U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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e.DEAL.NET, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 5521 98-0195748
(State or Other Jurisdiction of (Primary Standard (I.R.S. Employer
Incorporation or Organization) Industrial Identification Number)
Classification Code)
1628 West 1st Ave., Suite 214
Vancouver, British Columbia, Canada V6J 1G1
(604) 659-5024
(Address, Including Zip Code, and Telephone Number, including Area Code,
of Registrant's Executive Offices)
Herdev S. Rayat, President
1628 West 1st Ave., Suite 214
Vancouver, British Columbia, Canada V6J 1G1
(604) 659-5024
(Name, Address, Including Zip Code, and Telephone Number,
including Area Code, of Agent for Service)
Copies of all communications, including communications
to the agent for service of process, to:
Joseph Sierchio, Esq.
Sierchio & Company, LLP
150 East 58th Street
New York, New York 10155
(212) 446-9500
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APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this registration statement becomes effective.
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If this Form is filed to register additional securities for an offering pursuant
to Rule 426(b) under the Securities Act of 1933, 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 of 1933, check the following box and list the Securities Act
Registration Statement number of the earlier Registration Statement for the same
offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
Registration Statement number of the earlier Registration Statement for the same
offering. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
as amended, check here: [X]
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If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title Of Each Class Of Number of Units To Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Be Registered Offering Price Aggregate Offering Registration
Per Share Price Fee
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<S> <C> <C> <C> <C>
Units consisting of one 5,000,000 $0.10 (1) 500,000 $396
share of common stock, and
one Warrant
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Warrant (2) 5,000,000 -- -- --
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Common Stock (3) 5,000,000 -- -- --
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Common Stock (4) 5,000,000 .20 1,000,000 --
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</TABLE>
(1) Calculated in accordance with Rule 457(o) under the Securities Act of 1933.
(2) Warrants constituting a part of the Units.
(3) Common Stock constituting a part of the Units.
(4) Common Stock issuable upon exercise of the Warrants.
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 SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is neither an
offer to sell these securities nor is it a solicitation of an offer to buy these
securities, in any state where the offer or sale is not permitted.
PROSPECTUS
Initial Public Offering
e.DEAL.NET, INC.
of
A minimum of 2,500,000 units and a maximum of 5,000,000 units.
The units are offered at a price of $0.10 per unit.
Each unit we are offering consists of one share of our common stock and one
redeemable warrant entitling the holder to purchase an additional share of our
common stock at a price of $.20 per share for a period of 36 months from the
date of the issuance.
We are a development stage company in the process of implementing our
business plan which is to provide a platform through which we can connect buyers
and sellers of pre-owned automobiles through the Internet.
Although the quotation of prices for trading of our common stock has been
authorized on the over-the-counter "pink sheets" market, there is no active
trading market for our common stock.
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See "Risk Factors" beginning on page 8 for a discussion of
material issues to consider before purchasing any of the units.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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Price to the Public(1) Maximum Proceeds to the
Commissions(1) Company(2)
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Per Unit $.10 -0- $.10
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Total 5,000,000 Units $500,000 -0- $500,000
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(1) We are offering the units directly through our officers and directors on an
all or none basis with respect to the first 2,500,000 units and on a best
efforts basis with respect to the remaining units. The offering will end 90
days from the date of this prospectus unless it is terminated by us on such
earlier date as we may deem appropriate or if extended by us for an
additional 30 days, in our sole discretion and without notice.
(2) Does not include (i) offering expenses of approximately $42,000 or (ii) the
proceeds that we would receive if all of the warrants were exercised.
The date of this prospectus is ________________, 2000.
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TABLE OF CONTENTS
Limited State Registration....................................................5
Cautionary Note Regarding Forward-Looking Statements .........................5
Prospectus Summary............................................................6
Risk Factors..................................................................8
Use of Proceeds..............................................................14
Arbitrary Determination of Offering Price....................................14
Dilution.....................................................................15
Plan of Distribution ........................................................15
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................16
Business ....................................................................19
Legal Proceedings............................................................20
Management...................................................................21
Executive Compensation.......................................................22
Principal Shareholders.......................................................24
Market for OurCommon Stock...................................................24
Description of Securities....................................................24
Limitation of Liability and indemnification matters .........................27
Legal Matters................................................................27
Experts......................................................................27
Where You Can Find Additional Information....................................27
Financial Statements.........................................................29
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LIMITED STATE REGISTRATION
We have registered or qualified the units for sale only in Arizona,
California, Colorado, Florida, New York, Nevada and Washington. We may also
offer the units to overseas investors. If you purchase units, you will generally
be limited to reselling the constituent securities only in those jurisdictions,
together with other jurisdictions in which we may qualify our common stock for
secondary trading.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the future,
called "forward-looking statements." In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"could," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of such terms and other
comparable terminology.
These forward-looking statements include, without limitation, statements
about:
o our market opportunity;
o our strategies;
o competition;
o expected activities and expenditures as we pursue our business plan;
and
o the adequacy of our available cash resources.
These statements appear in a number of places in this report and include
statements regarding our intent, belief or current expectations, those of our
directors or officers with respect to, among other things: (i) trends affecting
our financial condition or results of operations, (ii) our business and growth
strategies, (iii) the Internet and Internet commerce and (iv) our financing
plans. Although we believe that the expectations reflected in the
forward-looking statement are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as otherwise required by
federal securities laws, we are under no duty to update any of the forward
looking statements after the date of this prospectus to conform them to actual
results or to changes in our expectations. All forward-looking statements
attributable to us are expressly qualified in their entirety by the foregoing
cautionary statement.
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar "forward looking statements" by existing public
companies, does not apply to our offering.
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
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PROSPECTUS SUMMARY
This summary contains certain key basic information about us and the
offering. Because it is only a summary, it does not contain all of the
information that you should consider before purchasing units. You should read
the entire prospectus, including the section titled "Risk Factors" and our
financial statements and related notes, before deciding to purchase any of the
units.
Our Company
e.Deal.net, Inc. is a Nevada corporation incorporated on November 6, 1998. We
are in the process of implementing our business plan of providing a platform for
connecting buyers and sellers of pre-owned automobiles through the Internet.
Although we have not yet generated any sales, we anticipate generating revenues
through a variety of sources, including:
o initial listing fees;
o sales fees upon consummation of a sale;
o advertising fees;
o affiliation fees; and
o referral fees.
We maintain our office executive offices at:
1628 West 1st Ave., Suite 214
Vancouver, British Columbia, Canada V6J 1G1
Tel.: (604) 659-5024
We also maintain offices at: 7332 E. Butherus Dr.,Suite 101
Scottsdale, Arizona 85260
Tel.: (480) 998-0404
The Offering
We are offering up to 5,000,000 units each consisting of one share of common
stock and one redeemable warrant at a price of $.10 per share. The offering
price was arbitrarily determined by us. The minimum number of units you must
purchase is 10,000 which represents a $1,000 purchase price. The warrants, which
are redeemable by us, entitle the holder to purchase an additional share of
common stock at $.20 per share for a period of 36 months from the date the
warrant is issued.
We must sell at least 2,500,000 units in order for us to close the offering and
use the proceeds. Pending the sale by us of 2,500,000 units, all proceeds will
be held in a non-interest bearing account and will be returned to the
subscribers in the event we do not sell the minimum number of units. We will
offer the units for a period of 90 days, subject to our right, exercisable in
our sole discretion and without notice to you, to extend the offering period for
an additional 30 days. Accordingly, your funds may be held in escrow for as long
as 120 days before they are returned to you. We would expect to extend the
offering if the minimum
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number of units have not been sold by [a date which is 90 days from the date of
the prospectus].
We currently have 5,340,000 shares issued and outstanding. If we sell the
maximum number of units and if all of the warrants are exercised, we will have a
total of 15,340,000 shares issued and outstanding.
No Trading Market for Our Common Stock
Although prices for our common stock are authorized to be published in what
is customarily known as the "pink sheets," there is no current active trading
market for our common stock and there can be no assurance that a trading market
will develop; or, if such trading market does develop, that it will be
sustained. The absence of such a trading market may limit the marketability and
liquidity of our shares.
Use of Proceeds
We intend to use the proceeds from the offering to substantially expand our
web site, implement our marketing strategies and for general working capital
purposes.
Risk Factors
This offering involves a high degree of risk. Risk factors applicable
include lack of operating history, need for additional working capital,
dependence on key personnel, acceptance of our services in the marketplace,
competition from established web sites and portals, dependence on advertisement,
risks inherent in the Internet online industry and inexperience of management.
Risk factors relating to the offering include "penny stock" regulation, and
limited trading market for the securities offered. Please refer to the section
of this prospectus entitled "RISK FACTORS."
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RISK FACTORS
You should consider carefully the following risks before you decide to buy
our common stock. Our business, financial condition or results of operations
could be materially and adversely affected by any one or more of the following
risks.
OUR FUTURE SUCCESS IS UNCERTAIN BECAUSE WE HAVE A LIMITED OPERATING
HISTORY. We were organized on November 6, 1998. Since then, we have limited our
activities to organizational and financing matters and to the development of our
Website at WWW.EDEAL.NET and marketing strategy. Because of this limited
operating history, our prospects must be considered in light of the risks,
expenses and problems frequently encountered by companies that are in the early
stages of development and that operate in new and rapidly changing markets such
as online commerce. To address these risks we must, among other things, continue
to develop and expand our Web site in order to establish a base of consumers and
develop relationships with commercial vendors and maintain and upgrade our
technology. If we cannot execute our business strategy or successfully address
each of these risks, our financial condition and results of operations may
suffer.
