Optionee upon the exercise by the Optionee of the option to purchase any of the
shares covered by this Option, the Corporation will pay, in complete
satisfaction of its obligations hereunder, to the Optionee, in cash, an amount
equal to the difference between the option exercise price and the fair market
value of such shares on the date that Optionee gave notice of such exercise in
accordance with paragraph 1(a) hereof. For purposes of this Agreement, if the
shares subject to this option are traded on a stock exchange or exchanges, the
fair market value shall be the closing sale price on the exchange having the
greatest volume of trading on the last trading day immediately prior to the date
such notice is given.
4. The Optionee acknowledges that, upon any conflict between the terms of
the Stock Option Plan and this Agreement, the terms of this Agreement shall
prevail.
DATED: , 19 _.
_________________________________
(employee name)
THINWEB.COM CORPORATION
By:________________________________
(Officer of Corporation)
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated May 20, 1999, relating
to the December 31, 1998 financial statements of ThinWeb Software Incorporated,
which appears in such prospectus. We also consent to the reference to us under
the heading "Experts" in such prospectus. It should be noted that
PricewaterhouseCoopers LLP has not prepared or certified the information under
the heading "Selected Financial Data" or the June 30, 1999 financial statements
included in such prospectus.
/s/ PriceWaterhouseCoopers LLP
------------------------------
Halifax, Canada Chartered Accountants
October 22, 1999
