3DSHOPPING COM, 10-K/A, 2000-10-27

3DSHOPPING COM
10-K/A, 2000-10-27
BUSINESS SERVICES, NEC

Previous: FIRST HORIZON ASSET SECURITIES INC, 8-K, EX-10.1, 2000-10-27

Next: 3DSHOPPING COM, 10-K/A, EX-23.1, 2000-10-27

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1 to
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________

Commission File Number 1-15161

3Dshopping.com
(Exact name of registrant as specified in its charter)

California 95-4594029
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

308 Washington Boulevard
Marina del Rey, California 90292
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (310) 301-6733
-------------

Securities registered pursuant to Section 12(b) of the Act:
Common Stock
Warrants to Purchase Common Stock

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of each class)

The registrant hereby amends the following items, financial statements,
exhibits or other portions of its Annual Report on Form 10-K for the fiscal year
ended June 30, 2000 as set forth in the pages attached hereto:

Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

3DSHOPPING.COM
TABLE OF CONTENTS

Item
No. Page
----- -----

Part III

Item 10. Directors and Executive Officers of the Registrant..............3
Item 11. Executive Compensation..........................................6
Item 12. Security Ownership of Certain Beneficial Owners and
Management.....................................................11
Item 13. Certain Relationships and Related Transactions.................13

Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K......................................................14

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The current executive officers and directors of the Company are as follows:

Name Age Position
---- --- --------
Terry L. Gourley 38 Chairman of the Board and Chief Executive
Officer
Joel P. Gayner 56 President and Director
Jacalyn A. Hughes 48 Executive Vice President of Operations
and Chief Technology Officer
Howard A. Cohn 60 Senior Vice President of Administration
and Chief Financial Officer
Brian A. Smith 54 Executive Vice President of Marketing
David C. Williams 43 Executive Vice President of Business
Development
C. James Jensen 59 Director
Maryann O'Donnell 49 Director
John A. Allegretti 44 Director

Terry L. Gourley has served as our chief executive officer since May
2000 and became our chairman of the board in September 2000. From November 1999
to May 2000, he served as our director of marketing communications. From
February 1998 until November 1999, Mr. Gourley served as president and branch
manager of a financial services business at NLSB Bank Financial Service Center.
From March 1993 until February 1998, Mr. Gourley was an independent business
owner and branch manager for FLPL Financial Services.

Joel P. Gayner has served as our president since May 2000, and
became a member of our board of directors in September 2000. From February 2000
to May 2000, he served as our senior vice president of sales and marketing. From
1990 until February 2000, Mr. Gayner was the president of Group G Associates,
Inc., a marketing company.

Jacalyn A. Hughes has served as our chief technology officer since
February 2000 and is also currently our executive vice president of operations.
From January 1998 to February 2000, Ms. Hughes was vice president of information
technology and chief information officer at Specialty Laboratories, Inc., a
reference laboratory serving hospitals and specialist physicians. From August
1989 to January 1998, Ms. Hughes served as director of management information
systems at Candle Corporation, a supplier of networked business applications.
Ms. Hughes currently serves on boards for the Society for Information
Management, Southern California, and the Organization of Women Executives.

Howard A. Cohn has served as our senior vice president of
administration and chief financial officer since May 2000. From November 1999 to
May 2000, he served as our controller and treasurer. From 1995 to November 1999,
Mr. Cohn was vice president of strategic planning and corporate development at
West LA Music. Mr. Cohn is a certified public accountant. Mr. Cohn declared
personal bankruptcy under Chapter 7 of the federal Bankruptcy Code in 1996.

Brian A. Smith has served as our executive vice president of
marketing since May 2000. From May 1999 to May 2000, Mr. Smith served as our
president of Creative Services. From 1993 to May 1999, Mr. Smith was president
and chief executive officer of DBLA, a direct mail and catalog marketing
business acquired by the Company in May 1999.