WE HAVE AN EVOLVING AND UNPROVEN BUSINESS MODEL. We have not generated any
operating revenues. The manner in which we intend to conduct our business and
charge for our services is new and unproven. Due to the cost and delay inherent
in obtaining a market or feasibility study we have not commissioned any such
study with regard our proposed business model. Our business model depends upon
our ability to generate revenue streams from multiple sources through our Web
site, including: subscription and advertising fees from consumers; revenue from
facilitating automotive e-commerce transactions (such as financing, insurance,
warranties and aftermarket products); fees from the online used vehicle sales
services; fees from national advertising programs, promotions and services; and
fees for enhanced private seller listings. In order for us to be successful,
large numbers of consumers must visit our Web site on a regular basis to attract
consumers, vendors and advertisers to list vehicles and to advertise and offer
products and services through our Web site. Therefore, we must not only develop
services that directly generate revenue, but also provide information that
attracts consumers to our Web site frequently. We will need to develop new
offerings in each of these areas as consumer preferences change and new
competitors emerge. We cannot assure you that we will be able to provide
consumers with an acceptable blend of services and information. We provide
information to consumers without charge, and we may not be able to generate
sufficient revenue to pay for these offerings. Accordingly, we cannot be sure
that our business model will be successful or that we can sustain revenue growth
or become profitable.
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OUR STRATEGY TO GROW THE e.DEAL.NET BRAND WILL REQUIRE SIGNIFICANT
EXPENDITURES, AND OUR BUSINESS MAY NOT GENERATE SUFFICIENT REVENUES TO COVER
THESE EXPENDITURES. Our business will depend heavily on the recognition and
value of the e.Deal.net brand. In particular, we believe that obtaining
recognition as a marketplace destination for used vehicles is critical to
attracting consumers, dealers, private sellers, commercial vendors and
advertisers to our Web site. In order to develop the e.Deal.net brand, we expect
that operating expenses, particularly sales and marketing expenditures, will
require a large portion of our resources, including a significant portion of the
proceeds from the offering over the next 12 months. This high level of
expenditures will have a negative impact on our results of operations. Moreover,
if we are unable to generate revenues as a result of these investments in our
business, we may never achieve or sustain profitability.
WE HAVE A HISTORY OF LOSSES AND EXPECT TO CONTINUE TO INCUR NET LOSSES FOR
THE FORESEEABLE FUTURE. We have experienced operating losses in each quarterly
and annual period since inception. We incurred net losses of $2,193 and $ 2,685
for the six months ended, respectively, September 30, 1999 and 2000; and $7,470
and $16,185 respectively for the years ended March 31, 1999 and 2000. As of
September 30, 2000 (unaudited), we had an accumulated deficit of $25,847. We
expect to maintain high levels of expenditures for sales and marketing and
general and administrative expenses, and consequently our losses may increase in
the future. We will need to continue to generate significant increases in our
revenues to achieve and maintain profitability.
WE ARE IN AN INTENSELY COMPETITIVE MARKET WHICH COULD REDUCE OUR MARKET
SHARE AND HARM OUR FINANCIAL PERFORMANCE. The market for providers of used
vehicle information and automotive products and services, including classified
advertising, is intensely competitive, and we expect competition to increase
significantly, particularly on the Internet. Barriers to entry on the Internet
are relatively low, and we may face competitive pressures from numerous
companies. There are a number of Web sites that offer vehicle listings,
including vehicle manufacturers' own Web sites and Web sites containing
electronic classified advertisements, and automotive products and services. In
addition, there are numerous Web sites that offer vehicle information and other
content, as well as community offerings, directly to the vehicle-purchasing
consumer generally or to targeted audiences such as vintage car enthusiasts. We
also face competition from traditional media companies such as newspapers, niche
classified publishers and television and radio companies, many of which
currently operate Web sites. In addition to direct competitors, we also compete
indirectly with vehicle brokerage firms, discount warehouse clubs and automobile
clubs. Several Web sites provide auction services, and some have also recently
announced their intention to auction vehicles on the Internet. We expect
additional competitors to enter our market in the future. The automotive
e-commerce market is new and rapidly evolving, and we expect competition among
e-commerce companies to increase significantly. We cannot assure you that Web
sites maintained by our existing and potential competitors will not be perceived
by consumers, dealers, other potential automotive vendors or advertisers as
being superior to ours. We also cannot assure you that we will be able to
maintain or increase the levels of visitors logging onto our Web site and the
number of leads these visitors generate for sellers of used vehicles and
automotive products and services or that competitors will not experience
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greater growth in these areas than we do.
THE ONLINE MARKET FOR USED VEHICLE INFORMATION AND AUTOMOTIVE PRODUCTS AND
SERVICES MAY FAIL TO GROW, WHICH WOULD LIMIT THE GROWTH OF OUR ONLINE
ADVERTISING REVENUES AND ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. The online market for used vehicle information and automotive
products and services is new and rapidly developing. As is typical for any new,
rapidly evolving market, demand and market acceptance for recently introduced
products and services are subject to a high level of uncertainty and risk. It is
also difficult to predict the market's future growth rate, if any. If the online
market for used vehicle information and automotive products and services fails
to develop or develops more slowly than expected or our services do not achieve
or sustain market acceptance, we may not be able to generate or increase our
revenues, and, therefore, our results of operations and financial condition
could be materially and adversely affected.
OUR BUSINESS IS DEPENDENT ON THE ECONOMIC STRENGTH OF THE AUTOMOTIVE
INDUSTRY. We believe that the strength of the automotive industry significantly
impacts both the revenues we derive from our site users and members, other
automotive vendors and advertisers and the consumer traffic to our Web site. The
automotive industry is cyclical, with the number of sales of vehicles changing
due to national and global economic forces. Any decrease in the current level of
vehicle sales could have a material adverse effect on our business, results of
operations and financial condition.
BECAUSE OF THE INDUSTRY IN WHICH WE INTEND TO OPERATE, WE MAY BE
PARTICULARLY AFFECTED BY GENERAL ECONOMIC CONDITIONS. We believe that the
purchase of automobiles is generally a discretionary purchase and may be
particularly affected by negative trends in the general economy. The ultimate
success of our operations depends to a significant extent upon a number of
factors relating to discretionary consumer spending, including economic
conditions (and perceptions of such conditions by consumers) affecting
disposable consumer income (such as employment, wages and salaries, business
conditions, interest rates, availability of credit and taxation) for the economy
as a whole and in regional and local markets. In addition, because the purchase
of a vehicle is a significant investment and is relatively discretionary, any
reduction in disposable income in general may affect us more significantly than
companies in other industries.
WE MAY BECOME SUBJECT TO GENERAL VEHICLE-RELATED LAWS OR VEHICLE BROKERAGE
AND LAWS. There are numerous state laws regarding the sale of vehicles. In
addition, government authorities may take the position that state or federal
insurance licensing laws, vehicle financing laws, motor vehicle dealer laws or
related consumer protection or product liability laws apply to aspects of our
business. If federal or individual states' regulatory requirements change or
additional requirements are imposed on us, we may be required to modify aspects
of our business in those states in a manner that might undermine the
attractiveness of our Web site's products and services to consumers, dealers,
automotive vendors or advertisers or require us to terminate operations in that
state, either of
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which could harm our business. As we introduce new services and if we expand our
operations to other countries, we could become subject to additional licensing
and regulatory requirements. Substantially all states have laws that broadly
define brokerage activities, and government authorities may take the position
that under these laws we are acting as a broker. If this occurs, we may be
required to comply with burdensome licensing requirements or terminate our
operations in those states. In either case, our business, results of operations
and financial condition could be materially and adversely affected.
IF WE DO NOT PROVIDE A HIGH-QUALITY USER EXPERIENCE AND SERVICE OFFERINGS
THROUGH OUR WEB SITE, THE VALUE OF OUR BRAND MAY FALL. Promotion and enhancement
of the e.Deal.net brand will depend largely on our success in consistently
providing a high-quality consumer experience for buyers and sellers of vehicles
and automotive products and services and relevant and useful information. If
consumers, dealers, automotive vendors and advertisers do not perceive our
service offerings to be of high quality, or if we introduce new services or
enter into new business ventures that are not favorably received by such groups,
the value of our brand could be impaired or diluted. Such brand impairment or
dilution could decrease the attractiveness of e.Deal.net to one or more of these
groups, which could materially and adversely affect our business, results of
operations and financial condition.
WE NEED TO CONTINUE TO DEVELOP OUR CONTENT AND SERVICE OFFERINGS. Our
success will depend upon our ability to enhance and improve the ease of use,
responsiveness, functionality and features of our Web site and to develop new
services, in addition to continuing to improve the consumer shopping experience.
These efforts will require the development or licensing of increasingly complex
technologies. Although we intend to use a portion of the proceeds from this
offering to enhance our Web site, we may not be successful in developing or
introducing new features, functions and services, and these features, functions
and services may not achieve market acceptance or enhance our brand loyalty. If
we fail to develop and introduce new features, functions or services
effectively, it could have a material adverse effect on our business, results of
operations and financial condition.
