U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 4 to
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES Under Section
12(b) or (g) of the Securities Exchange Act of 1934
UBRANDIT.COM
(Exact name of registrant as specified in its charter)
Nevada 88-0381646
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12626 High Bluff Drive, Suite 200, San Diego, CA 92130
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (858) 350-9566
Securities registered or to be registered pursuant to Section 12(b) of the Act
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered:
------------------- --------------------
common shares None
$.001 Par Value
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TABLE OF CONTENTS
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ITEM 1: DESCRIPTION OF BUSINESS...............................................3
ITEM 2. FINANCIAL INFORMATION................................................26
ITEM 3. DESCRIPTION OF PROPERTY..............................................32
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......33
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.....................................34
ITEM 6. EXECUTIVE COMPENSATION...............................................37
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................39
ITEM 8. LEGAL PROCEEDINGS....................................................39
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS..........................................40
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES..............................40
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED..............43
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................45
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA..........................46
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL
DISCLOSURE...........................................................46
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS....................................46
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This Registration Statement includes a number of capitalized terms that
are commonly used in the Internet industry and have the definitions assigned to
them in the text below and under the heading entitled "Certain Definitions,"
which appears at the end of this Registration Statement.
ITEM 1: DESCRIPTION OF BUSINESS
Forward-Looking Statements
This Registration Statement contains certain forward-looking statements
that involve risks and uncertainties. Our company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of a variety of factors that may or may not be within our control,
including the risks set forth in "Risk Factors" and elsewhere in this
Registration Statement.
Overview
Ubrandit.com, a Nevada corporation (together with its subsidiary, the
"Company" or "Ubrandit"), is a development-stage enterprise engaged in the
development of specialty Web sites and other online related services and
products. Our primary focus is the "branding" (private labeling) of our
destination financial and e-commerce sites on the World Wide Web to the existing
Web sites of companies desiring to drive traffic and encourage repeat visitors
to their respective sites. "Private labeling" or "branding" means that when the
Company creates content for a client's Web site, the content (or Web pages) will
contain the client company's name, logo, and navigation buttons, and will not
include information about Ubrandit.com. We believe that branded content provides
more credibility to a client's Web site than a linked component, which directs
all of the credit to the company that created the content. The Company believes
that its specialty Web sites will be less costly than in-house developed Web
sites. While in-house developed Web sites may better reflect the content desired
by the developer, the Company attempts to provide desirable content and offers
other advantages. The Company offers e-commerce and customized "sticky" content
solutions to customers at affordable prices. These solutions are usually too
costly to develop in-house. The Company will initially focus on providing
brandable turnkey systems for two of the fastest growing segments of the World
Wide Web, financial information and e-commerce.
The Company offers online products and services through its on line
e-commerce and financial services destination sites. In June of this year the
Company launched its initial e-commerce site, JungleJeff.com, located at
www.jungle jeff.com . This comprehensive e-commerce site offers over 1,000,000
titles of books, music CDs and tapes, and movie videos and DVDs to online
purchasers. The Company has commenced initial testing of its branding technology
and has established branding beta test sites for the junglejeff.com e-commerce
site. As of the date of this registration statement over 800 individual web
sites have gone thorough the branding process. In September of 1999 the Company
concluded its beta testing and began allowing web sites to brand junglejeff.com
pursuant to an automated signup process at the Company's Ubrandit.com web site.
The Company provides online financial information through its wholly-owned
subsidiary, Global Investors Guide, Inc., a California corporation ("Global
Investors Guide"). Global Investors Guide is an early stage start-up company,
which provides financial information services via a World Wide Web site located
at www.stockstudy.com. Stockstudy.com is a comprehensive financial site that
provides Web users with an extensive array of valuable features, including:
stock quotes, personal portfolio management, mutual fund data, news releases,
and exclusive editorial content. In addition to the financial services provided
by Stockstudy.com, the Company has also launched two additional financial sites
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since its acquisition of Global Investors Guide, Irpackages.com at the Internet
address www.irpackage.com and Newsletterz.com located at www.newsletterz.com.
The IRpackages.com site features a fully automated investor relations package
request system developed by the Company whereby users of the Web site can
request investor relations packages from over 5,900 public companies.
Newsletterz.com is a financial newsletter-marketing program that promotes a
growing number of financial publications from various investment categories. The
Company expects to offer branding of its financial services web sites in the
first calendar quarter of 2000.
We have derived a majority of our revenue from several customers, which
currently sell sponsorships or rent Company's mail database. For the quarter
ended September 30, 1999, Carnegie Marketing, Inc. accounted for approximately
64% of revenues of the Company. For the six months ended June 30, 1999, Carnegie
Marketing, Inc., accounted for approximately 94% of our revenues. For the year
ended September 30, 1998, Interactive Market Communications, a company based in
the United Kingdom, accounted for approximately 54% of the revenues of Global
Investors Guide. In the future, we anticipate that we will not depend on any one
or a small number of customers for a significant portion of revenue, as
additional customers and sources of revenue are added.
The Company was incorporated on December 19, 1997, in the State of
Nevada under the name of Mount Merlot Estates, Inc. In January 1999, the Company
changed its name to Virtual Brand, Inc. In February 1999, the Company changes
its name a second time to Ubrandit.com. The Company has sold equity shares to
raise capital, recruit and organize management, and to commence corporate
strategic planning and development. Other than the combined operations of Global
Investors Guide, the Company has not conducted any significant operations as of
the date of this Registration Statement. The Company's principal corporate
offices are located at 12626 High Bluff Drive, Suite 200, San Diego, CA 92130.
Its telephone number is (858) 350-9566.
Risk Factors
Our company and business enterprise are subject to a high degree of
risk and uncertainty. This Registration Statement contains forward-looking
statements based on current expectations. Any statements herein that are not
statements of historical fact may be deemed forward-looking. Actual results may
differ significantly from such forward-looking statements. The material risks
expected to affect results are discussed below. Additional risks and
uncertainties that are presently not known to us or that we deem immaterial may
also impair our business operations and financial condition.
We have only recently introduced our branding services and we are
unable to guarantee that the marketplace will accept our products and services.