David C. Williams became our executive vice president of business
development in June 2000. From June 1997 to June 2000, Mr. Williams was a
director and principal in The Management Group, a management consulting firm
specializing in e-commerce strategy. From 1991 through May 1997, he was managing
director of Hudson Hill Consulting, a business development and strategic
planning consulting firm.

C. James Jensen became a member of our board of directors in June
2000. Since December 1987, Mr. Jensen has been a private investor with emphasis
in the acquisition and management of commercial real estate. From 1981 to 1987,
Mr. Jensen served as chairman and chief executive officer of Thousand Trails,
Inc., and from 1973 to 1979, he was president of Grantree Furniture Rental
Corporation. Mr. Jensen is an active member of the World Presidents'
Organization, the alumni group of the Young Presidents' Organization. Mr. Jensen
currently serves on the board of directors of International Fibercom, Inc.
(NASDAQ: IFCI).

Maryann O'Donnell became a member of our board of directors in June
2000. Since January 2000, Ms. O'Donnell has been a partner of and investor in
O'Donnell & Ganns, LLC, a venture capital investment firm. From July 1998 until
January 2000, Ms. O'Donnell served as the president of ETI, LLC, a television
production company. From 1994 until July 1998, Ms. O'Donnell was one of the
original investors in Earthlink Network, an Internet service provider for which
she assisted in sales management recruitment. Ms. O'Donnell is currently a
member of the Tech Coast Angels, an investment group in Southern California.

John A. Allegretti became a member of our board of directors in
October 2000. Mr. Allegretti has served as chief financial officer and chief
legal and administrative officer for ChannelSpace Entertainment, Inc. since
January 2000, and was executive vice president and chief business affairs
officer from February 1999 through December 1999. From August 1997 to January
1999, Mr. Allegretti was vice president of administration for Crown
Communications, Inc. (now Crown-Castle International - USA). From October 1986
to December 1996, Mr. Allegretti was with Tele-Media Corporation, serving as
executive vice president and chief financial officer from January 1996 to
December 1996, as executive vice president and chief operating officer from
January 1990 to December 1995 and as vice president of legal affairs from
October 1986 to December 1989.

Board Meetings and Committees

The board of directors met seven times in the fiscal year ended June 30,
2000 and acted by unanimous consent on 11 occasions. No director attended fewer
than 75% of the aggregate of all meetings of the board of directors and the
committees of which the director was a member during 2000. In July 1999, the
Company formed a standing audit committee and compensation committee. The
Company does not have a nominating committee.

Audit Committee

The audit committee presently consists of Mr. Jensen, Ms. O'Donnell and Mr.
Allegretti. The audit committee makes recommendations concerning the engagement
of the independent public accountants, reviews with the independent public

accountants the plans and results of audits, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and nonaudit fees,
reviews the adequacy of the Company's internal accounting controls and reviews
all related party transactions on an ongoing basis for potential conflict of
interest situations. The audit committee acted by unanimous consent on one
occasion during fiscal 2000.

Compensation Committee

The compensation committee presently consists of Mr. Jensen and Ms.
O'Donnell. The compensation committee determines compensation for the Company's
executive officers and administers the Company's stock option plans. The
compensation committee acted by unanimous consent on one occasion during fiscal
2000.

Compensation of Directors

Directors who are not officers of the Company receive $1,000 for attendance
at each board meeting and $500 for attendance at each committee meeting, plus
reasonable out-of-pocket expenses incurred in attending meetings. In June 2000,
the Company's non-employee directors were granted options to purchase shares of
common stock under the Company's 1999 Stock Option Plan. Ms. O'Donnell was
granted options to purchase 20,000 shares of common stock, 1/4 of which become
exercisable in each of June 2001, 2002, 2003 and 2004. Mr. Jensen was granted
options to purchase 40,000 shares of common stock, 1/5 of which are currently
exercisable and 1/5 of which become exercisable in each of June 2001, 2002, 2003
and 2004. In October 2000, the Company's non-employee directors, Ms. O'Donnell,
Mr. Jensen and Mr. Allegretti, were granted options to purchase 55,000, 35,000
and 20,000 shares of common stock, respectively, under the 1999 Stock Option
Plan. 1/4 of each of these options become exercisable in each of October 2001,
2002, 2003 and 2004.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act, as amended, requires the
Company's officers, directors and persons who beneficially own more than ten
percent of the Company's common stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission. These reporting
persons also are required to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on its review of
the copies of such forms furnished to it and representations that no other
reports were required, the Company believes that all Section 16(a) reporting
requirements were complied with during the year ended June 30, 2000.