OTHERS COULD CLAIM THAT WE INFRINGE ON THEIR INTELLECTUAL PROPERTY RIGHTS,
WHICH MAY RESULT IN SUBSTANTIAL COSTS, DIVERSION OF RESOURCES AND MANAGEMENT
ATTENTION AND HARM TO OUR REPUTATION. We cannot be certain that our services do
not infringe on patents or other intellectual property rights of others that may
relate to our services. In addition, because patent applications in the United
States are not publicly disclosed until the patent is issued, applications may
have been filed that relate to our services. We may be subject to legal
proceedings and claims from time to time in the ordinary course of our business,
including claims of alleged infringement of the trademarks and other
intellectual property rights of third parties. If our services violate
third-party proprietary rights, we cannot assure you that we would be able to
obtain licenses to continue offering such services on commercially reasonable
terms, or at all. Any claims against us relating to the infringement of
third-party proprietary rights, even if not meritorious, could result in
substantial costs, diversion of resources and management attention and in
injunctions preventing us from distributing these services. A successful
infringement claim against us could materially and adversely affect us in the
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following ways: we may be liable for damages and litigation costs, including
attorneys' fees; we may be enjoined from further use of the intellectual
property; we may have to license the intellectual property, incurring licensing
fees; we may have to develop a non-infringing alternative, which could be costly
and delay projects; and we may have to indemnify users of our Web site with
respect to losses incurred as a result of our infringement of the intellectual
property. Regardless of the outcome, an infringement claim could materially and
adversely affect our business.
RISKS RELATING TO THE INTERNET GOVERNMENT REGULATION AND LEGAL
UNCERTAINTIES ASSOCIATED WITH THE INTERNET COULD ADVERSELY AFFECT OUR BUSINESS.
A number of legislative and regulatory proposals under consideration by federal,
state, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, including, but not
limited to, online content, user privacy, taxation, access charges, liability
for third-party activities and jurisdiction. Additionally, it is uncertain as to
how existing laws will be applied to the Internet. The adoption of new laws or
the application of existing laws may decrease the growth in the use of the
Internet, which could in turn decrease the demand for our services and increase
our cost of doing business. The tax treatment of the Internet and e-commerce is
currently unsettled. A number of proposals have been made at the federal, state
and local levels and by foreign governments that could impose taxes on the sale
of goods and services and other Internet activities. The Internet Tax Freedom
Act, signed into law in October 1998, placed a three-year moratorium on new
state and local taxes on Internet commerce. We cannot assure you that future
laws imposing taxes or other regulations on commerce over the Internet would not
substantially impair the growth of e-commerce and the growth of our business.
THE SUCCESS OF OUR BUSINESS PLAN DEPENDS ON INCREASED USE OF THE INTERNET
AS A MEANS OF COMMERCE. The ultimate success of our business plan depends on
increased and sustained acceptance and use of the Internet as a medium of
commerce. Consumers and businesses will not likely widely accept and adopt the
Internet for conducting business and exchanging information unless the Internet
provides these consumers and businesses with greater efficiencies and
improvements in commerce and communication. In addition, e-commerce generally,
and shopping for and the purchase of used vehicles and automotive products and
services on the Internet in particular, is a recent phenomenon. The growth of
this phenomenon may not continue at recent rates, and a sufficiently broad base
of businesses and consumers may not adopt or continue to use the Internet as a
means of commerce. The Internet may not prove to be a viable commercial
marketplace generally, or, in particular, for used vehicles and automotive
products and services. If use of the Internet does not continue to increase, our
business will be adversely affected.
OUR BUSINESS DEPENDS ON THE INTEGRITY OF THE INTERNET, WHICH IS UNCERTAIN
AND IS BEYOND OUR ABILITY TO CONTROL. If Internet usage continues to increase
rapidly, the Internet infrastructure may not be able to support the demands
placed on it by this growth, and its performance and reliability may decline.
The recent growth in Internet traffic has caused frequent periods of decreased
performance, outages and delays. Our ability to increase the speed with which we
provide services to consumers and to increase the scope and quality of such
services is limited by and dependent upon the speed
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and reliability of the Internet, which is beyond our ability to control. If
periods of decreased performance, outages or delays on the Internet occur
frequently, overall Internet usage or usage of our Web site could increase more
slowly or decline, which will adversely affect our business.
THE MARKET FOR INTERNET PRODUCTS AND SERVICES IS CHARACTERIZED BY RAPID
TECHNOLOGICAL CHANGE. Rapid technological developments, evolving industry
standards and consumer demands, and frequent new product introductions and
enhancements characterize the market for Internet products and services. These
market characteristics are exacerbated by the emerging nature of the market and
the fact that many companies are expected to introduce new Internet products and
services in the near future. Our success will significantly depend on our
ability to continually improve the used vehicle shopping experience, the
addition of new and useful services and content to our Web site, and the
performance, features and reliability of our Web site. In addition, the
widespread adoption of developing multimedia-enabling technologies could require
fundamental and costly changes in our technology and could fundamentally affect
the nature and viability of Internet-based advertising. The failure to improve
or augment the services that we provide or to successfully implement emerging
technologies could harm our business.
THE VALUE AND TRANSERABILITY OF OUR SHARES MAY BE ADVERSELY IMPACTED BY THE
LIMITED TRADING MARKET FOR OUR COMMON STOCK AND THE PENNY STOCK RULES. Although
prices for our common stock are authorized to be published in what is
customarily known as the "pink sheets," there is no current active trading
market for our common stock and there can be no assurance that a trading market
will develop, or, if such trading market does develop, that it will be
sustained. The absence of such a trading market may limit the marketability and
liquidity of our shares.
In addition, holders of our common stock may experience substantial
difficulty in selling their securities as a result of the "penny stock rules,"
which restrict the ability of brokers to sell certain securities of companies
whose assets or revenues fall below the thresholds established by those rules.
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USE OF PROCEEDS
The units are being offered directly by us on a all or none basis with
respect to the first 2,500,000 units and on a best efforts basis with regard to
the remaining units. The units will be sold on a first come-first serve basis.
The minimum investment by an individual investor is $1,000 or 10,000 units. The
gross proceeds from the offering will be $250,000 if the minimum number of units
is sold and $500,000 if the maximum number of units is sold.
The following table sets forth our intended use of proceeds depending on
whether the minimum or maximum number of units is sold:
Category Minimum Maximum
($250,000) ($500,000)
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Cost of this Offering $42,000 $ 42,000
Web site development $40,000 $ 40,000
Working Capital $15,000 $100,000
Staffing $100,000 $100,000
Office $ 20,000 $ 40,000
Marketing $ 23,000 $143,000
Legal and Consulting $ 10,000 $ 35,000
----------------------
TOTAL $250,000 $500,000
Except as described in this prospectus, no portion of the proceeds of the
offering will be paid to officers, directors and/or any of their respective
affiliates.
ARBITRARY DETERMINATION OF OFFERING PRICE
There is no active trading market for our common stock. The initial
offering price of $0.10 per unit has been arbitrarily determined by us, and
bears no relationship whatsoever to our assets, earnings, book value or any
other objective standard of value. Among the factors considered by us in
determining the initial offering price were:
* The lack of trading market
* The proceeds to be raised by the offering
* The amount of capital to be contributed by the public in proportion to the
amount of stock to be retained by present stockholders
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<PAGE>
DILUTION
The difference between the public offering price per share and the pro
forma net tangible book value per share of our common stock after this offering
constitutes the dilution to investors in this offering. Net tangible book value
per share is determined by dividing our net tangible book value (total tangible
assets less total liabilities) by the number of outstanding Units of Common
stock. Dilution arises mainly from the arbitrary decision by a company as to the
offering price per share. Dilution of the value of the Units purchased by the
public in this offering will also be due, in part, to the lower book value of
the Units presently outstanding, and in part, to expenses incurred in connection
with the public offering.
Net tangible book value is the net tangible assets of a company (total
assets less total liabilities and intangible assets; please refer to "Financial
Statements"). At September 30, we had a net tangible book value of $64,153 or $
0.01 per share.
After giving effect to the sale of the 5,000,000 units (and without giving
effect to the exercise of any warrants) being offered at an initial public
offering price of $.10 per share and after deducting estimated expenses of this
offering ($42,000), our adjusted net tangible book value at September 30, 2000
after the offering would have been $ 522,153 or $0.05 per share, representing an
immediate increase in net tangible book value of $0.04 per share to the existing
shareholders and an immediate dilution of <$0.05> per share to new investors.
The following table illustrates the above information with respect to
dilution to new investors on a per share basis:
Initial public offering price $ .10
Pro forma net tangible book value at September 30, 2000 522,153.00
Increase in pro forma net tangible book value attributed to
new investors 458,000.00
Adjusted pro forma net tangible book value per share after offering .05
Dilution to new investors <.05>
PLAN OF DISTRIBUTION
The Offering
We offer the right to subscribe for up to 5,000,000 units at $0.10 per
unit. The minimum number of units you can purchase is 10,000. We propose to
offer the units directly on an all or none basis with respect to the first
2,500,000 units and on a best efforts basis with regard to the remaining units.
Therefore, 2,500,000 units must be sold before the offering can be completed.