As discussed elsewhere in this Registration Statement, we are not fully
operational and we have only in September of 1999 completed beta testing of our
e-commerce site and introduced our branding services. Therefore, we are unable
to provide any assurance or guarantee that the marketplace will accept our
branding services and related online products, or that we will be able to sell
such services and products at a profit.
Our company has a limited operating history and we are uncertain if our
company will ever become profitable.
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Other than revenues generated through our combined operations of Global
Investors Guide, we have not as of yet generated any significant revenues from
operations and we are unable to provide any assurance or guarantee that we will
be able to generate any substantial revenues in the future. Since its inception
in December 1997, our company's principal business activities have been limited
to organizational matters, research and development activities, the acquisition
and creation of Web site content and the introduction of its e-commerce sites.
In each year since inception the Company has experienced losses from operations.
As of June 30, 1999, we had an accumulated loss of $1,225,680 and an accumulated
deficit of $1,225,680. Our company therefore has no significant operating
history on which to evaluate its future prospects and ability to implement its
business plan and objectives. We expect our operating losses to continue in the
near future as our development, marketing and sales activities, and operations
continue. We are uncertain as to when, or if, our company will ever become
profitable.
Our capital is limited and we may need additional capital to implement
our business plan and continue operations.
Our company has limited operating capital and limited access to credit
facilities. We estimate that we currently have sufficient funds to continue
operations for approximately 36 months at currently projected levels of
operational expense. However, we expect that additional funds will be necessary
for our company to implement its business plan, as described in this
Registration Statement. Our company's continued operations therefore will depend
upon its ability to raise additional funds through bank borrowings or equity or
debt financing. There is no assurance that the Company will be able to obtain
additional funding when needed, or that such funding, if available, can be
obtained on terms acceptable to the Company. If the Company cannot obtain needed
funds, it may be forced to curtail or cease its activities.
Our company's success still depends on its ability to attract and
retain qualified technical and management personnel.
At present, our company employs eleven full-time personnel plus various
consultants in management, sales, programming, legal, and editorial
responsibilities. We do not have employment agreements with any employee. Our
company's success will depend, in part, upon its ability to attract and retain
qualified employees, technical consultants and management personnel. We are
unable to provide any assurance or guarantee that we will be able to attract,
integrate or retain sufficiently qualified personnel. Our inability to retain
additional qualified personnel in the future could harm our business. We do not
maintain life insurance on the life of any employee.
We face a number of risks associated with obtaining Year 2000
compliance.
Computer systems, software packages and microprocessor dependent
equipment may cease to function or generate erroneous data when the Year 2000
arrives. To correctly identify the Year 2000, a four-digit code field will be
required to be what is commonly termed "Year 2000 compliant." Our business may
suffer if the systems we depend on to conduct day-to-day operations are not Year
2000 compliant. The potential areas of exposure include electronic data exchange
systems operated by third parties with which we may transact business and
computers, software, telephone systems and other equipment that we may use
internally.
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Our systems may fail or experience a slow down.
Our facilities will house a variety of hardware and software computer
systems. Our operations depend on our ability to protect these systems against
damage from fire, earthquakes, power loss, telecommunications failures,
break-ins and similar events. Additionally, computer viruses, electronic
break-ins or other similar disruptive problems could harm our operations. A
disaster or malfunction that disables our facility could cause an interruption
in the production and distribution of our products and services, or limit the
quantity or timeliness of updates to our productions. Our insurance policies may
not adequately compensate us for any losses that may occur due to any failures
or interruptions in our systems. We do not presently have a formal disaster
recovery plan. Although we have safety measures and contingency plans for
certain emergencies, we do not expect to develop a formal disaster recover plan
in the foreseeable future.
The market for online services is intensely competitive.
E-commerce and the market for online services are intensely competitive
industries. The Company will compete against established companies with
significantly greater financial, marketing, personnel, and other resources than
the Company. Such competition could have a material adverse effect on the
Company's profitability.
The market for our company's securities is limited and may not provide
adequate liquidity.
The Company's Common Stock is currently traded on the OTC Electronic
Bulletin Board. We are unable to provide any assurance or guarantee that the OTC
Bulletin Board will provide adequate liquidity or that a trading market will be
sustained. Holders of our company's stock may be unable to sell shares purchased
should they desire to do so. Furthermore, it is unlikely that a lending
institution will accept our company's securities as pledged collateral.
"Penny stock" regulations may impose certain restrictions on
marketability of securities.
The SEC has adopted regulations which generally define "penny stock" to
be an equity security that has a market price of less than $5.00 per share. The
Company's Common Stock may be subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's prior written consent to the
transaction. Additionally, for any transaction, other than exempt transactions,
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involving a penny stock, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the SEC relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's Common Stock and
may affect the ability to sell the Company's Common Stock in the secondary
market.
Our market and business technology is rapidly changing.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our Web sites and Internet
storefronts. Internet e-commerce and other Internet-based industries are
currently characterized by rapid technological change, changes in customer
requirements and preferences, frequent new product and service introductions
embodying new technologies, and the emergence of new industry standards and
practices that could render our existing Web sites, Internet storefronts and
enabling technologies obsolete. If we are unable, for technical, legal,
financial or other reasons, to adapt quickly to changing market conditions and
customer requirements, our business, financial condition and results of
operations would be materially adversely affected.
Security breaches and credit card fraud could harm our business.
A significant barrier to online commerce and communications is the
secure transmission of confidential information over public networks. We rely on
licensed third party encryption and authentication technology to provide the
security and authentication necessary to effect secure transmission of
confidential information, such as customer credit card numbers. Our servers run
on a Microsoft Windows NT platform and employ IIS 4.0 software which includes
encryption technology. Information is verified and authenticated by Verisign,
Inc. Advances in computer capabilities, new discoveries in the field of
cryptolography, or other events or developments may result in a compromise or
breach of the algorithms we use to protect our customers, transaction data or
our software vendors and products. Someone who is able to circumvent our
security measures could misappropriate proprietary information to cause
interruptions in our operations. We may be required to expend significant
capital and other resources to protect against such security breaches or
alleviate problems caused by such breaches. Such expenditures could have a
material adverse effect on our business, results of operations and financial
condition.
