<PAGE> 1
Date Filed: April 8, 1999 SEC File No.333-73289
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
AMENDMENT NO. 1 TO FORM SB-2
Registration Statement Under the Securities Act of 1933
CYBERGUIDE ONLINE, INC.
(Exact Name of Issuer as Specified in Its Charter)
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Texas 7379 76-0594616
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State of Incorporation Primary Standard Industrial I.R.S. Employer
Classification Code Number Identification Number
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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
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Title of class of Amount to be Proposed Proposed Amount of
securities to be registered Maximum maximum Registration Fee
registered offering price per aggregate offering
unit price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 10,200,000 $0.05 $510,000 $141.78
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</TABLE>
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.
<PAGE> 2
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Price to Public Underwriting Discount Proceeds to Issuer
and Commissions or other Persons
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $ 0.05 None $ 0.05
- -----------------------------------------------------------------------------------------------------------
Total Maximum $510,000 None $510,000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
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.
APRIL 7, 1999
<PAGE> 3
<TABLE>
<S> <C>
SUMMARY OF THE OFFERING...........................................................................................1
RISK FACTORS......................................................................................................4
USE OF PROCEEDS...................................................................................................9
DETERMINATION OF OFFERING PRICE..................................................................................10
DILUTION ........................................................................................................11
PLAN OF DISTRIBUTION.............................................................................................12
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....................................................12
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT........................................................................15
DESCRIPTION OF SECURITIES........................................................................................15
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.......................................................17
DESCRIPTION OF BUSINESS..........................................................................................18
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.........................................................20
DESCRIPTION OF PROPERTY..........................................................................................24
MARKET FOR COMMON EQUITY
AND RELATED SHAREHOLDER MATTERS.........................................................................24
EXECUTIVE COMPENSATION...........................................................................................26
FINANCIAL STATEMENTS.............................................................................................26
</TABLE>
<PAGE> 4
SUMMARY OF THE OFFERING
<TABLE>
<S> <C>
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 10,200,000 Shares
STOCK OUTSTANDING
AFTER OFFERING,
ASSUMING MAXIMUM
AMOUNT SOLD:
SHARES OF PREFERRED 1,050 Shares which are convertible into 10,500,000 shares
STOCK OUTSTANDING of common stock at the close of this offering.
PRIOR TO THE 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
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.
</TABLE>
1
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RISK FACTORS
AN INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK, INCLUDING A
RISK OF LOSS OF AN INVESTOR'S ENTIRE INVESTMENT IN THE COMPANY. PROSPECTIVE
INVESTORS SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS BEFORE PURCHASING ANY
SHARES.
DEVELOPMENT STAGE COMPANY. 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.
LACK OF DIVERSIFICATION. 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.
"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.
DEPENDENCE ON 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. 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 involves immediate and
substantial dilution to investors.
SHARES AVAILABLE FOR RESALE UNDER RULE 144. All of our presently
outstanding shares of stock are "restricted securities" as defined under Rule
144 promulgated under the Securities Act and may only be sold pursuant thereto
or otherwise pursuant to an effective registration statement or an exemption
from registration, if available. Rule 144 generally provides, subject to
various restrictions, that a person who has restricted securities may sell,
within any three month period, an amount of restricted securities which does
not exceed the
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greater of 1% of a company's outstanding common stock or the average weekly
trading volume in such securities during the four calendar weeks prior to such
sale. Our executive officers own preferred stock having rights to convert into
up to an aggregate of 10,500,000 restricted shares of common stock for which the
one year holding period expires in November, 1999. A sale of shares by our
officers, whether pursuant to Rule 144 or otherwise, may have a depressing
effect upon the price of our common stock in any market that might develop.
ARBITRARY DETERMINATION OF OFFERING PRICE. The offering price and
other terms and conditions relative to the shares offered have been arbitrarily
determined by us and do not necessarily bear any direct relationship to assets,
earnings, book value or any other objective criteria of value.
NO DIVIDENDS ON COMMON STOCK. We have never paid dividends on our
stock and do not anticipate paying any dividends in the foreseeable future.
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.
PENNY STOCK REGULATION. Broker-dealer practices in connection with
transactions in "penny stocks" are regulated by certain penny stock rules
adopted by the Commission. Penny stocks generally are equity securities with a
price of less than $5.00. Since our stock will likely be subject to the penny
stock rules, investors in this offering will in all likelihood find it more
difficult to sell their stock.