The funds received by us from the subscribers will be held by our legal
counsel, as escrow agent, in a non interest bearing account. If 2,500,000 units
are not sold within 90 days of this prospectus, which period may be extended for
an additional 30 days by us, in our sole
15
<PAGE>
discretion, the offering will terminate and all funds theretofore received from
subscribers will be promptly returned by the escrow agent to the subscribers.
Once 2,500,000 units have been sold the escrow agent, upon written notice from
us of acceptance of the subscriptions, will deliver the subscriber funds to us
and we will have our transfer agent issue certificates representing the shares
and warrants purchased promptly delivered to the subscriber. Proceeds from
subscriptions received after that point, will be forwarded to us at the end of
each week of the offering period, subject to receipt by the escrow agent of
written notice from us that we have accepted the subscription
No compensation is to be paid to any person for the offer and sale of the
units. Our president and other board members may distribute prospectuses related
to this offering. We estimate that approximately 200 copies of this prospectus
will be distributed by them. They intend to distribute prospectuses to
acquaintances, friends and business associates.
As of the date of this prospectus, no broker has been retained by us for
the sale of Units being offered. In the event a broker who may be deemed an
underwriter is retained by us, an amendment to our registration statement will
be filed.
Method of Subscribing
You may subscribe by filling in and signing the subscription agreement and
delivering it, prior to the expiration date, to us. The subscription price of
$0.10 per unit must be paid in cash or by check, bank draft or postal express
money order payable in United States dollars to the order of Sierchio & Company,
LLP, as Escrow Agent and delivered to it at 150 East 58th Street, New York, New
York 10155. We reserve the right to reject any subscription in whole or in part
in our sole discretion for any reason whatsoever notwithstanding the tender of
payment at any time prior to our acceptance of the subscriptions received.
Expiration of the Offering
This offering will expire 90 days from the date from the date of this
prospectus, unless concluded by us on an earlier date as we may deem appropriate
or extended by us for an additional 30 days in our sole discretion and without
notice.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included elsewhere in this prospectus. This
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
but not limited to, those set forth under "Risk Factors" and elsewhere in this
prospectus.
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<PAGE>
Plan of Operation
We have not generated any revenues from operations. Further, we expect
minimal, if any, revenues during fiscal year 2001. We are developing an on-line
auction site to connect buyers and sellers of cars and trucks. We will charge a
fee for each listed vehicle and a percentage of the sale along with commissions
from affiliate sales. Depending on the success of our business model, it may see
additional revenue streams from advertisers targeting consumers for new cars,
insurance, shipping, appraisals, parts, accessories and other automotive related
products and services.
Our Website is located at www.edeal.net. The Company is currently
developing and testing the functionality of its beta site. This testing is
expected to continue through the first quarter of 2001. Once all technological
issues are resolved, we anticipate a full launch in April 2001.
We have budgeted $40,000 to complete the development of our Website. Upon
completion, we plan to spend approximately $1,500 per month to maintain the Web
site. The budget to furnish and purchase additional computer hardware and
software is $40,000.
We have three full time employees and one part time employee, two of whom
have just been hired for our Scottsdale Arizona office, we have one individual
for sales and marketing and the another responsible for development of related
content for the Web site. These new employees are expected to add approximately
$10,000 per month to our monthly cost of operations. At present we have only one
full time employee.
Our executive offices are located at 1628 West 1st Ave., Suite 214, Vancouver,
British Columbia, Canada. We use the offices of our president, Herdev S. Rayat,
on a rent free basis. We expect this arrangement to continue until such time as
we decide that additional office space is required. We also maintain a sales and
marketing office at 7332 E. Butherus Drive, Suite 101, Scottsdale, Arizona; we
have entered into a lease assignment with the prior tenant; the term of the
lease expires on March 31, 2002 ; our monthly rent payment for our Scottsdale
office is $2,686.08. The estimated rent, phone and other charges for our
Scottsdale office are budgeted at $5000 per month. This will increase our
current monthly cost of operations from approximately $10,000 to $15,000. We are
currently accruing Mr. Rayat's salary of $2,666.66 per month, and will not use
any of the proceeds of this offering to pay any portion of Mr. Rayat's salary.
The budget to complete the furnishing of the office and to purchase additional
computer hardware and software is $40,000.
As of September 29, 2000, we had $70,706 in cash and $9,593 in liabilities.
We do not believe our cash position is sufficient to fully implement our
business model. However, we have sufficient cash on hand to cover our estimated
operating expenses through February 2001. If the minimum number of units is
sold, we believe we will have sufficient capital to launch our Website and,
implementing our marketing strategy, and cover operating expenses through
December 31, 2001.
17
<PAGE>
Liquidity and Capital Resources
Total shareholder's equity decreased from $82,530 at March 31, 1999 to
$66,345 as of March 31, 2000. From April 1, 1999 to March 31, 2000, our working
capital decreased an aggregate of $5,071. In March 1999, we completed a private
placement to a small group of investors. We sold 340,000 shares for aggregate
gross proceeds of $85,000. At March 31, 1999, we had working capital of $85,095
and current liabilities of $3,279.
As of March 31, 2000 our assets comprised of $80,738 in cash, since we had
not yet incurred significant expenses or cash outlays in the marketing or
promotion of our services. However, our expenses are expected to increase as we
engage in increased marketing and promotion of our services. It is also
anticipated that cash requirements for our Website development will increase.
Our operations presently continue to use rather than provide cash. During
the twelve months ended March 31, 2000, we used $4,357 in cash. Nonetheless,
management is of the opinion that we have sufficient working capital to continue
for the next three months. Thereafter, if this offering is not completed,
additional funds will be required for us to continue as a going concern.
Results of Operations
We were incorporated and started operations on November 6,1998. We have not
yet generated any revenues. During the fiscal year ended March 31, 2000, we
realized a net loss of $16,185 (or $0.003 per share), compared to a net loss of
$7,470 (or $0.001 per share) for the fiscal year ended March 31, 1999.
18
<PAGE>
BUSINESS
General
We are a development stage company seeking to establish an online business
involving the buying and selling of pre-owned automobiles through the Internet.
Description of Business
The automotive industry in the United States exceeds $1 trillion per year.
In 1999, the used automobile industry exceeded $360 billion in retail sales,
with used vehicle unit sales exceeding new vehicle unit sales by over 200%. The
traditional used vehicle market is highly fragmented, competitive and
inefficient. For dealers, this market structure has resulted in high costs
associated with attracting consumers. For consumers, this fragmented market has
resulted in a lack of access to the information that is needed for consumers to
research and evaluate their automotive purchasing decisions. Additionally,
consumers must often deal with multiple parties to arrange for financing,
insurance, warranties and maintenance. The Internet provides an efficient
platform for dealers to aggregate vehicle listings and other automotive product
information and disseminate such information to consumers as well as to expose
both consumers and dealers to an extensive range of buying and selling
opportunities.
It has been estimated that the online used car market in the United States
could jump from less than 3 percent in 1999 to almost 40 percent in 2004. This
would reflect an increase in industry gross revenues from less than $10 billion
in 1999 to more than $164 billion in 2004.
More than one-third (34 percent) of used vehicle buyers log on the Internet
to help them during the shopping process. This is an 8 percentage point increase
over 1999 when only 26 percent of used-vehicle buyers turned to the Internet.
New vehicle shoppers continue to lead used vehicle shoppers in Internet usage,
54 percent versus 34 percent.*
We believe that although new vehicle buyers are still more likely to use
the Internet to shop, the Internet may ultimately have a greater impact on the
used-vehicle market. This is because most used vehicle buyers who go online are
looking for specific vehicles for sale, and new vehicle buyers who go online
research facts and figures such as vehicle pricing or vehicle specifications. As
a result, we believe used-vehicle Internet shoppers are more likely to use
online services to facilitate the actual sale process.
Our business model and strategy is to establish ourselves as an Internet
auction site for buyers and sellers of pre-owned vehicles. Our web site
WWW.EDEAL.NET will provide information on how to buy the right used vehicle, how
to sell a used vehicle along with other useful features like reviews, recall
notices, information on upcoming new models, road test results, links to
manufacturers, links to other informational sources, quotes on insurance through
links with major insurance providers, forums, alerts for service, useful hints
and tips to maintain your vehicle, shipping and appraisals through affiliate's,
accessories and other automotive related items. We will charge a fee for listing
each vehicle and a percentage of the
* According to the 2000 Used Autoshopper.com Study the J.D. Power study is
based on responses from more than 6,000 consumers who recently purchased a
1995 to 2000 model-year used vehicle.
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<PAGE>
sale of the vehicle. We also expect to generate fees from advertising, and
referral fees from insurance companies, shipping companies, appraisers and other
ancillary services.
We have generated no revenues to date, as we have been in the development
stage and are still developing our Web site. We must be considered in the
promotional stage and in the very early phase of our development.
Marketing:
We believe that the ultimate success of our online business depends to a
large degree on the uniqueness and attraction of our concept. We have not
conducted any marketing studies as to the viability of our business model and
strategy. We have made no marketing efforts to date. Future marketing, subject
to available working capital, will be made through advertising mediums such as
television, print and radio as well as targeted email. We will seek to enter
into agreements whereby advertisements are provided in exchange for banner
exchange with other Internet sites. We are seeking to limit our cash
expenditures wherever possible.