Because we store and transmit proprietary information, a breach of our
security could damage our reputation and expose us to potential liability from
litigation and reimbursement of losses. We are unable to provide any assurance
that our security measures will prevent a future security breach or that, should
a security breach occur, it will not have a material adverse effect on our
business, results of operations and financial condition. In addition, we may
incur losses, as have other retailers who accept credit card payments without
obtaining a signature, from orders placed using fraudulent or stolen credit card
information, despite obtaining approvals from financial institutions. Under
current commercial banking and credit card practices, we are liable for
fraudulent credit card transactions. We are unable to provide any assurance that
our security measures will always be successful and, as a result, could suffer
from significant losses in the future which could have a material adverse effect
on our business, results of operations and financial condition.
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Our operations significantly depend upon maintenance and continued
improvement of the Internet's infrastructure.
The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic. Our
success will depend upon the development and maintenance of the Internet's
infrastructure to cope with this increased traffic. This will require a reliable
network backbone with the necessary speed, bandwidth, data capacity and
security. Improvement of the Internet's infrastructure will also require the
timely development of complementary products, such as high-speed modems, to
provide reliable Internet access and services.
The Internet has experienced a variety of outages and other delays as a
result of damage to portions of its infrastructure and could face similar
outages and delays in the future. Outages and delays are likely to affect the
level of Internet usage, the level of traffic on our Web site and the number of
purchases on our Web site. In addition, the Internet could lose its viability as
a mode of commerce due to delays in the development or adoption of new standards
to handle increased levels of activity or due to increased government
regulation. The adoption of new standards or government regulation may also
require us to incur substantial compliance costs.
We may be exposed to liability for content retrieved from our Web
sites.
Our exposure to liability from providing content on the Internet is
currently uncertain. Due to third party use of information and content
downloaded from our Web sites, we may be subject to claims for defamation,
negligence, copyright, trademark or patent infringement or other theories based
on the nature and content of online materials. Our exposure to any related
liability could have a material adverse effect on our business, financial
condition and results of operations. We do not maintain insurance specifically
covering such claims. Liability or alleged liability could further harm our
business by diverting the attention and resources of our management and by
damaging our reputation in our industry and with our customers.
Our industry may be subject to increased government regulation.
As commerce conducted on the Internet and online services continue to
evolve, federal, state or foreign agencies may adopt regulations or impose new
taxes intended to cover our business operations. These agencies may seek to
regulate areas including user privacy, pricing, content and consumer protection
standards for our products and services. Compliance with additional regulation
could hinder our growth or prove to be prohibitively expensive. It is also
possible that the introduction of additional regulations could expose companies
involved in Internet commerce, or the provision of content over the Internet, to
significant liability. If enacted, these government regulations could materially
adversely affect the viability of the Internet commerce and online services,
generally, as well as our business, financial condition and results of
operations.
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Acquisition of Global Investors Guide
On March 11, 1999, the Company entered into an Agreement and Plan of
Reorganization for the Acquisition of All the Outstanding Shares of Common Stock
of Global Investors Guide. Said shares were purchased in a related party
transaction from the shareholders of Global Investors Guide in exchange for
1,826,000 shares of the Company's common stock. Global Investors Guide was a
majority owned company owned by Jeff Phillips, President, CEO and Director of
the Company. In February, 1999, in contemplation of the acquisition, Mr.
Phillips was elected to the Board of Directors of the Company and granted
options to purchase 400,000 shares of Company Common Stock at a price of $0.50
per share. Such price was determined by contemporaneous sales of Common Stock to
unaffiliated third parties. Mr. Phillips abstained from voting on the
acquisition in his capacity as director; Mr. Phillips was not a shareholder of
the Company and did not vote on the acquisition in such capacity. The estimated
value of the transaction was $913,000 as determined in accordance with generally
accepted accounting principles. Such purchase price represented $1,122,198 of
goodwill (the amount of the purchase price plus assumed liabilities in excess of
assets). The Company has recorded a loss of $475,000 attributable to the
impairment of good will from the aquistion. Although the Company believes that
such transaction was not on terms less favorable than those available from an
unrelated third party, no fairness opinion was obtained. Global Investors Guide
became a wholly owned subsidiary of the Company. The acquisition was treated as
a purchase for accounting purposes and accordingly, the Company recorded the
acquired assets less liabilities assumed at cost. The difference between the
cost of Global Investors Guide and the sum of the fair values of the assets less
liabilities assumed was recorded as goodwill. See Note 11 to Unaudited Financial
Statements Dated June 30, 1999. Global Investors Guide is a progressive Internet
company that provides financial information services via a Web site located at
www.stockstudy.com. Headquartered in Del Mar, California, Global Investors Guide
employed eight full-time personnel plus various consultants in management,
sales, programming, legal, and editorial responsibilities at the time of
acquisition. The Web site stockstudy.com provides online investors with targeted
content, including, but not limited to: stock quotes, personal portfolio
management, charting, mutual fund data, news releases, public company Web site
listings, an automated investor relations package request system, and financial
editorial content. At the time of acquisition, Global Investors Guide, in
conjunction with major industry partners was developing a comprehensive online
e-commerce destination site designed to directly compete for present market
share. This site has since developed into junglejeff.com, the Company's book,
music, video, e-commerce site discussed in detail below. Prior to its
acquisition by the Company, Global Investors Guide was developing a "branding"
technology for future release with the sales of its private-labeled sites to
follow after completion and adequate testing. This branding technology has
become one of the principal technologies of the Company as set forth below. The
Company hired all the key employees of Global Investors Guide and has continued
the development of the branding and private labeling technology. Global
Investors Guide is the first significant acquisition of Company.
Business Strategy
The Company's business strategy is to build a Company that offers
brandable Web modules to other Web sites. The Company is focused on creating
value for its stockholders through revenues created by advertising, sales, and
sponsorship payments on its brandable e-commerce site and its soon to be
brandable destination financial sites on the World Wide Web. The Company expects
that companies with existing Web sites desiring to drive traffic and encourage
repeat visitors to their respective sites will brand the Ubrandit.com's
destination sites thereby increasing Ubrandit.com's e- commerce sales, the value
of its advertising space, and sponsorship revenue. The key components of the
Company's business strategy include the following:
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(1) To develop destination Web sites in the areas of finance
(stock quotes, company and financial information and reports)
and entertainment (books, videos, and music ).