ITEM 11. EXECUTIVE COMPENSATION

The following table shows the compensation for the fiscal years ended June
30, 2000, 1999 and 1998 earned by (i) Terry L. Gourley, our chairman and chief
executive officer, (ii) Joel P. Gayner and Brian A. Smith, our other executive
officers whose compensation exceeded $100,000 during the fiscal year ended June
30, 2000 and (iii) Lawrence Weisdorn, our former chairman and chief executive
officer who resigned in September 2000, and Robert J. Vitamante, our former
president and chief operating officer who resigned in May 2000. None of the
named individuals received noncash compensation benefits having a value
exceeding 10% of his cash compensation during the fiscal years ended June 30,
2000, 1999 and 1998.

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- --------------
Awards
--------------
Securities
Underlying All Other
Name and Principal Salary Bonus Options/SARs Compensation
Position During Period Year ($) ($) (# of shares) ($)
--------------------------- ------- ------------ ------- ------------- -----------

Terry L. Gourley 2000 114,423(1) - 125,000 -
Chairman and Chief 1999 -0- -
Executive Officer 1998 -0- -

2000 145,282(2) - 150,000 -
Joel P. Gayner 1999 -0- -
President 1998 -0- -

Brian A. Smith 2000 126,511 90,000
Executive Vice President 1999 -0- - - -
of Marketing and 1998 -0- -
Creative

Lawrence Weisdorn(3) 2000 125,218 - 100,000 -
Former Chairman and Chief 1999 53,000 -
Executive Officer 1998 48,000 -

Robert J. Vitamante(4) 2000 201,150 142,940 100,000
Former President and Chief 1999 -0- -
Operating Officer 1998 -0- -

------------------------

(1) Reflects Mr. Gourley's salary commencing October 25, 1999 when he joined
the Company.

(2) Reflects Mr. Gayner's salary commencing February 8, 2000 when he joined the
Company.

(3) The Company formerly employed Mr. Weisdorn as chairman and chief executive
officer. Mr. Weisdorn's annual base compensation at the time his employment

ceased was $150,000. On September 1, 2000, Mr. Weisdorn resigned his
employment and pursuant to a termination agreement between the Company and
Mr. Weisdorn, the Company agreed to pay Mr. Weisdorn a gross amount of
$300,000, $150,000 of which was paid upon signing the agreement and
$150,000 is payable within three days following the Company's receipt of
proceeds from its next round of financing obtained from unaffiliated third
parties. Mr. Weisdorn also has until March 1, 2002 to exercise options to
purchase 100,000 shares of common stock at an exercise price of $7.70 per
share.

(4) The Company formerly employed Mr. Vitamante as president and chief
operating officer. Mr. Vitamante's annual base compensation at the time his
employment ceased was $200,000. On May 25, 2000, Mr. Vitamante resigned his
employment and pursuant to a termination agreement between the Company and
Mr. Vitamante, the Company agreed to pay Mr. Vitamante a gross amount of
$100,000, which was paid upon signing the agreement. Mr. Vitamante also has
until February 24, 2001 to exercise options to purchase 75,000 shares of
common stock at an exercise price of $11.00 per share.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

Individual Grants
-------------------------------
Number of Percent of
Securities Total Market
Underlying Options/SARs Price
Option/SARs Granted to Exercise Expira- on Date
Granted Employees in Price tion of Grant
Name (#) Fiscal Year ($/Share) Date ($)
--------------------- ----------- ------------- --------- ------- -------