Research and Development:
We have not commissioned any formal market or feasibility study as part of
our research and development in regard to the online automobile purchase and
sales business. Due to the cost and delay inherent in obtaining such a market
study, we have determined to proceed on the basis of our own analysis.
Description of Our Office Facilities:
Our executive offices are located at 1628 West 1st Ave., Suite 214,
Vancouver, British Columbia, Canada. We use the offices of our president, Herdev
S. Rayat, on a rent free basis. We expect this arrangement to continue until
such time as we decide that additional office space is required. We also
maintain a sales and marketing office at 7332 E. Butherus Drive, Suite 101,
Scottsdale, Arizona; we have entered into a lease assignment with the prior
tenant; the term of the lease expires on March 31, 2002; our monthly rent
payment for our Scottsdale office is $2,686.08.
Employees:
As of the date of this prospectus, we employ three full and one part-time
individuals. Two of our full time employees are employed in our Scottsdale
office. Our President and part-time bookkeeper are employed at our Vancouver
office. The Scottsdale office houses our web development and sales personnel.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding.
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<PAGE>
MANAGEMENT
Our director(s), executive officer(s) and other key employees, and their
ages, as of October 31, 2000 are as follows:
Name Age Positions held with the Company Since
---- --- ------------------------------- -----
Herdev S. Rayat 42 President, Chief Executive November, 1998
Officer and Director
Harv Dhaliwal 40 Director November, 1998
Arian Soheili 33 Secretary, Treasurer and Director November, 1998
Mr. Herdev S. Rayat is considered a "founder" and "parent" (as such terms
are defined in the Securities Exchange Act of 1934, as amended) because he (1)
has taken initiative in our organization and development of our business plan
and (2) currently controls approximately 98% of the issued and outstanding
common stock.
All of the directors are currently serving a term of office until the next
annual meeting of shareholders and until their successors are duly elected and
qualified, or until they resign or are removed.
The following represents a summary of the business history of each of the
foregoing individuals for the last five years:
HERDEV S. RAYAT. Mr. Rayat is President of Thor West Management Group, a
private management company that provides consulting and management services, he
has been involved with this private company since 1994. From 1996 Mr. Rayat has
worked on researching and developing our business plan. In his position as
President, Mr. Rayat will be responsible for overseeing all of our activities
and strategic planning for future development.
HARV DHALIWAL. Mr. Dhaliwal, since 1985, has been the President and Chief
Executive Officer of Sight & Sound Ltd., a privately held company engaged in the
retail sales of audio and video products.
ARIAN SOHEILI. Mr. Soheili graduated from Simon Fraser University with a
Bachelor of Business Administration majoring in Accounting and Management
Information Systems. From 1995 to December 1998, Mr. Soheili worked for Deloitte
& Touche, providing clients with system strategies for technology implementation
and e-commerce solutions. Mr. Soheili posses skills in Java, MS SQL, Windows
NT/95, ACCPAC, Power Play and have extensive working knowledge and experience in
HTML, Internet & Intranet, Electronic Commerce, Fire Walls and MIS report
writing tools. Since January 1999, Mr. Soheili has been the president and
founder of Precision Accounting Systems & Solutions, a financial and internet
consulting business.
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<PAGE>
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. The Company has not
compensated its directors for service on the Board of Directors or any committee
thereof. As of the date hereof, no director has accrued any expenses or
compensation. Officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors. The
Company does not have any standing committees at this time.
There are no family relationships between any of the Company's directors,
executive officers and other key personnel.
All directors and officers of the Company are elected annually to serve for
one year or until their successors are duly elected and qualified.
During the past five years no director, executive officer, promoter or
control person of the Company was:
(1) the subject of any bankruptcy petition filed by or against any business
of which such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time;
(2) convicted in a criminal proceeding or is subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; or
(4) found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law.
EXECUTIVE COMPENSATION
The following summary compensation table reflects all compensation awarded
to, earned by, or paid to our chief executive officers for all services rendered
to us in all capacities during each of the years ended December 31, 1998, 1999
and 2000. Except for Mr. Rayat none of our other executive offices received
salary, bonus or other compensation for the years listed.
22
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--------------------------------------------------------------------------------
Summary Compensation Table
--------------------------------------------------------------------------------
All Annual
Name and Principal Position Year Salary Bonus Compensation
--------------------------------------------------------------------------------
Herdev S. Rayat 1998 0 $ 0 $ 0
1999 0 $ 0 $ 0
2000 32,000* $ 0 $ 32,000*
--------------------------------------------------------------------------------
* Mr. Rayat's salary commenced on Jauary 1, 2000. We are accruing his
entire salary until such time as we have sufficient cash flow to pay the
same.
Mr. Rayat presently serves as our president pursuant to a one year
Management Agreement effective January 1, 2000. Pursuant to this agreement, Mr.
Rayat is entitled to annual compensation in the amount of $32,000. We are
accruing his entire salary until such time as we have sufficient cash flow to
pay the same. Mr. Rayat will be reimbursed for reasonable out-of-pocket expenses
incurred on our behalf. The Management Agreement may be terminated by us for
cause, or by Mr. Rayat upon not less than sixty days advance written notice. Mr.
Rayat receives no additional compensation for serving as a director.
Directors are not currently compensated, although each is entitled to be
reimbursed for reasonable and necessary expenses incurred on our behalf.
Except for our agreement with Mr. Rayat, there are no employment contracts
or agreements between us and any of our directors and officers.
We do no have any employee stock option or other benefit plans.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of October 31, 2000 the beneficial
ownership of common stock of each person known to us who owns more than 5% of
our issued and outstanding common stock and of our directors, executive officers
and significant employees.
23
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<TABLE>
<CAPTION>
===========================================================================================
Name and address of Amount and Percent of class Percentage Percentage
benneficial Owner Nature of owned ownership if ownership if The
Beneficial the minimum is Maximum is sold
Ownership sold
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Herdev S. Rayat 5,000,000 98% 64% 33%
1628 West 1st Ave.
Suite 214
Vancouver, B.C.
Canada V6J 1G1
-------------------------------------------------------------------------------------------
All directors, 5,000,000 98% 64% 33%
executive offices
as a group (3
persons)
===========================================================================================
</TABLE>
MARKET FOR OUR COMMON STOCK
As of March 8, 1999, our common stock was authorized for trading in the
over-the-counter market and was quoted on the pink sheets under the symbol
"EDAN". Prior to that, there was no established trading market for the Common
Stock. However, there is no current trading activity in our common stock and
there has been no reported trading activity since at least May of 1999.
The following table sets forth the range of high and low bid quotations as
reported for our common stock, for the period from January 1 to the date of the
filing of this prospectus. Quotations represent prices between dealers, do not
include retail markups, markdowns or commissions and do not necessarily
represent prices at which actual transactions were effected.
Common Shares
FISCAL YEAR 2000 High Low
---------------- ---- ---
First Quarter $0.00 $0.00
(Jan. 1 through March 31)
Second Quarter $0.00 $0.00
(April 1 through May 04)
The number of record holders of the Common Shares as of the date of this
prospectus was approximately 138, including nominees of beneficial owners.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital consists of 100,000,000 shares of common stock,
$.001 par
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value and 1,000,000 shares of preferred stock, $.01 par value. The following
description of our securities is qualified in its entirety by reference to our
Articles of Incorporation and Articles of Amendment to the Articles of
Incorporation, copies of which are available upon request.
Common Stock
Each share of common stock is entitled to one vote at all meetings of
shareholders. All shares of common stock are equal to each other with respect to
liquidation rights and dividend rights. There are no preemptive rights to
purchase any additional shares of common stock. The Articles of Incorporation
prohibit cumulative voting in the election of directors. In the event of our
liquidation, dissolution or winding up, holders of shares of common stock will
be entitled to receive on a pro rata basis all of our assets remaining after
satisfaction of all liabilities and all liquidation preferences, if any, granted
to holders of our preferred stock.
All of our issued and outstanding common stock is fully paid and
non-assessable and is not subject to any future call.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to their ownership. The holders of shares of our common stock do not
have cumulative voting rights, which means that the holders of more than 50% of
the outstanding shares, voting for the election of directors, can elect all of
our directors if they so choose and, in that event, the holders of the remaining
shares will not be able to elect any of our directors.
Preferred Stock
The Articles of Incorporation vests our Board of Directors with authority
to divide the preferred stock into series and to fix and determine the relative
rights and preferences of the shares of any such series so established to the
full extent permitted by the laws of the State of Nevada and the Articles of
Incorporation in respect to, among other things, (i) the number of shares
constituting such series and the distinctive designations thereof; (ii) the rate
and preference of dividends, if any, and the time of payment of dividends,
whether dividends are cumulative and the date from which any dividend shall
accrue; (iii) whether preferred stock may be redeemable and, if so, the
redemption price and the terms and conditions of redemption; (iv) the
liquidation preferences payable on preferred stock in the event of involuntary
or voluntary liquidation; (v) sinking fund or other provisions, if any, for
redemption or purchase of preferred stock; (vi) the terms and conditions by
which preferred stock may be converted, if the preferred stock of any series are
issued with the privilege of conversion; and (vii) voting rights, if any.