(2) Upgrade its existing financial sites Stockstudy.com,
newsletterz.com and Irpackages.com to brandable sites and
increase and improve the content on these sites.
(3) Continue development of its e-commerce site, Junglejeff.com.
Continue to upgrade branding technology and support systems to
accommodate large-scale branding of sites. Increase and
perfect the content of the site.
(4) Market its brandable sites and the advertising space and
sponsorships available on its main sites and branded sites.
(5) Continue developing and increasing the customers utilizing the
Company's custom Web site design and programming.
The Company's principal business objective is to provide "private
labeled" and "branded" financial and e- commerce Web-based systems to the
Internet. "Private Labeling" or "branding" means that when the Company creates
content for a client's Web site, the content (or Web pages) will contain the
client company's name, logo, and navigation buttons, and will include very
minimal information about Ubrandit.com. or its affiliates. The goal of one of
the Company's branded sites is to have it appear to be part of the client's Web
site and to have the Web user believe that he or she has not left the clients
site when accessing the content available on the private labeled site. The
Company believes that the content provided by branded sites will provide Web
users with significant incentives to visit and remain at the client's Web site
enabling the client to have an increased Web presence. Branded content is
different than content assessable by "linking". Usually linking occurs when a
Web user accesses a link and is sent to a different and distinct site where the
company that created the content is located. After visiting the different site
the Web user has little incentive to return to the originating site where the
link was found when desiring to access that specific content again.
Through the development of completely brandable systems for financial
information and e-commerce, the Company believes that it has found a niche
within the Internet industry that has yet to have been fully exploited. To date
the Company knows of no Internet company has positioned itself as the leader in
this niche area. The Company believes that there will be significant demand for
branded systems. These branded systems will allow the Company to reach more
users than the traditional internet business model. The Company anticipates that
it will obtain a larger number of users at a lower cost by letting the branded
sites do the advertising. The model allows the Company to increase its internet
presence rapidly without any of the traditional costs of advertising a single
destination site address. The Company believes that the key to becoming
profitable is reducing its average cost of acquiring new net users and
subscribers.
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The Company has completed numerous Web sites to be offered as branded
solutions, including stockstudy.com, newsletterz.com and irpackages.com. The
Company is currently running beta tests with selected initial users on its
e-commerce site, junglejeff.com. The branding technology must still undergo
further technology development and beta testing. The cost of the remaining
technology development is anticipated to be approximately $50,000. The estimated
completion date for branding technology development is the first calendar
quarter of Year 2000. The Company completed beta testing of branded sites for
junglejeff.com in September of 1999. Beta test results by approximately 800 free
users indicated no significant problems with the Website. No significant loss of
customers was experienced. As a result of user comments, the Company upgraded
certain tool features available on the Website to make use easier for customers.
The Company discovered the most significant barrier to broader customer use was
the customers' inability to market and sell its own Website. The Company intends
to prepare materials to assist customers in such marketing efforts.
We expect to commence branding beta sites for the financial
destination sites in the fourth calendar quarter of this year and to complete
beta testing of the financial sites by the end of the first quarter of the next
calendar year. The Company does not anticipate any security authorization
concerns since it is employing currently operational technology from reputable
industry sources. Upon completion of development and testing, the Company
anticipates a marketing budget of approximately $300,000.
The Company's current focus is on providing branded turnkey systems for
two significant segments of the World Wide Web, financial information and
e-commerce. Through technology developed by Global Investors Guide and through
the development of and purchase of other Web content, it is the Company's plan
to develop valuable "sticky" technology (content and systems which hold traffic
at Web sites) that will enable the generation of income through commission-based
programs and advertisement. All sales are paid by credit card. The Company has
engaged Bank of America as the credit card facilitator and Cybercash, Inc. as
the third party credit card authorization agent.
The Company currently has more than 800 sites which have commenced the
branding process. All these sites branded the Company's destination site
junglejeff.com. The Company is currently experiencing page views on its Web
sites as follows: stockstudy.com -- 5,769 per day; junglejeff.com -- 380 per
day; ir packages.com -- 225 per day; and newsletterz.com -- 157 per day. The
Company is not actively seeking advertising sponsors until final beta testing
has been completed and no advertisers are currently under agreement.
The barriers of entry into developing an internet business are
relatively minor. The costs to obtain and maintain traffic to sustain this
business can be significant. The development of a Web site requires a relatively
small cost in time and capital for a simple design. More complex sites,
including especially e-commerce solutions, are much more time consuming and
capital intense. However, without exposure, usually through advertising, even
the most costly site will have few visitors and generate limited revenue. Many
established sites in their respective niche markets have very substantial
advertising/marketing budgets which make it extremely difficult for newly
created sites to compete unless they also have substantial marketing and
advertising resources to draw on. The Company believes that its branding model
provides an effective new way of gaining exposure. By allowing other sites to
brand its site, the Company expects to achieve substantial market exposure much
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faster, at a lower cost to enable it to compete with the traditional,
well-capitalized internet businesses. Ubrandit.com believes that its branding
model will allow it to enter areas of internet businesses in which it otherwise
could not compete. The Company expects that in the future other sites will
choose to begin branding their site's content as this concept gains popularity.
Ubrandit.com principal sites are in the financial area and the e-commerce
internet business areas. The Company believes that it is essential to its
success that as more companies follow Ubrandit.com's branding business model
that the Company continue to offer additional content and Web sites in the
future. Such sites may be acquired from the developers or developed by
Ubrandit.com. By offering more brandable site variations to our branding
affiliates the Company believes that it will be able to remain competitive.
Plan of Operation
The Company has financed its research and development activities
through the sale of equity securities to its stockholders in private
transactions. As of June 30, 1999, the Company had approximately $1,582,878 in
cash. The Company currently also has approximately $4,400,000 in remaining
proceeds received in September from a recent private sale of its securities. At
the current expense rate, the Company anticipates that such funds will be
sufficient to continue operations for approximately 36 months at historic levels
of operational expense. However, we expect that additional funds will be
necessary for our company to fully implement its business plan and strategies,
as described in this Registration Statement. Thereafter, the Company will be
dependent upon the receipt of additional capital to sustain operations. Without
additional capital, there is substantial uncertainty about the ability of the
Company to achieve its business plan.