Terry L. Gourley 25,000 14.5% $7.125 11/1/09 $ 7.125
Chairman and Chief 100,000 $7.00 5/18/10 $ 7.00
Executive Officer

Joel P. Gayner 50,000 17.2% $13.188 2/9/10 $13.188
President 100,000 $ 7.00 5/18/10 $ 7.00

Brian A. Smith 0 -- -- -- --
Executive Vice
President of
Marketing and
Creative

Lawrence Weisdorn 100,000 11.5% $7.70 3/1/02 $7.00
Former Chairman and
Chief Executive Officer

Robert J. Vitamante 142,940 16.4% $11.00 2/24/01 $11.00
Former President and
Chief Operating Officer

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired Value Fiscal Year-End (#) Fiscal Year-End(1) ($)
on Exercise Realized -------------------- ----------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------- ---------- -------- ------------------------- -------------------------

Terry L. Gourley -- -- 0 125,000 $0 $809,375
Chairman and Chief
Executive Officer

Joel P. Gayner -- -- 10,000 140,000 $ 3,120 $662,480
President

Brian A. Smith -- -- 22,500 67,500 $0 $0
Executive Vice President
of Marketing and
Creative Affairs

Lawrence Weisdorn -- -- 100,000 0 $580,000 $0
Former Chairman and
Chief Executive Officer

Robert J. Vitamante -- -- 75,000 0 $187,500 $0
Former President and
Chief Operating Officer

-------------------

(1) Represents the difference between the aggregate market value at June 30,
2000 of the common stock underlying the options (based on a last sale price
of $13.50 on that date) and the options' aggregate exercise price.

pensation Arrangements for Current Executive Officers

Terry L. Gourley. In October 2000, Mr. Gourley and the Company
entered into a three-year employment agreement, pursuant to which Mr. Gourley
continues to serve as the Company's chairman of the board and chief executive
officer. The employment agreement provides for an annual base salary of $290,000
during the term, which will be reviewed by the compensation committee of the
board of directors at least one month prior to the commencement of each year
during the term for purposes of determining whether to increase his annual base
salary and if so, the amount of such increase. The employment agreement also
provides that Mr. Gourley is eligible for an annual bonus, payable at the
discretion of the compensation committee of the board of directors. At the time
and in consideration of execution of the employment agreement, successfully
restructuring the Company's business model and introducing the Company to
prospective sources of capital, the Company agreed to issue to Mr. Gourley a
one-time $200,000 bonus, payment of which has been deferred until after the
Company successfully raises at least $4 million of new financing. The Company
also agreed to (i) accelerate the vesting of the options to purchase 125,000
shares of common stock which were previously granted to Mr. Gourley and (ii)
grant to Mr. Gourley options to purchase 200,000 shares of common stock under
the Company's 1999 Stock Option Plan at an exercise price of $5.875 per share,
the closing sale price of the

common stock on the day immediately preceding the agreement date. The options
will vest one-third on each of the first, second and third anniversaries of the
agreement date. The Company also agreed to forgive all amounts due it under Mr.
Gourley's $25,000 promissory note to the Company, including interest accrued.

Joel P. Gayner. In October 2000, Mr. Gayner and the Company entered
into a three-year employment agreement, pursuant to which Mr. Gayner continues
to serve as the Company's president. The employment agreement provides for an
annual base salary of $290,000 during the term, which will be reviewed by the
compensation committee of the board of directors at least one month prior to the
commencement of each year during the term for purposes of determining whether to
increase his annual base salary and if so, the amount of such increase. The
employment agreement also provides that Mr. Gayner is eligible for an annual
bonus, payable at the discretion of the compensation committee of the board of
directors. At the time and in consideration of execution of the employment
agreement, successfully restructuring the Company's business model and
introducing the Company to prospective sources of capital, the Company
agreed to issue to Mr. Gayner a one-time $200,000 bonus, payment of which has
been deferred until after the Company successfully raises at least $4 million of
new financing. The Company also agreed to (i) accelerate the vesting of the
options to purchase 150,000 shares of common stock which were previously granted
to Mr. Gayner and (ii) grant to Mr. Gayner options to purchase 200,000 shares of
common stock under the Company's 1999 Stock Option Plan at an exercise price of
$5.875 per share, the closing sale price of the common stock on the day
immediately preceding the agreement date. The options will vest one-third on
each of the first, second and third anniversaries of the agreement date.