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.
COMPETITION. Any business that is related to the Internet is highly
competitive because of numerous factors, including the ease of access to the
Internet and the perception, albeit incorrect, among the public that
involvement in the Internet can generate huge profits. We will compete for
virtually every aspect of our business with larger companies, from the pursuit
of advertising dollars to our ability to hire people to work for us.
POTENTIAL CONFLICTS OF INTEREST BETWEEN MANAGEMENT AND THE COMPANY.
Our President intends to devote full time as may be required to the business
and affairs of the Company. We are not currently aware of any conflicts between
our management and the interests of the company and our management has not
established any policies for handling any conflicts which may arise, especially
since we do not have any outside directors.
VOTING CONTROL BY MANAGEMENT. After completion of this offering,
assuming all of the shares offered are sold, our management, through its
ownership of
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convertible preferred stock, will have the right to acquire 10,500,000 shares of
our common stock. In addition, each share of preferred stock is entitled to
10,000 votes on all matters submitted to shareholders. Thus, our management will
control at least approximately 51% of our voting securities. As a result, our
management already controls and will continue to control the affairs of the
Company, including the election of all of our Board of Directors, the issuance
of additional shares of stock, the distribution and timing of dividends, if any,
and all other matters.
LOCATION OF OUR ACCOUNTANTS. Our accountants are located in Florida,
but our offices and books and records are located in Texas. When we need our
accountants to audit our records, we send to our accountants the necessary
materials to allow them to perform their examination of our records. Because our
company is only recently organized, with no meaningful history of operations,
this procedure has not caused problems for us in the past. However, as our
operations grow, this separation between us and our accountants may become
inefficient and potentially costly. Although we currently have no plans to
change this arrangement, if problems are presented that we feel do not justify
our continued use of our existing accountants, we may decide to change to
accountants located in the state of Texas. Changing accountants can be
expensive.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Shares offered
hereby, assuming all of the Shares offered hereby are sold, of which no
assurances are given, are estimated to be $460,000, giving effect to the
estimated expenses of the Offering of approximately $50,000 and exclusive of
Selling Commissions, if any.
The following table sets forth the anticipated use of the net proceeds
of this Offering in based upon various levels of
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sales of the stock offered. 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 p;resented 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.
5
<PAGE> 9
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Placement of # of Shares # of Shares # of Shares # of Shares # of Shares
Shares @ Sold Sold Sold Sold Sold
$.05 per
Share
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<S> <C> <C> <C> <C> <C>
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
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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
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Website $ 10,000 $ 30,000 $ 55,000 $ 77,500 $ 100,000
Development
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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
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Because we presently anticipate selling 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 would expect to have to pay up to 10% of any gross proceeds
raised in this offering to one or more NASD registered broker-dealers. In such
event, net proceeds to us will 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, our
management believes that the net proceeds therefrom, together with anticipated
funds from operations, will provide us with sufficient funds to meet our cash
requirements for at least twelve (12) months following the date these maximum
proceeds are raised. As set forth in the above table,
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<PAGE> 10
if we receive net proceeds in amounts less than the maximum proceeds, this
twelve month time frame will probably be diminished and our business plans will
have to be decreased to an extent not presently determinable by us.
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 estimated 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
prove to be inaccurate. The allocation may also be changed if problems,
expenses and delays frequently encountered in growing a new business within the
internet industry, implementing new business strategies, as well as changes in
the economic climate and/or our planned business operations are experienced by
us.
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 December 31, 1998, 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.
<TABLE>
<CAPTION>
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November 23, 1998 10,200,000 shares offered
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<S> <C> <C>
Purchase price per share less than $0.01 $0.05
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Net tangible book value per less than $0.01 n/a
share of
common stock before the
offering(1)
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Pro forma net tangible book n/a $0.02
value per share
of common stock after the
offering, assuming all
preferred stock is converted
into common stock
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Increase to net tangible book n/a approximately $0.02
value per
share attributable to
purchase of
common stock by new
investors
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Dilution to new investors n/a approximately $0.03
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</TABLE>
(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 commission of up to an
aggregate of 10% of the proceeds of this offering. Since this
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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:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Name Age Position Term of Office
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jim W. Tucker 56 Director, Chairman Until next annual meeting of
stockholders
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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
- -----------------------------------------------------------------------------------------------
</TABLE>
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 no
arrangement or understanding between any of our directors or officers pursuant
to which he was elected to his office.