Holders of the preferred stock are entitled to one vote for each share held of
record. Holders of the preferred stock vote with holders of the common stock as
one class. There are no shares of preferred stock issued and outstanding.
Warrants
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<PAGE>
In connection with this offering, we will issue one warrant per unit for a
total of up to 5,000,000 warrants. Each warrant may be exercised by the holder
thereof to purchase one share of common Stock at an exercise price of $.20 per
share for a period of 36 months from the date of issuance of the warrant unless
sooner redeemed. Thereafter, the warrant will expire, become void and of no
further force or effect, unless extended in our sole discretion.
In the event a decision is made to extend the exercise period or change the
exercise price, such notice shall be delivered to holders by written notice not
less than thirty days prior to expiration of the exercise period. Upon
expiration of the exercise period, it is anticipated that any market which might
have existed for the warrants will terminate.
The warrants contain the usual anti-dilution provisions so as to avoid
dilution of the equity interest, which is represented by the underlying common
stock upon the occurrence of certain events, such as stock dividends or splits.
In the event of our liquidation or dissolution, if any, holders of the warrants
will not be entitled to participate in the distributed assets if any, of the
Company. Holders of warrants will have no voting, preemptive, liquidation or
other rights of a stockholder, and no dividends will be declared on the
warrants.
The warrants are redeemable at our election at any time following
detachment upon thirty days written notice to the holders at a redemption price
of $.0001 per warrant. Notice of our decision to redeem the warrants shall be
given to the holders by regular mail at the last known address maintained by our
warrant agent. The failure of the holder of such warrants to purchase the common
stock within the thirty-day period will result in such holders' forfeiture of
the right to purchase the common stock underlying the warrants.
Transfer Agent
Our transfer agent for the common stock and warrant agent for the Warrants
is Holladay Stock Transfer, Inc. Its address and telephone number is 2939 North
67th Place, Scottsdale, Arizona 85251; (480) 481-3940.
Dividends
We have not declared any dividends since inception, and have no present
intention of paying any cash dividends on our common stock in the foreseeable
future. The payment of dividends in the future rests within the discretion of
our board of directors and will depend, among other things, upon our earnings,
capital requirements and, financial condition, as well as other relevant facts.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
We believe that the indemnification provisions of our Articles of
Incorporation and Bylaws will be useful to attract and retain qualified persons
as directors and officers. Our Articles of Incorporation limit the liability of
directors and officers to the fullest extent permitted by Nevada law. This is
intended to allow our directors and officers the benefit of
26
<PAGE>
Nevada's corporation law which provides that directors and officers of Nevada
corporations may be relieved of monetary liabilities for breach of their
fiduciary duties as directors, except under circumstances which involve acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1993 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, 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 Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than our payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
LEGAL MATTERS
The legality of the securities we offering by this prospectus will be
passed on by Sierchio & Company, LLP 150 East 58th Street, New York, New York
10155, our legal counsel.
EXPERTS
The financial statements of we included herein and in the Registration
Statement have been examined by Berenfeld, Spritzer, Shechter & Sheer
independent certified public accountants, and are included herein and in the
Registration Statement in reliance upon the report of such firm given on there
authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form SB-2. This prospectus, which is a part of the Registration
Statement, does not contain all of the information included in the Registration
Statement. Some information is omitted and you should refer to the Registration
Statement and its exhibits. With respect to references made in this prospectus
to any of our contracts, agreements or other documents, such references are not
necessarily complete and you should refer to the exhibits attached to the
Registration Statement for copies of the actual contract, agreement or other
document. You may review a copy of the Registration Statement, including
exhibits, at the Securities and Exchange Commission's public reference room at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or Seven World
Trade Center, 13th Floor,
27
<PAGE>
New York, New York 10048, or Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661.
The public may obtain information on the operation of the public reference
room by calling the Securities and Exchange Commission at 1-800-SEC-0330.
We intend to send an annual report, including audited financial statements,
to our shareholders.
We will also file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements or other information on file at the public
reference rooms. You may also request copies of these documents, for a copying
fee, by writing to the Securities and Exchange Commission.
Our Registration Statement can be reviewed by accessing the Securities and
Exchange Commission's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Securities and Exchange
Commission.
28
<PAGE>
e.DEAL.NET, INC.
FINANCIAL STATEMENTS
------------------------------------------
CONTENTS
-----------
A. Audited
Independent auditors' report
Financial statements:
Balance sheets as at March 31, 1999 and 2000
Statements of operations For the years ended March 31, 1999 and 2000, And For
the Cumulative Periods From Inception (November 6, 1998) to March 31, 2000
Statements of Stockholders' Equity For the Cumulative Periods From Inception
(November 6, 1998) to March 31, 2000
Statements of cash flows for the years ended March 31, 1999 and 2000, And For
the Cumulative Periods From Inception (November 6, 1998) to March, 2000
Notes to financial statements
B. Unaudited
Balance Sheet at September 30, 2000
Statement of Operations For the Six Months Ended September 30, 2000
and 1999, and For The Cumulative Periods From Inception
(November 6, 1998) to September 30, 2000
Statements of Stockholders' Equity For the Cumulative Periods From Inception
(November 6, 1998) to September 30, 2000
Statement of Cash Flows For The Six Months Ended September 30, 2000
And 1999, and For The Cumulative Periods From Inception
(November 6, 1998) to September 30, 2000
Notes to Financial Statements
29
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and
Board of Directors
e.Deal.Net, Inc.
Ft. Lauderdale, Florida
We have audited the accompanying balance sheet of e.Deal.Net, Inc.
(a development stage company) as of March 31, 2000 and 1999 and the related
statements of operations, changes in stockholders' equity and cash flows for the
periods then ended and the period November 6, 1998 (inception) to March 31,
2000. These financial statements are the responsibility of the Company' s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe the 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 e.Deal.Net, Inc. as of March
31, 2000, and the results of its operations and its cash flows for the period
November 6, 1998 (inception) to March 31, 2000 in conformity with generally
accepted accounting principles.
BERENFELD, SPRITZER, SHECHTER & SHEER
June 8, 2000
Miami, Florida
30
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
MARCH 31,
2000 1999
-------- --------
CURRENT ASSETS:
CASH $ 80,738 $ 85,095
OTHER ASSETS:
Organization costs, net of
accumulated amortization 0 714
-------- --------
TOTAL ASSETS $ 80,738 $ 85,095
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 0 $ 779
Accrued expenses payable 14,393 2,500
-------- --------
Total Current Liabilities 14,393 3,279
STOCKHOLDERS' EQUITY:
Preferred stock $0.01 par value
1,000,000 shares authorized,
0 shares issued and outstanding 0 0
Common stock, $0.001 par value,
100,000,000 shares authorized,
5,340,000 shares issued and
outstanding 5,340 5,340
Additional paid-in capital 84,660 84,660
Deficit accumulated during the
the development stage (23,655) (7,470)
-------- --------
Total Stockholders' Equity 66,345 82,530
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 80,738 $ 85,809
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE PERIOD FOR THE PERIOD NOVEMBER 6, 1998
ENDED ENDED (INCEPTION)
MARCH 31, 2000 MARCH 31, 1999 TO MARCH 31, 2000
-------------- -------------- -----------------
<S> <C> <C> <C>
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
----------- ----------- -----------
DEVELOPMENT STAGE EXPENSES:
Amortization 714 65 714
Bank charges 192 0 192
License and taxes 323 0 323
Management fees 9,418 5,000 9,418
Office expense 51 0 51
Professional fees 8,713 2,500 8,963
Travel 198 0 198
----------- ----------- -----------
Total Development Stage Expenses (19,609) (7,565) (19,859)
----------- ----------- -----------
OTHER INCOME:
Interest Income 3,424 95 3,424
----------- ----------- -----------
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (16,185) $ (7,470) $ (16,435)
=========== =========== ===========
LOSS PER SHARE:
Basic $ (0.0030) $ (0.0014) $ (0.0031)
=========== =========== ===========
Diluted N/A N/A N/A
=========== =========== ===========
Weighted-average of common
shares outstanding 5,340,000 5,208,690 5,302,740
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD NOVEMBER 6, 1998 (INCEPTION) TO MARCH 31, 2000
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
----------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, November 6, 1998
(inception) 0 $ 0 $ 0 $ 0 $ 0
Restricted common stock issued to related parties
for management services 5,000,000 5,000 0 0 5,000
Common stock sales 340,000 340 84,660 0 85,000
Deficit accumulated during the
development stage for the
period November 6, 1998 (inception)
to March 31, 1999 0 0 0 (7,470) (7,470)
--------- --------- --------- --------- ---------
Balance, March 31, 1999 5,340,000 $ 5,340 $ 84,660 $ (7,470) $ 82,530
Deficit accumulated during the
development stage for the year
ended March 31, 2000 0 0 0 (16,185) (16,185)
--------- --------- --------- --------- ---------
Balance, March 31, 2000 5,340,000 $ 5,340 $ 84,660 $ (23,655) $ 66,345
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE PERIOD FOR THE PERIOD NOVEMBER 6, 1998
ENDED ENDED (INCEPTION)
MARCH 31, 2000 MARCH 31, 1999 TO MARCH 31, 2000
-------------- -------------- -----------------
<S> <C> <C> <C>
$ 0 $ 0 $ 0
-------- -------- --------
OPERATING ACTIVITIES:
Deficit accumulated during the
development stage (16,185) (7,470) (23,655)
Adjustments to reconcile net loss
to net cash used by operations:
Amortization 714 65 779
Increase in accounts payable (779) 0 (779)
Increase in accrued expenses payable 11,893 2,500 14,393
-------- -------- --------
Net Cash Used by
Operating Activities (4,357) (4,905) (9,262)
-------- -------- --------
FINANCING ACTIVITIES:
Proceeds from the issuance of
common stock 0 85,000 85,000
Common stock issued for
management services 0 5,000 5,000
-------- -------- --------
Net Cash Provided by
Financing Activities -- 90,000 90,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (4,357) 85,095 80,738
CASH, BEGINNING OF PERIOD 85,095 0 0
-------- -------- --------
CASH, ENDING OF PERIOD $ 80,738 $ 85,095 $ 80,738
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999 AND FOR THE
CUMULATIVE PERIOD NOVEMBER 6, 1998 (INCEPTION) TO MARCH 31, 2000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
During the years ended March 31, 2000 and 1999, and for the cumulative
period November 6, 1998 (inception) to March 31, 1999, the Company did not
pay any interest.
