Date Filed: October 4, 1999 SEC File No.333-7328
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
AMENDMENT NO. 2 TO FORM SB-2
Registration Statement Under the Securities Act of 1933
CYBERGUIDE ONLINE, INC.
(Exact Name of Issuer as Specified in Its Charter)
Texas 7379 76-0594616
State of Incorporation Primary Standard IndustrialI.R.S. Employer
Classification Code Number Identification Number
16185 Creighton Road, Conroe, Texas 77302 (409) 760-2600
(Address and Telephone Number of Issuer's Principal Offices and Place of
Business)
James B. Tucker
16185 Creighton Road, Conroe, Texas 77302
(409) 760-2600
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: As soon as this Registration
Statement becomes effective.
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the box.|_|
CALCULATION OF REGISTRATION FEE
Title of class oAmount to be Proposed Proposed Amount of
securities to beregistered Maximum maximum Registration Fee
registered offering price paggregate offering
unit price
Common Stock 10,200,000 $0.05 $510,000 $141.78
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a) ,
may determine.
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PROSPECTUS
CYBERGUIDE ONLINE, INC
Maximum of 10,200,000 shares of common stock
Price per share: $0.05
Total proceeds if maximum sold: $510,000
This is the Company's initial public offering so there is no public market for
the Company's shares. However, we hope to have prices for our shares quoted on
the bulletin board maintained by the National Association of Securities Dealers
after we complete our offering.
An investment in our Company is risky, especially given the young age of our
Company. Only people who can afford to lose the money they invest in our Company
should invest in our shares. A full discussion of the risks of owning our shares
begins at page 4 of this Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of our shares or determined if this
prospectus is truthful of complete. Any representation to the contrary is a
criminal offense.
Price to Public Underwriting Discount Proceeds to Issuer
and Commissions or other Persons
Per Share $0.05 None $0.05
Total Maximum $510,000 None $510,000
We will probably sell the shares ourselves and do not plan to use underwriters
or pay any commissions. We will be selling our shares using our best efforts and
no one has agreed to buy any of our shares. There is no minimum amount of shares
we must sale so no money raised from the sale of our stock will go into escrow,
trust or another similar arrangement. We expect to end our offering no later
than June 30, 2000.
The information in this Prospectus is not complete and may be changed. We may
not sell our shares until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
our shares and it is not soliciting an offer to buy our shares in any state
where the offer or sale is not permitted.
October 4, 1999
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Summary of the Offering......................................................1
Risk factors.................................................................2
Use of proceeds..............................................................4
Determination of offering price..............................................7
Dilution....................................................................8
Plan of distribution.........................................................8
Directors, executive officers, promoters and control persons.................9
Securities ownership of certain beneficial owners and management............11
Description of securities...................................................12
Disclosure of commission position on indemnification for securities act
liabilities...............................................................14
Description of business.....................................................14
Managements discussion and analysis or plan of operation....................16
Description of property.....................................................20
Market for common equity and related shareholder matters....................20
Executive compensation......................................................21
Financial statements........................................................21
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Summary of the Offering
Our Company: CyberGuide Online, Inc., is a recently
incorporated Texas corporation. We are in the
business of developing and producing Internet
advertisements for the Dallas Metroplex. We
currently maintain our executive offices at
16185 Creighton Road, Conroe, Texas 77302 (409)
760-2600.
Securities offered: Up to a maximum of 10,200,000 shares of
common stock, no par value per share. The shares
are offered at $0.05 per share for total gross
offering proceeds of $510,000.
Shares of common 0 shares
stock outstanding
before offering:
Shares of common
stock outstanding
after offering,
assuming maximum
amount sold: 10,200,000 shares offered in this offering;
however, if all of our preferred shares were
converted into common stock, 20,700,000 shares of
our common stock would be outstanding.
Shares of preferred 1,050 shares which are convertible into 10,500,000
stock outstanding shares of common stock at the close of this
prior to the offering offering.
convertible into common
stock on a 1:10,000 basis
Terms of the offering: There is no minimum offering. Accordingly, as
shares are sold, we will use the money raised for
our activities. The offering will remain open
until June 30, 2000, unless all of the
shares are sold earlier or we decide to cease
selling efforts.
Use of proceeds: We intend to use the proceeds of this
offering primarily for additional development of
our web page and web pages designed for others and
related activities, for repayment of corporate
debt and for working capital and general corporate
purposes.
Plan of distribution: This is a best efforts offering, with no
commitment by
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anyone to purchase any shares. Our shares will be
offered and sold by our principal executive
officers and directors, although we may use the
services of one or more NASD registered
broker-dealers as selling agent(s) to make offers
and sales on our behalf.
Risk factors
Unless we are able to sell all of the shares offered, we may not be able
to continue as a going concern. We were incorporated in November, 1998, and are,
therefore, a development stage company with a limited operating history. We need
to receive substantially all of the maximum proceeds of this offering to proceed
with our business plan and will require substantial additional capital, for
which no agreements or arrangements are currently in place, to implement our
business plan. Accordingly, our ability to continue as a going concern is
dependent upon us receiving the maximum proceeds of this offering and/or
securing conventional financing.
If the public does not like our web page, we will not succeed due to our
lack of diversification of businesses. If we are successful in selling the
maximum number of shares offered, we will only have enough money to develop our
web page and provide other web services to the public to a limited extent. As a
result, we will not have any real diversification of operations, at least
initially. This will mean that our fortunes will depend significantly upon the
success of our web page; if the public does not like our web page or the related
services, we will not succeed.
This is a "best efforts" offering. This offering is being conducted on a
"best efforts" basis, meaning there is no guarantee as to how much money we will
be able to raise through the sale of our stock. If we fail to sell all the stock
we are trying to sell, our ability to expand and complete our business plan will
be materially adversely effected, and investors may lose all or substantially
all of their investment.
Our success is dependent upon our management. Our success is materially
dependent on the continued services of Mr. Brad Tucker, our President, who
intends to devote full time to the our business. The loss of the services of Mr.
Tucker could have a material adverse effect upon our business and operations
until a suitable replacement may be located.
Dilution to purchasers of our shares will occur. Our company is authorized
to issue a substantial number of shares of common stock in addition to the
shares offered hereby, as well as shares of preferred stock in such series and
with such rights and preferences as may be determined by our Board of Directors
in its sole discretion. The issuance of additional securities could cause
material dilution to
investors in this offering. In addition, this offering itself will cause
immediate and substantial dilution to investors.
Illiquidity of investment in stock. There is currently no market for our
shares and no assurances are given that a public market for our stock will
develop or be sustained if developed. As a result, investors may not be able to
readily dispose of any of our shares.
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Year 2000 problems. The advent of the new millennium on January 1, 2000,
may cause computers that are not Y2K compliant to malfunction, potentially
causing massive disruptions. Although our current computer is, and any computers
to be acquired will be, designed to be Y2K compliant, our success also depends
greatly upon the public having unfettered access to the Internet. As a result,
any problems caused generally to the Internet by Y2K compliance issues will
likely harm the our business as could problems individuals have with their own
computers that are not Y2K compliant, thus limiting their ability to access our
web page or web pages maintained by us.