The Company commenced providing branding services to approved clients
in September 1999. The Company has entered into branding affiliate agreements
with more than 800 sites. Additional sites are expected to commence generating
revenue as the marketing program progresses. To date, no material revenue has
been generated from the sites.
The Company's principal focus over the remainder of this fiscal year
and for the first six months of fiscal 2000 will be to complete the development
of its branding technology. The Company uses outside programmers and computer
technicians as well as Company employees in its research and development
efforts. The Company also plans, as part of its development efforts, to increase
the amount of content and the quality of the content on all of its sites. This
will involve extensive programming to increase the ease of use of the Web sites
and the overall presentation of the sites so that users of the site will find a
hassle free, friendly and exciting environment. The Company believes that such
improvements will increase Web traffic and the length of time that users are on
its affiliated sites thereby, which will increase the potential for higher
advertising revenues. The Company expects to increase the number of programmers
employed to four over the next year and to continue its outsourcing of
programmers. It is expected that two more outsourcing firms will be added to the
Company's research and development outsourcing program over the next year. The
Company plans to control costs by extensively utilizing outsourcing in the
future. It is possible that the Company may encounter opportunities to acquire
strategic Internet related entities and/or content providers for the purpose of
consolidation or expansion of its current operations. Any such acquisition would
be outside the scope of our management's currently anticipated workload. The
Company may be required to raise additional capital and recruit additional
qualified management personnel to lead and supervise these efforts. In the event
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that the Company decides to make an acquisition, these operational and other
issues will be addressed as part of the acquisition evaluation.
The Company also plans to increase the "stickiness" of its sites by the
acquisition of more and improved content to the existing sites. With regards to
the e-commerce site, Junglejeff.com, this would mean the acquisition of more
products to sell. The Company has a contract with Baker and Taylor, Inc., a
Delaware corporation ("Baker & Taylor"), to provide music, book, and video
products through a drop shipment program. Pursuant to the program, products
purchased on a retail Web site are drop shipped to the customer on an "as
available" basis. No specific inventory has been designated as belonging to the
Company and the Company only purchases the inventory as it fulfills orders. The
Company has also contracted with Muze Inc., a New York corporation ("Muze"), to
provide the book, music, and video data base feeds. The Company is researching
the development of subsites for computer products and auction based e-commerce.
The Company plans also to enter into other strategic alliances with product
providers such as those providing the book, music , and video products to offer
a larger number and greater variety of products. The Company believes that the
prices for goods and services in its agreements with its suppliers are
comparable to those available to other Web-based retailers. The Company's cost
to expand marketing exposure by Website branding is expected to result in lower
costs of sales. As a result, the Company anticipates that its branded sites will
compete on a price basis with other Web-based retailers.
The Company expects to increase the information available on its
financial sites and significantly increase the database of public companies
available on irpackages.com. The Company intends to allocate additional capital
to recruit and train additional qualified personnel to implement this expansion
strategy. The Company plans to continue to increase the variety of available
quotes (to include commodities and foreign securities), portfolio management,
charting, and company information available on the site stockstudy.com. This
will be done through additional programming and development of the site and by
the purchase of additional data feeds from data providers. The Company also
plans to increase the attractiveness of newsletterz.com by increasing both the
number and variety of news letters available on the site. The Company does not,
and does not intend to develop proprietary content, except that the Company has
engaged one staff writer to provide a morning and evening summary analysis of
the stock market. All other content is licensed or purchased from third parties.
The Company has allocated additional personnel to market the service to the
newsletter community. There are currently 41 newsletters available on
newsletterz.com. Neither the Company nor any affiliate of the Company publishes
or has any interest in any of the newsletters. Currently the newsletters on the
site cover a broad range of financial interests, ranging from: small cap stocks,
blue chip stocks, mutual funds, foreign securities, drip investing, commodities,
ADR's, and personal finance.
The Company intends to differentiate its product line from other
similar sites by providing a broad range of content and by continually updating
the content. For example, while many financial sites contain newsletters or
similar information, few sites offer as many newsletters from such a broad
topical range as newsletterz.com. Such an approach is in contrast to other
financial sites (DLJDirect, E*Trade) which offer only their own research. The
Company will also rely upon the input of its branded site users to include
information that customers demand.
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Through the first six (6) months of the next fiscal year, the Company
plans to purchase approximately $200,000 in additional computer equipment which
will include servers, hubs, routers, Internet connectivity lines, and work
stations. The Company expects that this equipment will be capable of servicing
the projected number of users on the Company's e-commerce sites and content
sites over this period. The Company's computer systems are scalable and if the
number of Internet users accessing the sites exceed expectations more funds will
be allocated to the purchase of additional servers and connectivity lines. The
Company expects that the present office space that it is leasing will be
adequate to accommodate the growth of the Company through the end of the next
fiscal year. The Company uses off-site server providers in secure server
locations to house most of its Internet server computers and expects to continue
this practice in the foreseeable future.
The Company expects to hire four additional programmers and computer
technicians during the remainder of this year and the first half of the next
fiscal year and expects to extensively employ outside computer consultants on a
project by project basis. The Company will be hiring approximately twelve people
to work in a newly formed marketing department. This new department will market
the services and products of the Company including: selling advertising on the
Company's sites and associates sites, marketing the associates program to the
Companies and institutions that have Web sites that could benefit from a branded
e-commerce or financial site, and selling custom programming to Web Sites. The
Company also expects to hire an additional ten technicians to support the
operations of the e-commerce site, and an additional five persons for general
administrative purposes.
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Principal Markets
The Company initially will focus on two principal markets on the World
Wide Web: the market for financial services and information (stock quotes,
personal portfolio management, charting, mutual fund data, news releases,
automated investor relations package request system, and financial editorial
content) and the market for entertainment products and services (books, videos,
and music ).
The Company expects to generate the majority of its revenue through 1)
revenues derived from the sale of products via e-commerce through the Company's
main sites (junglejeff.com and stockstudy.com) and through the client's sites,
2) the sale of advertisement space (on main sites and on client sites), 3) fees
Charged for custom Web site design and programming, and 4) fees charged for
graphic customization of the branded content on individual associate sites. For
a description of the Company's main Web site, see "The Company's Brandable
Sticky Solutions" below.