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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 from 1997 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. 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
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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.
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
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<PAGE> 15
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.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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
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
12
<PAGE> 16
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 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
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<PAGE> 17
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 paid 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
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.
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<PAGE> 18
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". If we are successful enough to start
our free internet service provider, we hope to greatly expand the economic
reach of our company.
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<PAGE> 19
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 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.
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".
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<PAGE> 20
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 anticipates 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 hope to have a total of 16,000 customers listed on the CyberGuide
over a ten year period. We currently anticipate that the first 1,000 customers
will pay $50 per month and the following 15,000 will pay $100 per month.
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 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
17
<PAGE> 21
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.
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<PAGE> 22
- --------------------------------------------------------------------------------
DALLAS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
16 CITIES
AROUND THE DALLAS METROPLEX
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CITY BANNERS
$100 PER CITY =
$1600 MONTHLY REVENUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CITY CATEGORY BANNERS
16 CITIES X 26 LETTERS X 25 CATEGORIES X $50 PER MONTH =
$520,000 MONTHLY REVENUE
- --------------------------------------------------------------------------------
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<PAGE> 23
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. We hope to
have our common stock prices listed on the bulletin board maintained by the
National Association of Securities Dealers. 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 publicly 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 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
20
<PAGE> 24
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 publicly 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 December 31, 1998.
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<PAGE> 25
[LETTERHEAD OF BEARD NERTNEY KINGERY CROUSE & HOHL P.A.]
April 9, 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 March 1,
1999, with respect to the financial statements of CyberGuide Online, Inc., as of
and for the period November 19, 1998 (date of incorporation) to December 31,
1998, filed with the Securities and Exchange Commission.
/s/ BEARD, NERTNEY, KINGERY, CROUSE & HOHL, P.A.
<PAGE> 26
CYBERGUIDE ONLINE, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
===============================================================================
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Financial Statements as of and for the period November 19, 1998 (date of
incorporation) to December 31, 1998:
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>
===============================================================================
F-1
<PAGE> 27
[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 accompanying balance sheet of CyberGuide Online, Inc. (the
"Company"), a development stage enterprise, as of December 31, 1998, and the
related statements of operations, stockholders' equity and cash flows for the
period November 19, 1998 (date of incorporation) 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.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1998, and the results of its operations and its cash flows for the period
November 19, 1998 (date of incorporation) to December 31, 1998 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in 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.
March 1, 1999
Tampa, FL
F-2
<PAGE> 28
CYBERGUIDE ONLINE, INC.
(A Development Stage Enterprise)
BALANCE SHEET AS OF DECEMBER 31, 1998
================================================================================
<TABLE>
<S> <C>
ASSETS
Computer equipment ( net of accumulated
depreciation of $38) $ 1,462
-----------
TOTAL $ 1,462
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY:
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
Common stock - $.001 par value - 100,000,000 shares
authorized; zero shares issued and outstanding 0
Additional paid-in capital 1,490
Deficit accumulated during the development stage (38)
-----------
Total stockholders' equity 1,462
-----------
TOTAL $ 1,462
===========
</TABLE>
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE> 29
CYBERGUIDE ONLINE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 19, 1998 (DATE OF INCORPORATION)
TO DECEMBER 31, 1998
================================================================================
<TABLE>
<S> <C>
EXPENSES -
Depreciation $ 38
-----------
NET LOSS $ 38
===========
NET LOSS PER SHARE:
Basic $ 0
===========
Weighted average number of shares - basic 0
===========
Diluted $ 0
===========
Weighted average number of shares - diluted 10,500,000
===========
</TABLE>
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS
F-4
<PAGE> 30
CYBERGUIDE ONLINE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS'EQUITY
FOR THE PERIOD NOVEMBER 19, 1998 (DATE OF INCORPORATION)
TO DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Paid-in Development
Shares Value Shares Value Capital Stage Total
------ ------- ------- ------ ---------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, November 20, 1998
(date of incorporation) 0 $ 0 0 $ 0 $ 0 $ 0 $ 0
Issuance of Class A
preferred stock 1,050 10 0 0 1,490 0 1,500
Net loss for the period,
November 20, 1998
(date of incorporation)
to December 31, 1998 (38) (38)
------ ------ ------ ------ ------ ------ ------
Balances, December 31,
1998 1,050 $ 10 0 $ 0 $1,490 $ (38) $1,462
====== ====== ====== ====== ====== ====== ======
</TABLE>
================================================================================
SEE NOTES TO FINANCIAL STATEMENTS
F-5
<PAGE> 31
CYBERGUIDE ONLINE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD NOVEMBER 19, 1998 (DATE OF INCORPORATION)
TO DECEMBER 31, 1998
================================================================================
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(38)
Adjustment to reconcile net loss to net cash used in
operating activities - depreciation 38
----
NET CASH USED IN OPERATING ACTIVITIES 0
----
NET CHANGE IN CASH AND CASH EQUIVALENTS 0
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0
----
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 0
====
Interest paid $ 0
====
Taxes paid $ 0
====
</TABLE>
SUPPLEMENTAL DISCLOSURES 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
<PAGE> 32
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
<PAGE> 33
NOTE C - RELATED PARTY TRANSACTION
A shareholder contributed a computer valued at $1,500 to the Company in
consideration for preferred shares.