Use of proceeds
Assuming we are able to sell all of the shares we are offering, we expect
to net approximately $460,000, after deducting the estimated expenses of the
offering of approximately $50,000.
The following table explains our anticipated use of the net proceeds of
this offering, based upon various levels of sales achieved. The entries in this
table are presented in the order or priority to us. Specifically, the first
entry is for the relatively fixed costs associated with conducting this offering
and so are not likely to change. The next entry is for additional web site
development, the primary focus of our business, with the remaining entries
presented in their order of importance to us and our success. In general, the
more shares we are able so sell, the more we will be able to quickly add sales
people to our staff, hire additional programmers to design and maintain web
pages and generally grow our company. There is no minimum amount that must be
sold in this offering and there is no minimum or maximum amount that must be
purchased by each investor. Our receipt of no or nominal proceeds will have a
material adverse effect upon us and our investors.
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Placement of # of Shares # of Shares # of Shares # of Shares #of Shares
Shares @ Sold Sold Sold Sold Sold
$.05 per
Share
2,000,000 4,000,000 6,000,000 8,000,000 10,200,000
Gross $ 100,000 $ 200,000 $ 300,000 $ 400,000 $ 510,000
Funding
Use of
funds
raised:
Costs of the $50,000 $50,000 $50,000 $50,000 $50,000
offering
including
legal,
accounting,
and other
similar fees
Website $10,000 $30,000 $55,000 $77,500 $100,000
Development
Internet
Service $10,000 $30,000 $55,000 $77,500 $100,000
Advertising $10,000 $30,000 $55,000 $77,500 $100,000
Working
Capital $20,000 $50,000 $85,000 $117,500 $160,000
Total Use of
Proceeds $ 100,000 $ 200,000 $ 300,000 $ 400,000 $ 510,000
Because we expect to sell the shares strictly through the efforts of our
officers and directors, the above numbers do not include any deductions for
selling commissions. If broker/dealers are used in the sale of the shares, we
expect to have to pay up to 10% of any gross proceeds raised in this offering to
one or more NASD registered broker-dealers. This would cause the net proceeds to
us to be decreased and the use of proceeds may be reallocated in our
management's sole discretion.
In the event we receive the maximum proceeds of $510,000, owe believe that
these net proceeds, together with anticipated funds from operations, will
provide us with sufficient funds to meet our cash requirements for at least
twelve months following the date these maximum proceeds are raised. As set
forth in the above table, if we receive net proceeds in
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amounts less than the maximum proceeds, this twelve month time frame will
probably be diminished and our business plans will have to be decreased. None of
the offering proceeds we receive will be used to make loans to officers,
directors and/or affiliates.
In January, 1999, we borrowed $11,000 from various individuals to pay our
expenses while this offering is completed. The agreements by which we borrowed
these funds and may borrow in the future provide that the persons who loaned the
money have the right to convert the amounts due to them into our preferred stock
on the basis of 2 shares of preferred stock for each $1,000 loaned. If the
lenders decide to convert their debt into preferred stock and then decide to
convert their preferred stock into common stock, we may issue shares of the
common stock offered hereby to the lenders in satisfaction of the loan
agreements on the basis of one share of common stock for each $0.05 of debt so
converted. In the alternative, we may take part of the proceeds of the offering
to pay these debts.
The allocation of net proceeds of this offering set forth above is based
upon our present plans, assumptions and estimates regarding our intended
operations, anticipated expenditures and revenues. The actual allocation of net
proceeds of this offering may be shifted in our discretion if our assumptions
and estimates concerning anticipated expenditures and revenues are incorrect.
These allocations may also be changed if we experience problems, expenses,
delays or changes in the economic climate and/or our planned business
operations.
Determination of offering price
There is no established public market for our shares. As a result, the
offering price and other terms and conditions relative to our shares have been
arbitrarily determined by us and do not bear any relationship to assets,
earnings, book value or any other objective criteria of value. In addition, no
investment banker, appraiser or other independent, third party has been
consulted concerning the offering price for the shares or the fairness of the
price used for the shares.
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Dilution
At May 31, 1999, our company had a net tangible book value of $1,462. The
following table sets forth the dilution to persons purchasing shares in this
offering without taking into account any changes in our net tangible book value,
except the sale of 10,200,000 shares at the offering price and receipt of
$510,000, less offering expenses estimated at $50,000. The net tangible book
value per share is determined by subtracting total liabilities from our tangible
assets divided by the total number of shares of our common stock outstanding.
The numbers set forth in this table also assume the conversion of all of the
currently outstanding shares of preferred stock into our common stock.
May 31, 1999 10,200,000 shares offered
Purchase price per share less than $0.01 $0.05
Net tangible book value less than $0.01 n/a
per share of
common stock before the
offering(1)
Pro forma net tangible n/a $0.02
book value per share
of common stock after the
offering, assuming all
preferred stock is converted
into common stock
Increase to net tangible n/a approximately $0.02
book value per
share attributable to
purchase of
common stock by new
investors
Dilution to new investors n\a approximately $0.03
(1) Our net tangible book value per share is determined by dividing the number
of shares of common stock outstanding into the net tangible book value of
the company and is significantly less than zero prior to this offering.
Plan of distribution
General. We are offering up to a maximum of 10,200,00 Shares at a price of
$0.05 per Share to be sold by our executive officers and directors. If we sell
the shares through our executive officers and directors, no compensation will be
paid with respect to such sales. However, we may retain a NASD registered
broker-dealer to act as a selling agent in connection with all or part of this
offering and will likely pay a cash
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commission of up to an aggregate of 10% of the proceeds of this offering. Since
this offering is conducted on a "best efforts" basis, there is no assurance that
any of the shares will be sold.
The offering will remain open until June 30, 2000, unless the maximum
proceeds are earlier received or we decode to stop selling our shares. Our
officers, directors and existing stockholders may purchase shares in this
offering.
No escrow of proceeds. There will be no escrow of any of the proceeds of this
offering. Accordingly, we will have use of all funds raised as soon as we accept
a subscription and funds have cleared. These funds shall be non-refundable to
subscribers except as may be required by applicable law.
Directors, executive officers, promoters and control persons
Our directors and executive officers are as follows:
Name Age Position Term of Office
Jim W. Tucker 56 Director, Chairman Until next annual meeting of
stockholders
Bob Ringle 55 Director Until next annual meeting of
stockholders
James B. Tucker 28 Director, President Until next annual meeting of
stockholders
Paul C. Velte, IV 37 Secretary Until next annual meeting of
stockholders
Kenneth Wages 27 Vice President Until next annual meeting of
stockholders
Jim Lawrenz 34 Treasurer Until next annual meeting of
stockholders
There are no other persons nominated or chosen to become directors
or executive officers nor do we have any employees other than above. There is
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no arrangement or understanding between any of our directors or officers
pursuant to which he was elected to his office.
James B. ("Brad") Tucker -Director and President: Mr. Tucker has
devoted 100% of his time serving as a director and our President since our
inception in November, 1998. From 1996 to the formation of our company in
November 1998, , Mr. Tucker worked for American Beverage Company, a bottled
water manufacturing plant. While at American Beverage, Mr. Tucker generated new
marketing and advertising campaigns to aid in the sales of bottled water. Mr.