Marketing
The Company plans to implement a marketing campaign over the next 12
months. The Company expects to finance the bulk of its marketing expenses
through the future sale of its equity securities. The Company has allocated
approximately $300,000 to finance the cost of marketing its destination Web
sites and related products over the next six months.
The Company will initially market its products through multiple media
advertising campaigns, including Web-based advertisements, targeted mailings,
and print and radio advertisements. Such a minimal marketing budget will not
permit national or regional radio or television promotional campaigns. If the
Company is able to raise additional capital, the principal use of proceeds would
be to expand its marketing efforts. The Company will also benefit as its client
base grows since the Company plans to control the advertising space on its
branded sites. The Company expects advertising exposure to increase as the
Company develops more branded sites.
Each branded affiliate (i.e., a customer who purchases and uses a
branded Web site) enters into an agreement with the Company pursuant to which
the Company determines the advertising placed on the Web site. The Company
recognizes that its selection of advertisers will be important to branded
affiliates and will endeavor where possible to select advertisers that will not
directly compete with the business of the branded affiliate. If branded
affiliates are displeased with the Company's selection of advertisers, they may
choose to terminate the agreement. Upon such termination, the Company terminates
the customer's access to the branded Web site.
The Company anticipates that the cost of its branded sites will consist
of a customization fee of approximately $10.00 to $125.00 per site , depending
on the degree of customization requested by the customer. Websites currently
branding junglejeff.com may receive a commission equal to five percent ofnet
receipts (less returns, customary deductions and chargeback's, and certain
costs). The Company may, during its introductory phase, offer branded sites as a
promotion, either free or at reduced rates.
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The potential customers of the Company are significant since many Web
sites are constantly searching for new "sticky" content to differentiate
themselves from their competition and to encourage repeat visits by their users.
The Company believes that its products will appeal to virtually every type of
Web site that provides content and will represent very significant savings to
these sites over the development of similar sticky solutions by their own
programmers.
Initial Marketing Prospects
The Company has targeted several different types of Internet sites for
its initial marketing effort over the next 12 months. The Company believes that
these sites would significantly benefit from branding its sticky financial
information and e-commerce systems and therefore be most receptive to its
marketing efforts. The Company plans to hire twelve additional sales and service
personnel to service these new accounts. As of this time the Company has not
completed its branding technology nor has it entered into any branding
agreements with Web Site owners.
Portal Sites (an example of some very large portal sites are Excite,
Yahoo!, and Netscape's Netcenter) are continuously adding and searching for new
sticky content to help ensure that they are able to keep users glued onsite. The
Company believes that its brandable products could significantly assist portals
that want to add powerful sticky content without providing links to the
competition. Though some very large sites may already have agreements with
sticky content providers, the Company will market to other portals which are as
yet unaffiliated with financial information or e-commerce systems or sites that
wish to upgrade their present systems to the sophistication of a branded system.
The Company believes that many financial sites will be able to benefit
from the Company's products. For example, many financial information sites
provide services such as stock quotes and personal portfolio management, but
lose users to other sites when it comes to other important features such as
financial editorial content and e-commerce capabilities. Such e-commerce
capabilities include the sale of books, cassettes, CDs, videos and DVDs that are
available on junglejeff.com and the investment research anticipated to be
available for sale on stockstudy.com upon completion. The Company could also
market to such sites its newsletterz.com and irpackages.com sites. The Company
expects to fulfill these needs when its branding technology is completed. The
Company will not offer or sell any form of securities, mutual funds or other
financial instruments.
Many radio station Web sites currently do not offer their users an
online music CD store. The Company believes that this is a market with
significant potential for exposure to the Company's branded e-commerce stores
and the sale of music products. The Company expects that its future radio
station partners will be able to customize their stores in order to appeal to
the music preferences of the station's listeners. For its marketing effort over
the next twelve months the Company has compiled a data base of radio and
television stations, daily weekly newspapers, and magazines and plans to promote
its products to these companies as soon as the Company's e-commerce site is
available for branding. The Company expects to generate low or no cost
advertising from radio stations that sign up for its branded sites; stations
stand to benefit when their listeners visit their Web sites. The Company plans
to give its partners the opportunity to earn commissions from sales of music CDS
and other merchandise that listeners purchase from the radio station's branded
store.
The Company will also be marketing its sticky e-commerce and financial
sites to Community Sites. Community Sites (some examples of some very large
community sites are Geocities and the Mining Company) create "fraternities" of
users by providing Community-building features such as personal Web pages,
networking opportunities, and free e-mail services. A typical Community Site
organizes its site's features in ways that entice users into visiting various
areas of the site on a regular basis. When successful, the site's users become
accustomed to frequenting the site for specific information and interaction with
users of similar interests. The Company's products cover topics with such
wide-range appeal (from the financial markets to entertainment products) that
the Company believes that its branded sites will represent significant
additional assets to Community Sites.
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The Company believes that one of the key benefits of its e-commerce
site is that it will be highly customizable to the partner when all of the
technology is completed. The Company believes this will be appealing to a wide
selection of sites such as sports, travel, automotive and health related sites
where the site could tailor its branded e- commerce store to increase the time a
user spends on his site and the users repeat visits. For example a partner sport
related site could select and showcase specific sports books, videos, and DVDs
relating to its site.
Sticky Technology
The Company believes that "stickiness" is one of the most important
trends on today's Internet. As the word would imply, stickiness means finding
ways of keeping Web users glued to a particular Web site.
While a Web user may utilize a Web site for a specific purpose, such as
the purchasing of computer hardware, the moment the need arises for something
else, such as a stock quote or book purchase, the user is off to another site if
the current site does not provide the desired content. The key to stickiness is
providing users with so much useful content that they are able to find virtually
everything they need onsite.
The Company has taken that model one step further by developing
integrated systems that when completed will provide the client company's Web
site with an array of important content that will be branded with the client
company's name, logo, and color scheme - not those of Ubrandit.com.
The Company has developed a diverse suite of sophisticated Web sites
with the purpose of "branding" the sites to clients as sticky solutions. Four
major sites have been completed: www.stockstudy.com, www.irpackage.com,
www.newsletterz.com and www.junglejeff.com. The Company's destination Web sites
have been designed to reflect the latest in sticky technologies. The Company is
now branding junglejeff.com and expects to be able to brand its financial sites
to clients during the first quarter of the 2000 calendar year to clients shortly
thereafter.