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
The Company entered into the following non-cash transactions:
During the period November 6, 1998 (inception) the Company issued 5,000,000
restricted shares of common stock to Mr. Herdev S. Rayat (President) in
consideration for management services. This transaction was valued at
$5,000.
In January, 1999, Company issued 340,000 shares of unrestricted common
stock to unrelated parties for cash consideration. This transaction was
valued at $85,000.
The accompanying notes are an integral part of these financial statements.
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
e.Deal.Net, Inc. ("the Company") was incorporated on November 6, 1998 under
the laws of the State of Nevada. The Company's activities have been devoted
primarily to positioning itself to take advantage of opportunities
available in the Internet business. The Company intends to develop an
Internet based automobile and heavy transportation equipment auction site
in local markets throughout North America and to grow through internal
development, strategic alliances and acquisitions of existing businesses.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Accordingly, actual results could differ from
those estimates.
INCOME TAXES
The Company utilizes Statement of Financial Standards SFAS No. 109,
"Accounting for Income Taxes", which requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of
events that have been included in financial statements or tax returns.
Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates applicable to the periods
in which the differences are expected to affect taxable income.
31
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONT'D)
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. The accompanying financial
statements have no provisions for deferred tax assets or liabilities
because the deferred tax allowance offsets the deferred tax asset in its
entirety.
NET LOSS PER SHARE
The Company has adopted SFAS No. 128 "Earnings Per Share". Basic loss per
share is computed by dividing the loss available to common shareholders by
the weighted-average number of common shares outstanding. Diluted loss per
share is computed in a manner similar to the basic loss per share, except
that the weighted-average number of shares outstanding is increased to
include all common shares, including those with the potential to be issued
by virtue of warrants, options, convertible debt and other such convertible
instruments. Diluted earnings per share contemplates a complete conversion
to common shares of all convertible instruments, only if they are dilutive
in nature with regards to earnings per share. Since the Company has
incurred net losses for all periods, and since there are no convertible
instruments, basic loss per share and diluted loss per share are the same.
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income". This statement requires
companies to classify items of other comprehensive income by their nature
in a financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial position.
SFAS No. 130 is effective for financial statements issued for fiscal years
beginning after December 15, 1997. Management believes that SFAS No. 130
has no material effect on the Company's financial statements.
32
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONT'D)
In June 1997, FASB issued SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information". This statement establishes additional
standards for segment reporting in financial statements and is effective
for financial statements issued for fiscal years beginning after December
15, 1997. Management believes that SFAS No. 131 does not have a material
effect on the Company's financial statements.
In April, 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-5, "Reporting for Costs of Start-Up
Activities", ("SOP 98-5"). The Company is required to expense all start-up
costs related to new operations as incurred. In addition, all start-up
costs that were capitalized in the past must be written off when SOP 98-5
is adopted. The Company's adoption did not have a material impact on the
Company's financial position or results of operations.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", is effective for financial statements issued for fiscal years
beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. Management does not believe that SFAS No. 133 will have a
material effect on its financial position or results of operations.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by Mortgage Banking
Enterprises", is effective for financial statements issued in the first
fiscal quarter beginning after December 15, 1998. This statement is not
applicable to the Company.
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections", is effective for financial statements issued for fiscal years
beginning February 1999. This statement is not applicable to the Company.
33
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN MATTERS
The Company's initial activities have been devoted to developing a business
plan, negotiating contracts and raising capital for future operations and
administrative functions.
The ability of the Company to achieve its business objectives is contingent
upon its success in raising additional capital until such time as adequate
revenues are realized from operations.
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. As shown in the financial
statements, development stage losses from November 6, 1998 (inception) to
March 31, 2000 amounted to $23,655. The Company's cash flow requirements
during this period have been met by contributions of capital. No assurance
can be given that these sources of financing will continue to be available.
If the Company is unable to generate profits, or unable to obtain
additional funds for its working capital needs, it may have to cease
operations.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to retain
additional paid-in capital, and to ultimately attain profitability.
NOTE 4 - DEFERRED INCOME TAXES
The Company has a carry forward loss for income tax purposes of $23,655
that may be offset against future taxable income. The carry forward loss
begins to expire in the year 2019. Due to the uncertainty regarding future
operations, management has elected not to recognize any future income tax
benefits that may arise from the utilization of the carry forward.
34
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 4 - DEFERRED INCOME TAXES (CONT'D)
3/31/00 3/31/99
-------- --------
Deferred tax assets arising
from net operating losses $ 4,669 $ 1,121
Less valuation allowance (4,669) (1,121)
-------- --------
Net Deferred Tax Assets $ 0 $ 0
======== ========
NOTE 5 - ACCRUED EXPENSES
Accrued expenses at March 31, 2000 are as follows:
3/31/00 3/31/99
-------- --------
Accrued audit and accounting fees $ 5,393 $ 2,500
Accrued professional fees 1,000 0
Accrued management fees 8,000 0
-------- --------
Total Accrued Expenses $ 14,393 $ 2,500
======== ========
NOTE 6 - STOCKHOLDERS' EQUITY
The Company has issued a total of 5,000,000 common shares to Mr. Herdev S.
Rayat (President). Mr. Rayat is deemed to be a founder of the Company. The
shares are restricted as to their sale ability and were issued in exchange
for management services rendered that were valued at $5,000.
35
<PAGE>
e.DEAL.NET, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 6 - STOCKHOLDERS' EQUITY (CONT'D)
During fiscal year ended March 31, 1999, the Company issued 340,000 common
shares to unrelated parties. These shares were issued under a private
offering pursuant to Regulation D, Rule 504, promulgated under the
Securities Act of 1933. Common shares were offered to non-accredited
investors for cash consideration of 25 cents per share. 340,000 shares were
issued to 139 unaffiliated shareholders. That offering is now closed.
NOTE 7 - RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
During the fiscal year 2000, the Company accrued $ 8,000 in management fees
to Mr. Herdev Rayat, a related party, under a management agreement. The
agreement between Mr. Rayat and the Company calls for Mr. Rayat to provide
management and consulting services. No payments have been made to Mr. Rayat
as of the balance sheet date.
36
<PAGE>
e.DEAL.NET, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
(Unaudited) (Audited)
September March
--------- -----
30,2000 31, 2000
------- --------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 70,706 $ 80,738
-------- --------
Total Current Assets $ 70,706 $ 80,738
Property and Equipment - Note 2 3,040 0
-------- --------
Total Assets $ 73,746 $ 80,738
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued Expenses Payable $ 9,593 $ 14,393
-------- --------
$ 9,593 $ 14,393
Stockholders' Equity
Preferred Stock: $0.10 par value, 1,000,000 shares 0 0
authorized, 0 shares issued and outstanding
Common Stock: $0.001 par value, 100,000,000 shares
authorized, 5,340,000 shares issued and outstanding at
September 30, 2000 and March 31, 2000, respectively 5,340 5,340
Additional Paid In Capital 84,660 84,660
Deficit Accumulated During the Development Stage (25,847) (23,655)
-------- --------
Total Stockholders' Equity 64,153 66,345
-------- --------
Total Liabilities and Stockholders' Equity $ 73,746 $ 80,738
======== ========
</TABLE>
37
<PAGE>
e.DEAL.NET, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited
(Unaudited) (Unaudited) For The
For The Six For The Six Period From
Months Ended Months Ended Inception
Sep. 30, 2000 Sep. 30, 1999 November 6,
------------- ------------- 1998)
To Sep. 30,
2000
----
<S> <C> <C> <C>
Development Stage Revenues $ 0 $ 0 $ 0
Development Stage Expenses
General and Administrative 4,253 4,296 31,426
Other Income
Interest Income 2,060 1,611 5,579
----------- ----------- -----------
Deficit Accumulated During The $ (2,193) $ (2,685) $ (25,847)
Development Stage =========== =========== ===========
Loss Per Share:
Basic $ (0.0004) $ (0.0005) $ (0,0048)
=========== =========== ==========
Diluted N/A N/A N/A
=========== =========== ==========
Weighted-Average Of Common Shares 5,340,000 5,340,000 5,340,000
Outstanding =========== =========== ==========
</TABLE>
38
<PAGE>
e.DEAL.NET, INC.
Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD NOVEMBER 6, 1998 (INCEPTION) TO SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATE
COMMON STOCK ADDITIONAL DURING THE
----------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance, November 6, 1998 0 $ 0 $ 0 $ 0 $ 0
(Inception)
Restricted common stock
issued to related parties
for management services 5,000,000 5,000 0 0 5,000
Common stock sales 340,000 340 84,660 0 85,000
Deficit accumulated during
the development stage for
the period November 6, 1998
(Inception) to March 31, 1999 0 0 0 (7,470) (7,470)
--------- --------- --------- --------- ---------
Balance, March 31, 1999 5,340,000 $ 5,340 $ 84,660 $ (7,470) $ 82,530
(Audited)
Deficit accumulated during
the development stage for
the year ended March 31, 2000 0 0 0 (16,185) (16,185)
--------- --------- --------- --------- ---------
Balance, March 31, 2000 5,340,000 $ 5,340 $ 84,660 $ (23,655) $ 66,345
(Audited)
Deficit accumulated during
the development stage for
the period ended
September 30, 2000 0 0 0 (2,193) (2,193)
--------- --------- --------- --------- ---------
Balance, September 30, 2000 5,340,000 $ 5,340 $ 84,660 $ (25,847) $ 64,153
(Unaudited) ========= ========= ========= ========= =========
</TABLE>
39
<PAGE>
e.DEAL.NET, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
(Unaudited) (Unaudited) (Unaudited
For The Six For The Six For The Period
Months Ended Months Ended From Inception
September 30, September 30, November 6,
2000 1999 1998)
---- ---- To Sep. 30,
2000
----
<S> <C> <C> <C>
Operating Activities
Deficit accumulated during the development stage $ (2,193) $ (2,685) $(25,847)
Adjustments to Reconcile Net Loss to Net Cash Used
By Operations:
Amortization 246 0 1,025
(Increase) Decrease in Other Receivable 250 0
(Increase) Decrease in Organization Costs 78 (779)
Increase (Decrease) in Accounts Payable (4,800) (3,179) 9,593
------------------------------------------------
Net Cash Used By Operating Activities (6,747) (5,536) (16,008)
Investing Activities
Purchase of Property and Equipment (3,286) (3,286)
------------------------------------------------
Net Cash Used For Investing Activities (3,286) 0 (3,286)
Financing Activities
Proceeds From The Issuance Of Common Stock 0 0 85,000
Common Stock Issued For Management Services 0 0 5,000
------------------------------------------------
Net Cash Provided By Financing Activities 0 0 90,000
Net Increase (Decrease) In Cash (10,033) (5,536) 70,706
Cash, Beginning of Period 80,738 85,095 0
------------------------------------------------
Cash, Ending of Period $ 70,706 $ 79,559 $ 70,706
======== ======== ========
</TABLE>
40
<PAGE>
e.DEAL.NET, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
Supplemental Information
(Unaudited) (Unaudited) (Unaudited)
For The Six For The Six For The Period
Months Ended Months Ended From Inception
September 30, September 30, November 6, 1998
2000 1999 To Sep. 30, 2000
---- ---- ----------------
<S> <C> <C> <C>
Cash Paid For:
Interest $ 0 $ 0 $ 0
======= ======= =======
Income Taxes $ 0 $ 0 $ 0
======= ======= =======
Noncash Investing and Financing Activities:
Common Stock Issued For Services $ 0 $ 0 $ 5,000
======= ======= =======
Common Stock Issued For Unrelated Parties $ 0 $ 0 $85,000
======= ======= =======
</TABLE>
41
<PAGE>
e.DEAL.NET, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - PRESENTATION OF INFORMATION
The accompanying unaudited financial statements have been prepared in
accordance with Form 10SB and in the opinion of management of
e.DEAL.NET,INC. (The Company), include all normal adjustments considered
necessary to present fairly the financial position as of September 30, 2000
and the results of operations for the six months ended September 30, 2000
and 1999. These results have been determined on the basis of generally
accepted accounting principles and practices and applied consistently with
those used in the preparation of the Company's audited financial statements
and notes for the year ended March 31, 2000.
Certain information and footnote disclosures normally included in the
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
the accompanying unaudited interim financial statements be read in
conjunction with the financial statements and notes thereto incorporated by
reference in the Company's 1999,1998, audited financial statements
NOTE 2 - PROPERTY AND EQUIPMENT
Property and Equipment consists of the following at September 30, 2000:
Computer Equipment $3,286.00
Less Accumulated Depreciation 246.00
---------
Net Book Value $3,040.00
=========
Depreciation expense charged to operations during 2000 was $246.00.
42
<PAGE>
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. Indemnification of Officers and Directors.
Our Bylaws provide that we may indemnify any director, officer, agent or
employee against all expenses and liabilities, including counsel fees,
reasonably incurred by or imposed upon them in connection with any proceeding to
which they may become involved by reason of their being or having been a
director, officer, employee or agent of our Company. Moreover, our Bylaws
provide that we shall have the right to purchase and maintain insurance on
behalf of any such persons whether or not we would have the power to indemnify
such person against the liability insured against. Insofar as indemnification
for liabilities arising under the Securities Act, we have been informed that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
INFORMATIONTION NOT REQUIRED IN PROSPECTUS
ITEM 25. Other Expenses of Issuance and Distribution.
The following table sets forth an itemization of various expenses, all of
which we will pay, in connection with the sale and distribution of the
securities being registered. All of the amounts shown are estimates, except the
Securities and Exchange Commission registration fee.
Securities and Exchange Commission Registration Fee $ 396.00
Accounting Fees and Expenses 5,000.00
Transfer Agents Fees 1,500.00
Printing Costs 1,500.00
Filing Related Fees 3,000.00
Legal Fees and Expenses 30,000.00
Miscellaneous Fees 604.00
----------
TOTAL $42,000.00
ITEM 26. Recent Sales of Unregistered Securities.
Set forth in chronological order is information regarding shares of common
stock issued from November 6, 1998 to the date of this prospectus. Also included
is the consideration, if any, received by us for such Units and information
relating to the section of
43
<PAGE>
the Securities Act of 1933 (the "Securities Act"), or rule of the Securities and
Exchange Commission under which exemption from registration was claimed.
(a) In January 1999, 5,000,000 shares were issued to Herdev S. Rayat, our
president, at a price of $.001 per share. We believe this issuance to have been
exempt from the registration requirements of the Securities Act by virtue of
Section 4(2).
(b) In March 1999, 340,000 shares were issued to 138 individuals at a price
of $.25 per share or an aggregate of $84,500. We believe this issuance was
exempt from the registration requirements of the Securities Act by virtue of
Rule 504 of Regulation D thereunder. Form D was filed on February 12, 1999.
ITEM 27. Exhibits and Financial Statement Schedules.
(A) EXHIBITS
The following Exhibits are either attached hereto, incorporated herein by
reference or will be filed by amendment:
EXHIBIT DESCRIPTION OF EXHIBIT AND FILING REFERENCE
NUMBER
3.1(a) Articles of Incorporation
3.1(b) Certificate of Amendment to the Articles of Incorporation
3.2 Bylaws
5.1 Opinion of Sierchio & Company, LLP regarding the legality of
the securities being registered
23.1 Consent of Sierchio & Company, LLP (included in Exhibit 5.1)
23.2 Consent of Berenfeld, Spritzer, Shecter & Sheer
27.1 Financial Data Schedule
(B) FINANCIAL STATEMENT SCHEDULES
Financial Statement Schedules omitted because the information is included
in the Financial Statements and Notes thereto.
ITEM 28. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of
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1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 14 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually, or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) (230.424(b) of this Chapter) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the Registration Statement.
Provided, however, that paragraphs (b)(1)(i) and (b)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities and Exchange of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
Registration Statement
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relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
Offering.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that at that time shall be deemed to be the initial bona fide offering
thereof.
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In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, British Columbia, Canada, on the 11th day of December, 2000.
e.Deal.net, Inc.
By: /s/ Herdev S. Rayat
------------------------
Herdev S. Rayat, President, Chief Executive Officer and Director
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 11th day of December, 2000.
/s/ Harv Dhaliwal Director
------------------------
Harv Dhaliwal
/s/ Arian Soheili Secretary, Treasurer and Director
------------------------
Arian Soheili
Each person whose signature appears below constitutes and appoints Herdev
S. Rayat his or her true and lawful attorney-in-fact and agent with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all Amendments (including post-effective
Amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Harv Dhaliwal
------------------------ December 11, 2000
Harv Dhaliwal
/s/ Arian Soheili
------------------------ December 11, 2000
Arian Soheili
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EXHIBIT INDEX
The following Exhibits are either attached hereto or incorporated herein by
reference:
EXHIBIT DESCRIPTION OF EXHIBIT AND FILING REFERENCE
NUMBER Page
3.1(a) Articles of Incorporation
3.2 Bylaws
5.1 Opinion of Sierchio & Company, LLP,
5.2 regarding the legality of the securities being registered
23.1 Consent of Sierchio & Company, LLP
(included in Exhibit 5.1)
23.2 Consent of Berenfeld, Spritzer, Shechter & Sheer, CPAs
27.1 Financial Data Schedule
48