Tucker was involved in all aspects of the development of American Beverage, from
the initial start up of the company to the end sale of product to grocers. Also
during this period, Mr. Tucker spent over 2000 hours researching computer
hardware, software and Internet operations in preparation for the formulation of
CyberGuide Online. For the period from 1993 until 1996, Mr. Tucker was a
salesman with Silverleaf Resorts in Dallas, Texas, where Mr. Tucker's primary
duties consisted of selling time shares in various properties throughout the
country. James B. ("Brad") Tucker is the son of James W. Tucker.
James W. Tucker - Director and Chairman of the Board of Directors:
In addition to his role as our Chairman of the Board of Directors, Mr. Tucker's
primary focus has been on serving as the Chairman of the Board of Directors and
Vice President of Crossroads Environmental Corp., located in Conroe, Texas for
the previous 6 years. Crossroads Environmental Corp. is engaged in the business
of disposing of non-hazardous waste water in the Conroe area. Mr. Tucker's role
to our company is as an advisor, with several years experience in management.
Mr. Tucker will not likely spend a significant amount of his time in the active
management of our company. Jim W. Tucker is the father of James B. ("Brad")
Tucker.
Robert E. Ringle - Director: In addition to his role as a director of our
company, Mr. Ringle has served as Vice President, Director of Sales and
Treasurer of American Communications Enterprises, Inc., since the inception of
American Communications Enterprises, Inc., in October, 1998. Mr. Ringle has
more than 20 years experience in owning and operating advertising agencies and
marketing companies.
For the period from1997 to the inception of American Communications
Enterprises, Inc., Mr. Ringle served as the Chief Marketing Officer and Director
of Sales for Equicom Inc., a regional radio
broadcasting network.
For the period from 1995 to 1997, Mr. Ringle served as the Chief Executive
Officer of Quadra Group, Inc., a small consulting company specializing in
marketing and management.
For the period from 1993 to 1995, Mr. Ringle served as the Marketing
Director and Sales Manager for Pell Automotive Group, a car dealership in
Tucson, Arizona.
Mr. Ringle's role as solely a director of our company is to provide
marketing and management expertise. Mr. Ringle will not likely spend a
significant amount of his time in the active management of our company.
Paul C. Velte, IV - Secretary. Mr.Velte has served as our secretary since
our inception and is an attorney who has been engaged in the private practice of
law in the Austin, Texas area for the past 5 years.
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Mr. Velte has devoted approximately 20% of his time since September of
1997 in providing legal documents and advise to us. Mr. Velte continues to
represent the company at no charge and will likely continue to do so in
the future. We anticipate that Mr. Velte will spend at least 20% of his time
performing legal services for our the benefit with the rest of his time
spent on his private practice.
Kenneth Wages - Vice president. Mr. Wages has served as a Vice President
of our Company since its inception and has worked as a computer consultant for
the past 5 years, specializing in the design, construction and maintenance of
web pages on the Internet. Mr. Wages has devoted approximately 50% of his time
in the development of our CyberGuide and expects to devote 100% of his time to
our business upon completion of this offering.
Jim Lawrenze - Treasurer. Mr. Lawrenze has served as our Treasurer since
our inception and is an accountant who has been engaged in a private accounting
practice for the last 5 years. Mr Lawrenze has devoted 20% of his time since the
inception of our company to the development of our company and expects to devote
50% of his time upon completion of this offering to our company, with the rest
of his time devoted to his accounting practice.
Directors. All of our Directors serve for one year periods. We presently
expect to conduct our first annual meeting of shareholders and directors in
November, 1999 at which time directors will again be elected. All directors
serve for a period of one year unless removed in accordance with our bylaws.
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Securities ownership of certain beneficial owners and management
The following table sets forth certain information with respect to the
beneficial ownership of our common stock before and after giving effect to the
sale of the maximum number of shares of common stock offered. All shareholders
have sole voting and investment power over the shares beneficially owned.
Included within this table is information concerning each stockholder who owns
more than 5% of any class of our securities, including those shares subject to
outstanding options. Although our officers or directors may purchase shares in
this offering, the following amounts assume that our officers or directors do
not purchase any additional shares.
Title of Name and Address of Amount Amount % of % of
Class Owner Owned Owned Class, Class,
before the after the Before After
Offering Offering offering offering
and and
conversion conversion
Preferred James B. Tucker 525 5,250,000 50% 25.36%
Stock 4300 Horizon N. Parkway Preferred Common
Suite 915 Shares Shares
Dallas, Texas 75287
Preferred Jim Lawrenz 157.5 1,570,000 15% 7.58%
Stock 826 Wildwood Dr. Preferred Common
Grapevine, Texas 75061 Shares Shares
Preferred Paul C. Velte, IV 157.5 1,570,000 15% 7.58%
Stock 1122 Colorado Preferred Common
Suite 2320 Shares Shares
Austin, Texas 78701
Preferred Kenneth Wages 210 2,100,000 20% 10.14%
Stock 5502 Montclair Preferred Common
Colleyville, TX 76034 Shares Shares
DESCRIPTION OF SECURITIES
Current Capital Structure. As of the date of this Prospectus, our Company
has 100,000,000 shares of common stock, par value $0.001, authorized, with no
shares outstanding, and 10,000,000 shares of preferred stock, par value $0.01,
authorized, with 1,050 shares outstanding. If the maximum number of shares
offered in this Prospectus are purchased, and assuming the conversion of all the
outstanding preferred shares, there will be a total of 20,700,000 shares of
common stock issued and outstanding.
Common Stock. The holders of common stock are entitled to one vote for
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each share held of record on all matters to be voted on by the shareholders.
There is no cumulative voting with respect to the election of directors, with
the result that the holders of more than 50 per cent of the shares voted for the
election of directors can elect all of the directors. The holders of common
stock are entitled to receive dividends when, as and if declared by the board of
directors out of funds legally available therefor. In the event of liquidation,
dissolution or winding up of our company, the holders of common stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been made for each
class of stock, if any, having preference over the common stock. All of the
outstanding shares of common stock are, and the shares of common stock offered
hereby when issued for the consideration set forth in this Prospectus, will be
fully paid and non-assessable.
Preferred Stock. The Company has 10,000,000 shares of preferred stock
authorized. At present, we have designated 1,100 shares of our preferred stock
as Series A Preferred Stock. The Series A Preferred Stock, with respect to
rights on liquidation, dissolution or winding up of the affairs of the company,
ranks prior to the common stock. Specifically, in the event of a liquidation of
our company, the holders of the Series A Preferred Stock shall be entitled to
receive out of our assets, prior to the distribution of our assets to the
holders of the common stock, an amount of cash per share equal to $1,000.00 per
share of Series A Preferred Stock. The Series A Preferred Stock also carries
voting rights, with each share of Series A Preferred Stock entitled to 10,000
votes. Finally, the Series A Preferred Stock is convertible into shares of the
common stock on the basis of one share of preferred stock for 10,000 shares of
common stock. The preferred stock is convertible into common stock at the
earlier of two events; the selling of all shares in this offering or 18 months
from the date of this Prospectus.