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Branding Technology
The Company uses the terms "branding" and "private labeling"
interchangeably. The goal of the Company's proprietary branding technology, is
to provide private labeled content to client sites whereby the content will
appear to belong exclusively to the client company. This will be achieved by
incorporating the client company's name, logo, Web-color scheme, and navigation
into the content. The Company's destination Web sites have been designed to be
"transparent" in the way client sites access the branded content. The branding
content is designed so that the user will not notice the change in content
provider when they leave the client's site and enter the Company's branded
content. This is unlike the traditional "affiliate" model or "linking"
arrangement where the user is typically transferred directly to the main site of
the company that created the content. The Company believes that the lack of
transparency in the traditional affiliate model and linking arrangement is a
major shortcoming. In many cases the user will eventually just bypass the
affiliate site in favor of going directly to the content provider. The Company's
systems have been designed so that the user will not be aware of the Company's
destination sites, JungleJeff.com, StockStudy.com, Irpackages.com, or
newsletterz.com. This is key in that then users will not be tempted to bypass
the clients site and also it will enable the Company to run a variety of
e-mail-based promotions designed to drive traffic back to our clients' sites.
The Company is currently branding its destination site junglejeff.com, and
expects to commence branding its destination financial sites in the first
calendar quarter of 2000.
The Company's Brandable Sticky Solutions
Stockstudy.com
Located on the Internet at www.stockstudy.com, stockstudy.com is a
comprehensive financial site that provides Web users with an extensive array of
sticky features including: stock quotes, personal portfolio management, mutual
fund data, news releases, and exclusive editorial content. Quotes are provided
on a minimum of 15 minutes delay per each exchange requirement. Quotes are being
continually updated by a constant feed from the data providers as trades take
place. Articles and newsletters are being updated on a daily basis. The Morning
and Evening Bell commentary is updated twice daily. The public information on
companies is being updated constantly by data feeds as the public databases are
changed and updated. The Company plans to add several new features to the site
over the remainder of 1999 including adding data feeds that provide additional
news sources and editorial comment.
Upon completion of its branding technology the Company expects to be
able to brand stockstudy.com to Web sites that either do not have a finance
center or wish to upgrade their finance center - a customer base that includes a
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significant portion of Web sites on the Internet. There are thousands of sites
that currently "link" to other sites for finance content. The Company believes
that a significant number of these sites would take advantage of a cost
effective and sophisticated private labeled finance center if it was made
available to them. It is the goal of the Company's private labeled finance
center to appear as part of the client's Web site - not as a link to another
company's financial content. With enhanced content the Web user will have more
of an incentive to visit and remain at a client's site.
Newsletterz.com
Located on the Internet at www.newsletterz.com, Newsletterz.com is a
unique financial newsletter-marketing program that promotes a growing number of
publications from various investment categories. Investors can sample dozens of
respected financial publications and read daily market commentary from the
editors. Newsletterz.com currently represents 41 newsletters all of which are
unaffiliated. The Company is continually researching possible additions to the
newsletters it represents.
When the Company's branding technology is complete, Newsletterz.com
will provide clients with an opportunity to earn revenue from the sale of trial
subscriptions. The Company anticipates that the branding technology will be
completed by the end of the 1999 calendar year. Users of the site will be able
to purchase long-term and trial subscriptions directly from the site. The
Company does not intend to charge its customers for use of newsletterz.com,
except incidental customization charges. The Company plans to generate revenues
from the sale of trial subscriptions by a client's site shared with the client.
It is expected that newsletterz.com will be available as a stand-alone brandable
product and also as an integrated part of stockstudy.com.
IR Packages.com
IR packages.com is located on the Internet at www.irpackages.com. The
"IR" in IR Packages.com stands for "Investor Relations." Investor relations
packages are a resource that many investors require when evaluating the
investment merits of a company. A typical IR package includes the company's
corporate profile, recent press releases, recent public filings, and other
pertinent company information. As of September 13, 1999, information was
available on 5,989 companies.
While many free sites provide information regarding public companies,
the Company believes that irpackages.com offers several advantages over other
sites.
o Phone numbers, addresses, e-mails and other contact information about
public companies is easier to access.
o irpackages.com stores the user's name and address and transmits this
information automatically
The Company currently does not intend to charge a fee to use this site.
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The Company has developed a fully automated IR package request system.
Users simply utilize the site's search engine to find the company they are
interested in receiving an IR package from, and click "send." The system
automatically sends an e-mail to the IR department of the selected company with
the user's contact information and request. The IR department of the specific
company then makes a determination on the disposition of the request. As
previously stated, IR packages.com already has included in its data base more
than 5,989 publicly traded companies.
IR Packages.com is an integrated part of the Company's stockstudy.com
and it is expected that the site will also be available as a separate brandable
product.
JungleJeff.com
Launched on June 8, 1999, JungleJeff.com is a large e-commerce site
that currently features over 1,000,000 book, music, video, and DVD titles. The
site is located on the Web at www.junglejeff.com. The Company began branding
JungleJeff.com in September of 1999, following the completion of its beta
testing. It is expected that other product lines (such as computer software and
hardware and consumer electronics) will be added over time following the
completion of this branding technology. The Company is able to private label
JungleJeff.com to Web sites that either do not have an entertainment presence or
wish to upgrade their entertainment presence, a customer base that potentially
encompasses a significant portion of Web sites on the Internet. As is the case
with finance centers, there are thousands of Web sites that currently link to
other sites for their entertainment presence via associates programs (associate
sites earn commissions through the generation of sales). The Company believes
that a significant number of these sites may take advantage of a cost effective
and sophisticated private labeled entertainment e-commerce site if it was made
available to them. The Company plans through JungleJeff.com to offer client
companies an affiliate revenue sharing program. It is anticipated that an
affiliate site, when all the technology is complete, will be able to customize
their store to highlight certain categories and items, according to their
respective needs.