Brian A. Smith. Brian Smith does not have a written employment
agreement. He currently receives an annual base salary of $120,000 and is
entitled to the same benefits that other employees generally receive.

David C. Williams. David Williams does not have a written employment
agreement. He currently receives an annual base salary of $150,000 and is
entitled to the same benefits that other employees generally receive.

Jacalyn Hughes. Jacalyn Hughes does not have a written employment
agreement. She currently receives an annual base salary of $165,000 and is
entitled to the same benefits that other employees generally receive.

Howard A. Cohn. Howard Cohn does not have a written employment
agreement. He currently receives an annual base salary of $165,000 and is
entitled to the same benefits that other employees generally receive.

1999 Stock Option Plan

In February 1999, the Company adopted the 1999 Stock Option Plan. The 1999
Stock Option Plan authorizes the granting of awards of up to 2,000,000 shares of
common stock to the Company's key employees, officers, directors and
consultants. Awards consist of both nonqualified options and options intended to

qualify as "Incentive" stock options under Section 422 of the Internal Revenue
Code of 1986, as amended, as described in the 1999 Stock Option Plan. As of the
date of this report, options to purchase 1,641,554 shares of common stock are
outstanding or committed for grant under the 1999 Stock Option Plan, with
357,044 shares available for future grant.

1999 Employee Stock Purchase Plan

In November 1999, the shareholders approved the Company's 1999 Employee
Stock Purchase Plan, under which a total of 2,000,000 shares of common stock are
available for issuance. Under this stock purchase plan, as currently
administered by the compensation committee, all full-time employees, including
employees who are officers or directors, may use a portion of their salary to
acquire shares of the Company's common stock. Offering periods are six months
long and commence on January 1 and July 1 of each year and end on the last day
of June and December following. On the first day of each offering period, known
as the "offering date," each eligible employee is automatically granted an
option to purchase shares of the Company's common stock to be automatically
exercised on the last trading day of the six-month purchase period comprising an
offering period. The last trading day of a purchase period is known as a
"purchase date." On the purchase date, the amounts withheld will be applied to
purchase shares for the employee from the Company. The purchase price will be
the lesser of 85% of the closing market price of the Company's common stock on
the offering date or on the purchase date. As of the date of this report, no
shares of common stock have been issued under the 1999 Employee Stock Purchase
Plan.

2000 Performance Equity Plan

In October 2000, the board of directors approved the 2000 Performance
Equity Plan, under which a total of 1,000,000 shares of common stock will be
made available for grants to the Company's key employees, officers, directors
and consultants, upon shareholder approval. Awards may consist of both
nonqualified options and options intended to qualify as "Incentive" stock
options under Section 422 of the Internal Revenue Code of 1986, as amended,
restricted stock awards, deferred stock awards, stock appreciation rights and
other stock-based awards, as described in the 2000 Plan. As of the date of this
report, there were no options outstanding under the 2000 Plan.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of the date of this
report regarding the beneficial ownership of the common stock by (i) each person
or group known by the Company to own beneficially more than 5% of the common
stock, (ii) each director of the Company, (iii) each current executive officer
of the Company whose compensation exceeded $100,000 for the fiscal year ended
June 30, 2000 and (iv) all executive officers and directors as a group. Except
as otherwise noted, the persons listed below have sole investment and voting
power with respect to the common stock owned by them. Except as otherwise
indicated in the table below, the business address of each of the persons listed
is c/o of the Company at 308 Washington Boulevard, Marina del Rey, California
90292.