In addition to the Series A Preferred Stock, our board of directors is
empowered, without shareholder approval, to issue additional series of preferred
stock with such designations, rights and preferences as they may from time to
time determine. Thus, preferred stock, if issued, could have dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the common stock. Preferred stock, if issued,
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of our company.
Options and Warrants to Purchase Securities We do not have any outstanding
options or warrants to purchase common stock.
Debt Securities. Prior to December 31, 1998, as reflected in our financial
statements, we borrowed $4,000 from various individuals to pay our expenses
while this offering is completed. In addition, in January, 1999, we borrowed an
additional $7,000 for the same purposes. The agreements by which we borrowed
these funds and may borrow in the future provide that the persons who loaned the
money have the right to convert the amounts due to them into our preferred stock
on the basis of 2 shares of preferred stock for each $1,000 loaned. If the
lenders decide to convert their debt into preferred stock and then decide to
convert their preferred stock into common stock, we may issue shares of the
common stock offered
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hereby to the lenders in satisfaction of the loan agreements. In the
alternative, we may take part of the proceeds of the offering to pay these
debts.
Dividend Policy. To date, we have not paid any dividends. The payment of
dividends, if any, on the common stock in the future is within the sole
discretion of our Board of Directors and will depend upon our earnings, capital
requirements and financial condition, and other relevant factors. Our Board of
Directors does not intend to declare any dividends on the common stock in the
foreseeable future, but instead intends to retain all earnings, if any, for use
in our business operations.
Transfer Agent and Registrar. We intends to use Signature Stock Transfer,
Inc., in Dallas, Texas as our transfer agent for the common stock.
Disclosure of commission position on
indemnification for securities act
liabilities
Article Eleven of the Articles of Incorporation of the company provides
that the company shall indemnify its officer or directors against expenses
incurred in connection with the defense of any action in which they are made
parties by reason of being officers or directors of the company, except in
relation to matters as to which such director or officer shall be adjudged in
such action to be liable for negligence or misconduct in the performance of his
duty. One of our officers or directors could take the position that this duty on
behalf of the company to indemnify the director or officer may include the duty
to indemnify the officer or director for the violation of securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the company pursuant to the company's Articles of Incorporation,
Bylaws, Texas law or otherwise, we have 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 us of expenses incurred or payed by a director, officer or
controlling person of the company and 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, we will, unless in the opinion
of its counsel the matter has been settled by a controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
Description of business
History of our company. CyberGuide Online, Inc. is a recently organized
Texas corporation, incorporated under the laws of the State of Texas in
November of 1998. We are in the business of developing and producing Internet
advertisements for the Dallas Metroplex.
Operations - Basic Direction. CyberGuide Online is hoping to be Dallas,
Texas' most comprehensive and easy to use "Yellow Pages" on the Internet. Our
management started developing the CyberGuide in mid 1996 and worked through 1997
to get it ready for its launch in January of 1998. Since that time, we have
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received indications of interest from various businesses to advertise their
business to the Dallas Metroplex. With expanded resources in the marketing,
selling, and advertising departments, we hope to grow our customer base rapidly.
Currently, our operations consist primarily of designing, maintaining and
operating we pages for various clients. Specifically, we currently own, operate
and maintain two web sites, found at www.cyberdallas.com and
www.cyberguideonline.com. In addition, we currently maintain on behalf of our
clients, the following web pages:
www.adif.com
www.aessonline.com
www.shawflorist.com
www.omnipro.com
www.hairgrower.com
www.aallappliance.com
www.arvillas.com
www.avantipools.com
www.stormdoorexpress.com
www.alphachipiomega.com
www.jaegerplumbing.com
www.modsystems.com
www.atrci.com
www.finethings.net
www.addisonframing.com
www.awarch.net
www.westplumbing.com.
www.1stexecutives.com
www.1stexecutives.net
Our company is operated by four principals. These four principals consist
of a sales and marketing director, web master, accountant, and attorney. We want
to hire a larger sales staff and increase our marketing capabilities.
The CyberGuide Online web site was designed as an Internet site with
listings and categories for the city of Dallas and all of its surrounding
suburbs, ie. the "CyberGuide ". The CyberGuide is like having the Yellow Pages
at your fingertips. Of course, because our web site is on the internet, our
CyberGuide can only be reached through computers that have access to the
internet.
Other companies similar to ours buy extensive lists of businesses and add
them to their listings. The only businesses listed on the CyberGuide will be
companies that have bought advertising space and/or spoken with one of our sales
representatives. Every potential customer that spends about 30 minutes with one
of our representatives will receive a free listing on the CyberGuide. We believe
this will build a customer base for the future. Our company offers a "Web Site"
and an "Information Site".
We believe our business to be unique in the Internet advertising market.
Other companies build individual web pages for businesses and link them to their
site. These other companies typically charge more than we do for creation and
storage fees. We believe that our main competitor will probably be the local
yellow pages although, unlike the yellow pages, our web page can only be
accessed via a computer with a connection to the internet. There are 16
surrounding cities in the Dallas Metroplex. Residents of these cities do not
usually obtain, manage, and store over 16 phone books. For those persons with a
computer and access to the internet, our CyberGuide will be easily accessible.
We want to do mass media advertising in the Dallas Metroplex for our
services. We hope that this campaign will give us a competitive edge over our
competition, including the "Yellow Pages".
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16
<PAGE>
If we are successful enough to start our free internet service provider, we hope
to greatly expand the economic reach of our company.
Background on the internet industry. The internet's brief and meteoritic
existence provides little historic performance data. From a few hundred thousand
users seeking information, entertainment and commerce in the early 1990's, the
Internet community has grown significantly in the 1990s. Only a few short years
ago, Internet companies were struggling to carve out revenue and many Internet
sites offered free information posted by various entities with links to related
and unrelated sites. Now, as reported by Advertising Age, billions of dollars in
revenue are generated from advertising, Website development and retailing.
Major electronic manufacturers have products and/or are developing
integrated Internet products for next generation home systems and mobile
systems. Future delivery of the Internet is slated to arrive via increased cable
usage and/or satellite to multi-purpose home entertainment systems that will
function as Internet links, computers, radios and TV sets. Cellular phones
currently can connect to the Internet as well as automobile radios.
Trends in Ad Revenues. Currently, as reported by Advertising Age, the most
lucrative Internet advertising comes from banner advertising. Banner advertisers
pay for "hits" or "impressions" based on the number of user exposures to their
ads. National brands in every industry are now using the Internet as part of an
integrated approach to marketing. According to Advertising Age, local and
regional web sites offer similar opportunities to local and regional
advertisers.
Competition. Competition within the Internet community will be fierce.
Internet "audiences" will continue to be exposed to newspaper, TV, radio, direct
mail, etc. The advantages of the Internet lie in the totality of content and the
ability to deliver messages in audio and visual media twenty-four hours a day,
seven days a week. The disadvantages are that you must have a computer and
access to the internet to be able to participate in activities on the internet.
Summary of industry attractiveness. We believe the Internet industry will
prevail as the media of choice in the foreseeable future. The ability to access
users should offer the opportunity for increased revenues in advertising.