NOTE D - INCOME TAXES
During the period November 19, 1998 (date of incorporation) to December 31,
1998, 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.
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 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:
F-8
<PAGE> 34
<TABLE>
<S> <C>
Numerator
Net loss available to common stockholders $ 38
==============
Denominator
Weighted average shares
0
==============
Denominator for basic calculation
0
==============
Weighted average effect of dilutive securities:
Class A Preferred Stock 10,500,000
==============
Denominator for diluted calculation 10,500,000
==============
Net loss per share:
Basic $ 0.00
==============
Diluted $ 0.00
==============
</TABLE>
NOTE G - PROPOSED COMMON STOCK OFFERING
During the first calendar quarter of 1999, the Company intends to file 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.
NOTE H - SUBSEQUENT EVENT
In January, 1999, the Company borrowed $4,000 from certain individuals. The
agreements by which the Company borrowed these funds provide that the note
holders may convert the amounts due to them into the Company's preferred stock
on the basis of two shares of preferred stock for each $1,000 loaned. Each of
these preferred shares may be convertible into 10,000 shares of the Company's
common stock. In addition, the Company may borrow additional funds having
similar terms to fund certain costs of the offering.
================================================================================
F-9
<PAGE> 35
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 paid 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
<PAGE> 36
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimate by the Company of the
expenses of the offering:
<TABLE>
<CAPTION>
TYPE OF EXPENSE AMOUNT
--------------- ------
<S> <C>
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
</TABLE>
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 5I.(a) of the Texas
Securities Act. Section 5I.(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
2
<PAGE> 37
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 5I.(a) of the Texas
Securities Act. Section 5I.(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 paid by a director,
officer or controlling person of the Company and the successful defense of any
action, suit or proceeding) is asserted by such
3
<PAGE> 38
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.
4
<PAGE> 39
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 April 8, 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) April 8, 1999
(Signature) ---------------------------
James W. Tucker
(Title) Chairman of the Board of Directors
(Date) April 8, 1999
<PAGE> 40
Date Filed: April 8, 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 ___________ through ___________ of this
Registration Statement)
<PAGE> 41
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
<S> <C> <C>
3 Charter and Bylaws Original Filing
5 Opinion and consent of Hoge, This Filing
Evans, Holmes, Carter & Ledbetter, Page _____
PLLC, Attorneys and Counselors at
Law
10 Loan Agreements Original Filing
23.1 Consent of Beard, Nertney, Kingery, This Filing
Crouse & Hohl, P.A. Page _____
23.2 Consent of Hoge, Evans, Holmes, This Filing
Carter & Ledbetter, PLLC, (See Page ______
Exhibit 5)
</TABLE>
<PAGE> 1
EXHIBIT 5
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]
April 8, 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.
<PAGE> 2
CyberGuide Online, Inc.
Board of Directors
April 8, 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
SBH
<PAGE> 1
EXHIBIT 23.1
[BEARD, NERTNEY, KINGERY, CROUSE & HOHL, P.A. LETTERHEAD]
March 1, 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. ________________) of our report dated
March 1, 1999, with respect to the financial statements of CyberGuide Online,
Inc., as of and for the period November 19, 1998 (date of incorporation) to
December 31, 1998, filed with the Securities and Exchange Commission.
/s/ BEARD, NERTNEY, KINGERY, CROUSE & HOHL, P.A.