Number of Shares Percentage
Name of Beneficial Owner Beneficially Owned of Shares
---------------------- ------------------ ---------

Terry L. Gourley....................... 167,775(1) 3.1%

Joel P. Gayner......................... 150,000(2) 2.8%

Brian A. Smith......................... 31,300(3) *

C. James Jensen........................ 9,300(4) *
101 Wild Oak Court
Danville, California 94506

Maryann O'Donnell...................... 0(5) *
c/o O'Donnell & Ganns, LLC
1896 Rising Glen Road
Los Angeles, California 90069

John Allegretti........................ 0(6) *
c/o ChannelSpace Entertainment, Inc.
808 Live Oak Drive, Suite 126
Chesapeake, Virginia 23320

Lawrence Weisdorn...................... 840,000(7) 15.4%
20485 Roca Chica Drive
Malibu, California 90265

All directors and executive officers
as a group (nine persons).............. 385,475(8) 6.8%

----------------------------

* Less than 1%.

(1) Includes 125,000 shares of common stock issuable upon exercise of
immediately exercisable options. Excludes 200,000 shares of common stock
issuable upon exercise of options, 1/3 of which become exercisable on each
of October 23, 2001, 2002 and 2003.

(2) Represents shares of common stock issuable upon exercise of immediately
exercisable options. Excludes 200,000 shares of common stock issuable upon
exercise of options, 1/3 of which become exercisable on each of October 23,
2001, 2002 and 2003.

(3) Includes 22,500 shares of common stock issuable upon exercise of
immediately exercisable options. Excludes 67,500 shares of common stock
issuable upon exercise of options, 1/3 of which become exercisable on each
of April 1, 2001, 2002 and 2003.

(4) Includes 8,000 shares of common stock issuable upon exercise of immediately
exercisable options. Excludes (i) 32,000 shares of common stock issuable
upon exercise of options, 1/4 of which become exercisable on each of June
29, 2001, 2002, 2003 and 2004 and (ii) 35,000 shares of common stock
issuable upon exercise of options, 1/4 of which become exercisable on each
of October 23, 2001, 2002, 2003 and 2004.

(5) Excludes (i) 20,000 shares of common stock issuable upon exercise of
options, 1/4 of which become exercisable on each of June 20, 2001, 2002,
2003 and 2004 and (ii) 55,000 shares of common stock issuable upon exercise
of options, 1/4 of which become exercisable on each of October 23, 2001,
2002, 2003 and 2004.

(6) Excludes 20,000 shares of common stock issuable upon exercise of options,
1/4 of which become exercisable on each of October 23, 2001, 2002, 2003 and
2004.

(7) Includes (i) 100,000 shares of common stock issuable upon exercise of
immediately exercisable options and (ii) 35,000 shares of common stock
issuable upon exercise of immediately exercisable options owned by Mr.
Weisdorn's spouse. Pursuant to a termination agreement between the Company
and Mr. Weisdorn dated September 1, 2000, Mr. Weisdorn has until March 1,
2001 to exercise the 100,000 options.

(8) Includes shares referred to as being included in notes 1-5. Excludes shares
referred to in such notes as being excluded. Also includes (i) 1,100 shares
of common stock owned by and 25,000 shares of common stock issuable upon
exercise of currently exercisable options granted to Howard A. Cohn, the
Company's chief financial officer and (ii) 1,000 shares of common stock
owned by Jacalyn Hughes, the Company's executive vice president of
operations and chief technology officer. Excludes (i) 50,000 shares of
common stock issuable upon exercise of options granted to Mr. Cohn, 1/4 of
which become exercisable in each of October 2001, 2002, 2003 and 2004, (ii)
50,000 shares of common stock issuable upon exercise of options granted to
David C. Williams, the Company's executive vice president of business
development, 1/4 of which become exercisable in each of October 2001, 2002,
2003 and 2004 and (iii) 40,000 shares of common stock issuable upon
exercise of options granted to Jacalyn Hughes, 1/4 of which become
exercisable in each of March 2001, 2002, 2003 and 2004.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