Managements discussion and analysis
or plan of operation
If we are successful in selling all of the shares offered hereby, we
believe the $510,000 generated thereby will be sufficient to maintain our
operations for at least 12 months after completion of the offering. If we raise
less than $510,000, we will have to limit our operations and sales efforts which
could delay or possibly destroy any growth of our company.
To allow us to continue in business until the completion of this offering,
in December, 1998, we borrowed $4,000 from various individuals as set forth in
our financial statements and also borrowed an additional $7,000 for the same
reasons in January, 1999, subsequent to the date of our financial statements.
14
17
<PAGE>
Our basic financing plan involves obtaining listings of various businesses
in the city of Dallas and all of its surrounding suburbs. The only businesses
listed on the CyberGuide are companies that have bought advertising space and/or
spoken with one of our sales representatives. We offer a "Web Site" and an
"Information Site".
An Information Site is basically the same thing as a full page
advertisement in the Yellow Pages that is easy to access for all people who have
a computer and access o the internet. However we think that a listing on our
service will be significantly cheaper than a listing in the Yellow Pages.
Initially, we expect to charge $50 per month for an Information Site. Unlike the
local yellow page advertisements, we will offer our customers e-mail
capabilities and site counters to show how many people have accessed their site.
Information Sites are very informative and can have multiple colors and be
animated.
We are offering these packages for a small setup fee and a monthly fee of
$50 for the first 1,000 customers. The next 15,000 business listed on our
service will pay $100 per month. We anticipate using the monthly fees from our
advertisers to advertise the CyberGuide on all forms of media in and around the
Dallas Metroplex.
If we are successful in reaching 1,000 advertisers, we anticipate then
launching an internet service provider ("ISP") to the Dallas Metroplex. We
currently anticipate that this will be offered initially to 40,000 users in
5,000 user blocks. There will be a one time setup fee of $99 and offered free
thereafter. To substitute for the free monthly services, we anticipate that
there will be Dallas Business Banner Advertisements at the top or bottom of our
browser, 24 hours daily. We feel this will insure our advertisers a captured
audience of consumers in the Dallas area.
We have been working with local television and radio stations for
sponsorship campaigns. Currently, we are attempting to come to terms with a
local radio station called "The Eagle 97.1". We have also been in contact with a
company call Net Talk Live. Although these contacts are interested in working
out sponsorship for our company, we need initial advertising campaigns of our
own to make the business more attractive for larger sponsors.
There are currently over 8 million consumers in the Dallas Metroplex.
Currently, there are 16 cities in and around the Dallas Metroplex proposed to be
listed on the CyberGuide. CyberGuide currently anticipates all 16 cities will
have their own business section, with a business banner at the top of every
city. This city banner advertisement will cost $100 per month for each city.
Each city has 26 alphabetical listing categories, with each category having at
least 25 sub-categories of business types. One business per category will be
offered a banner at the top of their respective category for an additional $50
per month.
Currently, our business plan is based solely on the Dallas Metroplex. In
the future, we want to market the Fort Worth and Houston, Texas areas. If
successful in Dallas, Fort Worth and Houston, we may then move into markets in
other regions of the country.
Operations - First Phase. The first phase of our plan will emphasize our
business information sites and web sites. These sites will be sold to business'
throughout the Dallas Metroplex. The first
15
18
<PAGE>
1,000 businesses will pay a $50 setup fee for their advertisements. All of the
other businesses will be charged a setup fee of $100. We anticipate using these
setup fees to advertise the online guide on all forms of media to the Dallas
Metroplex.
There are sixteen cities already listed on the CyberGuide. Each city has
business categories filtered throughout the guide from A to Z (ie. Accounting,
Automotive, Appliances etc.). We plan to market our CyberGuide to all businesses
in the Dallas Metroplex.
Operations - Second Phase. In the second phase of our plan, we anticipate
developing and selling the City Banners and the City Category Banners. There are
sixteen cities listed on the CyberGuide, and each city will have its own City
Banner. One business will be able to place an advertisement at the top of their
respective city page. This City Banner will cost $100 per month.
All sixteen cities have business categories from A to Z (ie. Accounting,
Automotive, Appliances etc.). Each business category will have its own banner.
Each city has 26 alphabetical listing categories. Each category will have at
least 25 sub-categories of business types. One business per category will be
offered a banner at the top of their respective category for an additional $50
per month.
16
19
<PAGE>
[GRAPHIC OMITTED]
17
20
<PAGE>
Operations - Third Phase. In the Third Phase of our plan, we hope to start
our own ISP. If we reach 1,000 advertisers, we hope to then launch an Internet
Service Provider in the Dallas Metroplex that only charges a one time setup fee
of $99 and is offered free thereafter. Initially, this is anticipated to be
offered to 40,000 users in 5,000 user blocks. To substitute for the free
services, there will be Dallas Business Banner Advertisements at the top or
bottom of the browser 24 hours daily. We feel this will insure our advertisers a
captured audience of consumers in the Dallas area.
Expansion Plans to Other Cities. We hope to establish our basic market
strategy in the Dallas/Ft. Worth Metroplex area. Assuming that our efforts are
successful, we then plan to expand our realm of operations by introducing a
similar market into the Houston, Texas and the Los Angeles, California areas. If
our efforts in Dallas, Houston and Los Angeles are successful and we think the
same to be prudent at the time, we could expand our operations to even more
cities, perhaps even worldwide.
Description of property
We are newly organized and has conducted limited activities. At the
present time, we have only one computer and plan to purchase additional computer
equipment at the close of this offering. We are currently using free office
space in Conroe, Texas provided by Crossroads Environmental Corp., a company
controlled by Jim W. Tucker, the chairman of our board. After completion of this
offering we expect to lease office space in Dallas, Texas from an unaffiliated
party.
Market for common equity and related shareholder matters
We are newly organized and this is our initial public offering so there is
currently no public trading market for our common stock. In addition, at this
time we have not taken any steps to establish a public market for our stock.
However, after we have completed this offering, we expect to apply to the
National Association of Securities Dealers to have our common stock prices
listed on the bulletin board maintained by the NASD. To be eligible to have our
common stock quoted on the bulletin board, we will be required to be a
"reporting company", a step the Company will attempt to accomplish after the
effective date of this registration statement. We expect to contact members of
the brokerage community to have a registered broker act as our market maker. Our
market maker will then submit quotes for our stock to the NASD so that our
shares can be publically traded.
None of our common stock is subject to outstanding options to purchase. We
have not agreed to register any our stock for anyone nor do we presently have in
effect employee stock options or benefit plan that would involve the issuing of
additional shares of our common stock.
Our existing shareholders collectively own 1,050 shares of our preferred
stock which is convertible on the basis of 10,000 shares of common stock for
each share of preferred stock for a total amount of common stock of 10,500,000
shares. All of this stock is "founder's stock" and was issued without
registration under the Securities Act. Because the stock owned is not
registered, it is "restricted stock" within the meaning of Rule 144 under the
Securities Act and may only be sold in accordance with the various rules and
regulations of Rule 144. Specifically, after the shareholders have held their
stock for a
18
21
<PAGE>
period of at least one year, they could begin to sell part of their stock.
Generally speaking, the amount of stock that each of the shareholders could sell
could not exceed one percent (1%) of our outstanding common stock during any
ninety (90) day period. If the maximum number of shares are sold under this
offering, and assuming the conversion of all of the preferred stock into common
stock, the total number of shares of common stock outstanding after the offering
and conversion will be 20,700,000 shares. As a result, each of the shareholders
could sell up to 207,000 shares during any ninety (90) day period. Although the
shareholders do not have any present intention to sell any of their shares, the
sale of a large block of our common stock could depress the per share price of
our common stock.
Rule 144 is conditioned upon us making public certain information.
Although we do not currently make information publically available that would
allow us to use Rule 144, we will be required to make such information available
after this registration statement becomes effective so shareholders could sell
the amount set forth in Rule 144.
We have never paid dividends and do not expect to declare any in the
foreseeable future. Instead, we expect to retain all earnings for our growth.
Although we have no specific limitations on our ability to pay dividends, the
corporate law of Texas, the State under which we are organized, limits the
ability to pay dividends to those instances in which we have earnings and
profits. If we are unable to achieve earnings and profits in a sufficient amount
to satisfy the statutory requirements of Texas, no dividends will be made, even
if our Board of Directors otherwise wanted to pay dividends. Investors should
not purchase shares in this offering if their intent is to receive dividends.
Executive compensation
Our directors do not currently receive any compensation for serving as a
director of the company. In addition, at present, there are no ongoing plans or
arrangements for compensation of any of our officers. However, we expect to
adopt a plan of reasonable compensation to its officers and employees when and
if we become operational and profitable.
We do not presently have a stock option plan but intend to develop an
incentive-based stock option plan for our officers and directors in the future.
Financial statements
The following are our financial statements, with independent auditor's
report, for the period ending May 31, 1999.
19
22
<PAGE>
CyberGuide Online, Inc.
(A Development Stage Enterprise)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Independent Auditors' Report F-2
Financial Statements as of and for the five months ended May 31, 1999, as of and
for the period November 19, 1998 (date of incorporation) to December 31, 1998
and as of and for the period November 19, 1998 (date of incorporation) to May
31, 1999.
Balance Sheets F-3
Statements of Operations F-4
Statement of Stockholder's Deficit F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
F-1
23
<PAGE>
[Letterhead of Beard, Nertney, Kingery, Crouse & Hohl P.A.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of CyberGuide Online, Inc:
We have audited the balance sheets of CyberGuide Online, Inc. (the "Company"), a
development stage enterprise, as of May 31, 1999 and December 31, 1998 and the
related statements of operations, stockholder's deficit and cash flows for the
five months ended May 31, 1999, the period November 19, 1998 (date of
incorporation) to December 31, 1998 and the period November 19, 1998 (date of
incorporation) to May 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates
made by management, as well as the overall financial statement presentation. We
believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of May 31, 1999
and December 31, 1998 and the results of its operations and its cash flows for
the five months ended May 31, 1999, the period November 19, 1998 (date of
incorporation) to December 31, 1998 and the period November 19, 1998 (date of
incorporation) to May 31, 1999 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes A and B to the
financial statements, the Company is in the development stage and will require a
significant amount of capital to commence its planned principal operations and
proceed with its business plan. As of the date of these financial statements, an
insignificant amount of capital has been raised, and as such there is no
assurance that the Company will be successful in its efforts to raise the
necessary capital to commence its planned principal operations and/or implement
its business plan. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to this
matter are described in Note B. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Beard, Nertney, Kingery, Crouse & Hohl P.A.
June 15, 1999
Tampa, FL
F-2
24
<PAGE>
CyberGuide Online, Inc.
(A Development Stage Enterprise)
BALANCE SHEETS
- --------------------------------------------------------------------------------
May 31, 1999 December 31,
1998
------------- --------------
ASSETS
Computer equipment-net $ 1,337 $ 1,462
------------- --------------
TOTAL $ 1,337 $ 1,462
============= ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Accrued liabilities $ 33,238
Shareholder advance 4,000
-------------
Total liabilities 37,238
-------------
STOCKHOLDERS' DEFICIT:
Preferred stock - $.01 par value: 10,000,000
shares Authorized; 1,050 shares issued and
outstanding with a liquidation value of
$1,050,000 10 $ 10
Common stock - $.001 par value; 100,000,000
shares Authorized; zero shares issued and
outstanding 0 0
Additional paid-in capital 1,490 1,490
Deficit accumulated during the development stage (37,401) (38)
------------ --------------
Total stockholders' deficit (35,901) 1,462
------------ --------------
TOTAL $ 1,337 $ 1,462
============ ==============
- --------------------------------------------------------------------------------
See notes to financial statements
F-3
25
<PAGE>
<TABLE>
CyberGuide Online, Inc.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the period For the period
November 19, November 19,
For the 1998 (date of 1998 (date of
five months incorporation) incorporation)
ended May 31, to December 31, to May 31, 1999
1999 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
EXPENSES:
Professional fees $ 33,238 $ 33,238
Salaries 3,500 3,500
Rent expense - related party 500 500
Depreciation expense 125 163
$ 38
----------------- ----------------- -----------------
NET LOSS $ 37,363 $ 38 $ 37,401
================= ================= =================
NET LOSS PER SHARE:
Basic $ 0 $ 0 $ 0
================= ================== =================
Weighted average number of shares 0 0 0
Diluted $ .01 $ .01 $ .01
================= ================== =================
Weighted average number of shares 10,500,000 10,500,000 10,500,000
================= ================== =================
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements
F-4
26
<PAGE>
<TABLE>
CyberGuide Online, Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDER'S DEFICIT
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Deficit
Accumulated
Preferred Stock Common Stock Additional During the
Paid- Development
Par Par
Shares Value Shares Value in Capital Stage Total
---------- -------- ---------- -------- ---------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, November 19, 1998
(date of incorporation) 0 $ 0 0 $ 0 $ 0 $ 0 $ 0
Issuance of preferred stock
for computer 1,050 10 1,490 1,500
Net loss for the period,
November 19, 1998
(date of incorporation)
to May 31, 1999 (37,401) (37,401)
---------- ----------- ---------- ---------- ------------------- -------------- -------------
Balances, May 31, 1999 1,050 $ 10 0 $ 0 $ 1,490 $ (37,401) $ (35,901)
========== =========== ========== ========== =================== ============== =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements
F-5
27
<PAGE>
<TABLE>
CyberGuide Online, Inc.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------- -- ------------- --- ---------------- --- ----------------
<CAPTION>
For the period For the period
November 19, November 19,
For the 1998 (date of 1998 (date of
five months incorporation) incorporation)
ended May to December to May 31, 1999
31, 1999 31, 1998
------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
Net loss $ (37,363) $ (38) $ (37,401)
Adjustment to reconcile net loss to
cash used in operating activities:
Depreciation 125 38 163
Increase in accrued liabilities 33,238 33,238
------------- ---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (4,000) 0 (4,000)
------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES-
Advance from shareholder 4,000 0 4,000
------------- ---------------- ----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 0 0 0
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 0 0 0
------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 0 $ 0 $ 0
============= ================ ================
TAXES PAID $ 0 $ 0 $ 0
============= ================ ================
INTEREST PAID $ 0 $ 0 $ 0
============= ================ ================
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the period ended November 19, 1998 (date of incorporation) to December
31, 1998, assets and Stockholders' equity increased by $1,500 when a computer
was contributed to the Company.