From August 1996 to June 30, 1998, Mr. Weisdorn, our former chairman and
chief executive officer, and his father, Lawrence Weisdorn, Sr. advanced a total
of $178,683 to the Company. These advances were made in the form of loans on
which the Company pays annual interest of 7%. In fiscal 1998, the Weisdorns
advanced $108,860 to the Company and during fiscal 1998 were owed as much as
$111,824. At June 30, 1999, the Company owed Lawrence Weisdorn, Sr. a total of
$50,201, and Lawrence Weisdorn, Jr., a total of $20,522. All sums owing to the
Weisdorns were repaid from the proceeds of the Company's initial public offering
in July 1999.

In July 1999, the Company loaned $225,000 to C. Michael Mellin, the
Company's former senior vice president, technology operations, under a
promissory note bearing interest at 10% per annum and secured by a deed of trust
on Mr. Mellin's residence. The note plus accrued interest became due on
September 1, 2000 and was not repaid. Foreclosure proceedings were initiated
against Mr. Mellin on September 12, 2000. Management believes that the value of
the security exceeds the outstanding indebtedness.

Effective October 1999, the Company adopted a policy on future related
party transactions. Under that policy, all transactions between the Company and
any of its executive officers, directors or affiliates must be approved or
ratified by a majority of the independent outside members of the Company's board
of directors who do not have an interest in the transactions.

In March and May 2000, the Company loaned an aggregate of $85,000 under two
promissory notes to Terry Gourley, our chairman and chief executive officer. The
promissory notes for $25,000 and $60,000 bear interest at 10% per annum and,
along with any accrued interest, are repayable upon demand by the Company. In
connection with entering into an employment agreement between the Company and
Mr. Gourley in October 2000, the Company forgave all amounts due under the
promissory note for $25,000, including interest accrued.

In May 2000, the Company loaned $25,000 under a promissory note to Joel
Gayner, our president. The promissory note is non-interest bearing and serves as
an advance against future sales commissions earned. If Mr. Gayner is still
employed by the Company on February 7, 2001, the Company will forgive all
amounts due under the promissory note, net of previously applied commissions. If
Mr. Gayner's employment with the Company is terminated, the note will be
forgiven at a rate of $7,500 per month over a period of 3.33 months.

In September 2000, the Company entered into an agreement to acquire certain
assets of ChannelSpace Entertainment, Inc. John A. Allegretti, a director of the
Company and the chief financial officer and chief legal and administrative
officer for ChannelSpace, was designated by ChannelSpace pursuant to the terms
of the agreement to become a member of the Company's board of directors. The
agreement provides for the Company to issue to ChannelSpace an aggregate of
833,333 shares of common stock upon the closing of the acquisition, which is
expected to occur in November 2000. These shares may not be sold or transferred
by ChannelSpace for six months following the consummation of the acquisition.
50,000 shares will be released from this restriction on the first day of each of

the seventh through the twelfth month after the closing, with the remaining
shares being released on the first day of the thirteenth month after the
closing. The Company has agreed to issue additional shares of common stock to
ChannelSpace on a quarterly basis for six quarters, beginning four months after
the closing, in the event that certain revenue targets are achieved. The Company
will issue to ChannelSpace additional shares of common stock if the average of
the closing prices of the Company's common stock for a period of three months
commencing fifteen months after the closing does not equal or exceed $15 per
share. The Company also agreed to grant to ChannelSpace registration rights with
respect to all of the shares to be issued in connection with the acquisition.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

The exhibits listed below are filed as part of this report:

Exhibit
Number Description
------ -----------
23.1 Consent of Friedman, Minsk, Cole & Fastovsky

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in Marina del Rey,
California on October 27, 2000.

3DSHOPPING.COM

/s/ Howard A. Cohn
By: _______________________________
Howard A. Cohn,
Senior Vice President and Chief
Financial Officer