- --------------------------------------------------------------------------------
See notes to financial statements
F-6
28
<PAGE>
CyberGuide Online, Inc.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
CyberGuide Online, Inc. (the "Company") was incorporated under the laws of the
state of Texas on November 19, 1998. The Company, which is considered to be in
the development stage as defined in Financial Accounting Standards Board
Statement No. 7, intends to operate a yellow pages advertising business on the
Internet. The planned principal operations of the Company have not commenced,
therefore accounting policies and procedures have not yet been established.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company will require a
significant amount of capital to commence its planned principal operations and
proceed with its business plan. Accordingly, the Company's ability to continue
as a going concern is dependent upon its ability to secure an adequate amount of
capital to finance its planned principal operations and/or implement its
business plan. The Company's plans include a public offering of its common stock
(see Note G) and the issuance of debt, however there is no assurance that they
will be successful in their efforts to raise capital. This factor, among others,
may indicate that the Company will be unable to continue as a going concern for
a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
F-7
29
<PAGE>
NOTE C - RELATED PARTY TRANSACTIONS
During the period November 19, 1998 (date of incorporation) to December 31,
1999, a shareholder contributed a computer valued at $1,500 in consideration for
preferred shares. In addition, during the five months ended May 31, 1999, a
shareholder advanced $4,000 to the Company. The advance is unsecured,
non-interest bearing and due on demand.
NOTE D - INCOME TAXES
During the period November 19, 1998 (date of incorporation) to May 31, 1999, the
Company recognized losses for both financial and tax reporting purposes.
Accordingly, no deferred taxes have been provided for in the accompanying
statement of operations.
At May 31, 1999, the Company had a net operating loss carryforward of
approximately $37,000 for income tax purposes. This carryforward is available to
offset future taxable income through the period ended May 31, 2019. The deferred
income tax asset arising from this net operating loss carryforward is not
recorded in the accompanying balance sheet because the Company established a
valuation allowance to fully reserve such asset as its realization did not meet
the required asset recognition standard established by SFAS 109.
NOTE E - CONVERTIBLE PREFERRED STOCK
The Company has issued 1,050 shares of preferred stock designated as Class A to
certain directors and officers. Each of the preferred shares contain the
following rights and preferences: (1) entitlement to dividends as may be
declared by the Board of Directors in preference and priority to any dividends
on any other class of capital stock, (2) voting rights equal to 10,000 shares of
common stock, (3) liquidation preference equal to $1,000 per share and (4)
convertible into 10,000 common shares upon the earlier of May 1, 2000 or the
Company completing an offering of common stock by raising $500,000. The
conversion rates described above are subject to proportional adjustment in the
event of a stock split, stock dividend or similar recapitalization event
effecting such shares.
With respect to liquidation, preferred shareholders have certain specific rights
of preference over the common shareholders prior to any distribution of assets
or funds to common shareholders.
NOTE F - LOSS PER SHARE
The Company computes net loss per share in accordance with SFAS No. 128
"Earnings per Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No.
98 ("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net
loss per share is computed by dividing the net loss available to common
stockholders for the period by the weighted average number of
F-8
30
<PAGE>
common shares outstanding during the period. Diluted net loss per share is
computed by dividing the net loss for the period by the number of common and
common equivalent shares outstanding during the period. Common equivalent
shares, composed of incremental common shares issuable upon the conversion of
Class A preferred stock, are included in diluted net loss per share to the
extent such shares are dilutive. The following table sets forth the computation
of basic and diluted net loss per share:
<TABLE>
<CAPTION>
For the period For the period
November 19, 1998 November 19, 1998
For the five (date of (date of
months ended incorporation) to incorporation) to
May 31, 1999 December 31, 1998 May 31, 1999
----------------- ------------------- --------------------
<S> <C> <C> <C>
Numerator
Net loss available to common
stockholders $ 37,363 $ 38 $ 37,401
================= =================== ====================
Denominator
Weighted average shares 0 0 0
================= =================== ====================
Denominator for basic calculation 0 0 0
================= =================== ====================
Weighted average effect of dilutive
securities-
Class A Preferred Stock 10,500,000 10,500,000 10,500,000
----------------- ------------------- --------------------
Denominator for diluted calculation 10,500,000 10,500,000 10,500,000
================= =================== ====================
Net loss per share:
Basic $ 0 $ 0 $ 0
================= =================== ====================
Diluted $ .01 $ 0 $ .01
================= =================== ====================
</TABLE>
NOTE G - PROPOSED COMMON STOCK OFFERING
The Company has filed a registration statement for the sale of up to 10,200,000
shares of the Company's common stock at $0.05 per share. The existing
shareholders do not intend to offer any shares for sale. The offering is on a
best-efforts, no minimum basis. As such, there will be no escrow of any of the
proceeds of the offering and the Company will have the immediate use of such
funds to finance its operations.
- --------------------------------------------------------------------------------
F-9
31
<PAGE>
Part II - Information not required in prospectus
Indemnification of directors and officers
Article Eleven of the Articles of Incorporation of the Company provides
that the Company shall indemnify its officer or directors against expenses
incurred in connection with the defense of any action in which they are made
parties by reason of being officers or directors of the Company, except in
relation to matters as to which such director or officer shall be adjudged in
such action to be liable for negligence or misconduct in the performance of his
duty. An officer or director of the Company could take the position that this
duty on behalf of the Company to indemnify the director or officer may include
the duty to indemnify the officer or director for the violation of securities
laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the Company's Articles of Incorporation,
Bylaws, Texas law or otherwise, the Company 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 Company of expenses incurred or payed by a director, officer or
controlling person of the Company and 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 Company will, unless in the
opinion of its counsel the matter has been settled by a controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
1
32
<PAGE>
Other expenses of issuance and distribution
The following is an itemized list of the estimate by the Company of the
expenses of the offering:
Type of Expense Amount
Accounting Fees $ 11,000.00
Filing Fees $ 1,000.00
Attorneys Fees $ 35,000.00
Transfer Agent Fees $ 1,000.00
Printing Costs $ 2,000.00
TOTAL $ 50,000.00
RECENT SALES OF UNREGISTERED
SECURITIES
On or about November 20, 1998, the Company was incorporated under the laws
of the State of Texas. Effective as of November 21, 1998, we issued a total of
1,050 shares of its preferred stock to the four founders of our Company, James.
B. Tucker, Paul C. Velte, IV, Jim Lawrenz, and Kenneth Wages. The federal
exemption we relied upon in issuing the securities was Section 4(2) of the
Securities Act. The Section 4(2) exemption was available to us because we did
not solicit any investment in the company and instead simply issued shares to
our four founders, Messrs Tucker, Velte, Lawrenz and Wages. In addition, given
Messrs Tucker, Velte, Lawrenz and Wages' involvement in the establishment of the
company, they each had access to such information as they deemed necessary to
fully evaluate an investment in our company. In addition, the issuance of the
shares of stock to Messrs Tucker, Velte, Lawrenz and Wages was exempt under the
laws of the State of Texas, the State in which all persons resided at the time
of the commencement of the company, pursuant to Section 5 I. (a) of the Texas
Securities Act. Section 5 I. (a) of the Texas Securities Act provides that the
provisions of the Texas Securities Act shall not apply to the sale of any
security by the issuer thereof so long as the total number of security holders
of the issuer thereof does not exceed thirty-five (35) persons after taking such
sale into account; and such sale is made without any public solicitation or
advertisements:
The actual consideration paid for the shares issued to Messrs Tucker,
Velte, Lawrenz and Wages was each of their interest in a computer, being our
sole asset. Because of the extremely limited nature of the transaction by which
the shares were issued to Messrs Tucker, Velte, Lawrenz and Wages, no
underwriters were used.
In December 1998 and January, 1999, we borrowed a total of $11,000 from
various individuals to pay our expenses
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while this offering is completed. The agreements by which we borrowed these
funds and may borrow in the future provide that the persons who loaned the money
have the right to convert the amounts due to them into our preferred stock on
the basis of 2 shares of preferred stock for each $1,000 loaned. If the lenders
decide to convert their debt into preferred stock and then decide to convert
their preferred stock into common stock, we may issue shares of the common stock
offered hereby to the lenders in satisfaction of the loan agreements. In the
alternative, we may take part of the proceeds of the offering to pay these
debts. Although we think the foregoing transactions represent loans to the
company and not the actual issuance of securities in a technical sense,
especially given the convertible feature of these notes, the issuance thereof
could be construed as an issuance of securities.
The federal exemption we relied upon in issuing the loans was Section 4(2)
of the Securities Act. The Section 4(2) exemption was available to us because we
did not solicit any investment in the company and instead simply borrowed money
from various individuals, each of whom had a pre-existing relationship with our
company, either as a supplier of services or otherwise knew our president Brad
Tucker through other business dealings. Prior to making these loans, we made
sure that each lender had access to such information concerning our company as
they deemed necessary to fully evaluate an investment in our company. In
addition, the loans were exempt under the laws of the State of Texas, the State
in which all of the lenders reside, pursuant to Section 5 I. (a) of the Texas
Securities Act. Section 5 I. (a) of the Texas Securities Act provides that the
provisions of the Texas Securities Act shall not apply to the sale of any
security by the issuer thereof so long as the total number of security holders
of the issuer thereof does not exceed thirty-five (35) persons after taking such
sale into account; and such sale is made without any public solicitation or
advertisements:
The actual consideration paid for the loans was cash in the face amount of
the loans. Because of the extremely limited nature of the transaction by which
the loans were made, no underwriters were used.
Exhibits
Attached to this registration are the exhibits required by Item 601 of
Regulation S-B.
UNDERTAKINGS
The Company does not presently anticipate using an underwriter in
conducting this offering; if the company changes its plan and utilizes an
underwriter, the Company will provide to the underwriter, at the closing
specified in any underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the Company's Articles of Incorporation,
Bylaws, Texas law or otherwise, the Company 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 Company of expenses incurred or payed by a director, officer or
controlling person of the Company and the successful defense of any action, suit
or proceeding) is asserted by such
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director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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35
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Conroe,
State of Texas on October 4, 1999.
(Registrant) CyberGuide Online, Inc.
By (Signature and Title)___________________________________
James B. Tucker, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
(Signature) ______________________________
James B. Tucker
(Title) President
(Date) October 4, 1999
(Signature) _______________________________
James W. Tucker
(Title) Chairman of the Board of Directors
(Date) October 4, 1999
36
<PAGE>
Date Filed: October 4, 1999 SEC File No.333-73289
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
REGISTRATION STATEMENT
ON FORM SB-2
UNDER
THE SECURITIES ACT OF 1933
CYBERGUIDE ONLINE, INC.
(Consecutively numbered pages 37 through 43 of this Registration Statement)
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INDEX TO EXHIBITS
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
3 Charter and Bylaws Original Filing
5 Opinion and consent of Hoge, This Filing
Evans, Holmes, Carter & Ledbetter Page 40
PLLC, Attorneys and Counselors at
Law
10 Loan Agreements Original Filing
23 Consent of Beard, Nertney, This Filing
Kingery, Crouse & Hohl, P.A. Page 43
23 Consent of Hoge, Evans, Holmes, This Filing
Carter & Ledbetter, PLLC, (See Page 40
Exhibit 5)
EXHIBIT 5
CONSENT OF HOGE, EVANS, HOLMES,
CARTER & LEDBETTER, PLLC,
ATTORNEYS AND COUNSELORS AT LAW
39
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HOGE, EVANS, HOLMES, CARTER & LEDBETTER, PLLC
ATTORNEYS AND COUNSELORS
HAMPTON COURT
SUITE 600
4311 OAKLAWN
DALLAS, TEXAS 75219
---------------------------
Steven B. Holmes
Licensed In TELEPHONE (214) 765-6000
Texas and Oklahoma TELECOPIER (214) 765-6020
E-MAIL [email protected]
October 4, 1999
Board of Directors
CyberGuide Online, Inc.
4300 Horizon N. Parkway
Suite 915
Dallas, Texas 75287
Re: CyberGuide Online, Inc.
Registration Statement on Form SB-2
Gentlemen:
We have been retained by CyberGuide Online, Inc. (the "Company") in
connection with the Registration Statement (the "Registration Statement") on
Form SB-2, to be filed by the Company with the Securities and Exchange
Commission relating to the offering of securities of the Company. You have
requested that we render our opinion as to whether or not the securities
proposed to be issued on terms set forth in the Registration Statement will be
validly issued, fully paid, and nonassessable.
In connection with the request, we have examined the following:
1. Articles of Incorporation of the Company;
2. Bylaws of the Company;
3. The Registration Statement; and
4. Unanimous consent resolutions of the Company's Board of Directors.
We have examined such other corporate records and documents and have
made such other examinations as we have deemed relevant.
40
<PAGE>
HOGE, EVANS, HOLMES, CARTER & LEDBETTER, PLLC ---------------------------------
CyberGuide Online, Inc.
Board of Directors
October 4, 1999
Page 2
Based on the above examination, we are of the opinion that the
securities of the Company to be issued pursuant to the Registration Statement
are validly authorized and, when issued in accordance with the terms set forth
in the Registration Statement, will be validly issued, and fully paid, and
non-assessable under the corporate laws of the State of Texas.
We consent to our name being used in the Registration Statement as
having rendered the foregoing opinion and as having represented the Company in
connection with the Registration Statement.
Sincerely,
HOGE, EVANS, HOLMES, CARTER & LEDBETTER PLLC
/s//Steven B. Holmes
Steven B. Holmes
EXHIBIT 23
CONSENT OF BEARD, NERTNEY, KINGERY, CROUSE & HOHL, P.A.
42
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[LETTERHEAD of BEARD NERTNEY KINGERY CROUSE & HOHL P.A.]
October 5, 1999
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form SB-2 (No. 333-73289) of our report dated June 15,
1999, with respect to the financial statements of CyberGuide Online, Inc., as of
and for the period May 31, 1999 and December 31, 1998, filed with the Securities
and Exchange Commission.
/s/ BEARD, NERTNEY, KINGERY, CROUSE & HOHL, P.A.
Tampa, Florida
43
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