The products that are sold through Junglejeff.com, similar to other
e-commerce sites, are purchased from large music and book distributors and
resold to buyers purchasing on the Web. Currently the Company has a contract
with Baker & Taylor, Inc., a major industry distributor, to provide its music,
book, and video products through a drop shipment program. Under the terms of its
agreement with Baker & Taylor, the Company has acquired a license to use and
display information from Baker & Taylor's extensive database of products on the
Company's websites for a term of 12 months the right to use and display
information from the Baker & Taylor database is included in the wholesale price
of the products purchased by the Company's brandable store, junglejeff.com.
pursuant to the program, products purchased on a retail Web site are drop
shipped to the customer on an as available basis. No specific inventory has been
designated as belonging to the Company and the Company only purchases the
inventory as it fulfills orders.
The Company's License Agreement with Muze Inc., a New York corporation,
provides that Muze grants to the Company a non-exclusive, nontransferable,
limited right to use the data and software provided by Muze. The License
Agreement is for a term of one year and requires the Company to make payments of
a maximum monthly fee of 93,500 or a lesser fee calculated on a fixed price per
unit sold. The Company may only use the data at specified sites and may not
assign, sell or otherwise use the data except as provided in the agreement. Muze
agrees to indemnify the Company against infringement of the intellectual
property rights of third parties, subject certain exceptions and requirements.
The Company agrees to indemnify Muze against claims arising out of content not
provided by Muze, breach of the License Agreement and illegal or unauthorized
use of the data.
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The Company has also contracted with Baker & Taylor and Muze Inc., to
provide the book, music, and video data base feeds. These data feeds that appear
on the Company's destination sites (and the Company's branded sites when the
technology is completed), allow purchasers to view video, book, or music jackets
and pricing, biographic synopsis, and other information about the products that
are being sold. Since the Company will rely exclusively on the drop shipment
program run by its distributors, the Company will not keep an inventory of its
products. Since the Company will not keep its own inventory, products will only
be available to the Web purchaser if they are currently in stock or as they
become available to the Company's distributors. The Company's system updates
distributor's inventory on a weekly basis. Products are purchased exclusively by
credit card and the Company processes said credit card purchases through
CyberCash, Inc. of Reston, Virginia, a provider of secure electronic payment
solutions. The Company insures secure Internet transactions by the use of
VeriSign, of Mountain View, California, a provider of Public Key Infrastructure
(PKI) and digital credit solutions used by Web sites to conduct communications
and transactions over the Internet. Products are purchased from distributors on
an as available basis. If the product is not available within 15 days then the
purchaser will be notified by e-mail and have the opportunity to cancel the
order. The Company has a return policy that a customer may return any unused
item for a full refund provided that the customer returns it to the Company in
its original condition within 15 days following receipt of order. Shipping costs
are only refunded if the return in due to an error on the part of the Company.
Revenue Sources
The Company has in previous years generated revenue from list rentals,
sponsorship advertising, and design of Web sites. The Company anticipates these
sources will not to be as significant in the future due to the in Company's
change in planning. As stated previously in this section the main focus of the
Company is on new areas of revenue generation, specifically, e-commerce, selling
Web site advertising, and graphic customization. Though not a primary focus, the
Company will also continue its Web site development and to seek sponsorship
advertising.
E-commerce
The Company recently launched Jungle-Jeff.com on June 8, 1999, and
began branding the site in September of 1999. No significant revenues have been
earned by the site and there are no material backorders. The Company expects to
earn revenues on items (books, music CDS, Videos, DVDs, etc.) sold via its
e-commerce site JungleJeff.com. The Company plans to earn revenues on items sold
through partnered versions of the site upon the completion of the Company's
branding technology. The Company anticipates offering discounts on items sold
through JungleJeff.com and through branded versions of the site. The Company
pays a commission of up to five percent (5%) of its net receipts (less returns,
customary deductions and chargebacks, and certain costs), to partners on sales
generated by their branded sites.
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The Company's other source of revenue generation from e-commerce is
through the sale of financial newsletter trial subscriptions from StockStudy.com
and Newsletterz.com. The Company has made arrangements with newsletter providers
to retain all revenue obtained from trial subscriptions, which range from one to
three months, depending upon the newsletter. After the end of the trial
subscription period, all revenues from the newsletters are paid directly to the
publisher and the Company does not receive any further income therefrom. The
Company does not pay any fees or charges to the publishers. Through November 30,
1999, the Company had received $1,990.05 of gross revenue from trial
subscriptions. (Newsletterz.com is an integrated part of StockStudy.com and is
expected to also be available to partners as a separate brandable product upon
completion of the Company's branding technology.) The Company plans to pay its
partner sites a commission on all trial subscription revenue generated by their
branded sites.
Advertising
To date the Company has not earned any significant revenue from
advertising. Currently the layouts of the Company's branded and destination
sites allow for one large banner ad and up to two smaller banner ads per page.
The Company plans to follow the generally accepted guidelines for advertising
fees on the World Wide Web. Ad fees are generally calculated through a
combination of the following two criteria: 1) The number of page views received
(each time a banner ad has the opportunity of being seen by a user counts as one
page view); and 2) The popularity of the host site (and the popularity of
specific pages of the host site). Typically, Web sites charge advertisers by CPM
(cost per thousand) page views. The Company plans to follow this general model.
The Company plans to charge fees that are commensurate with these
criteria. As mentioned above, the Company currently plans on controlling the
advertising space on its destination and branded sites. Therefore, the value of
the Company's advertising space should increase as the size of the Company's
partner base grows.
The Company will not establish the rates to be charged on a CPM basis
until the branding technology has been commercially launched and when sites are
able to easily brand the Company's destination sites. After the rollout of the
Company's branding and marketing program, the Company will evaluate page-view
penetration into certain industry group and will establish advertising fees
accordingly. Though the Company is still evaluating pricing options it
anticipates that the cost of branding to be approximately $10.00 to $125.00
depending upon the extent of customization. The Company may also run some
introductory phrase promotions depending upon marketing and market conditions.
Graphic Customization
The Company plans to charge a fee to partners who wish to customize and
have their official corporate logo integrated into their branded Web-content.
Depending on the level of customization required, the Company plans to charge a
fee accordingly. Though no assurances can be given, management believes that the
amount of revenue from this area could be significant if a large percentage of
partners opt for graphic customization.
Web Site Development
In addition to providing private labeled Web-content to partner sites,
the Company plans to continue and expand its custom Web site design and
programming for clients who wish to upgrade their existing Web presence.
The Company is not dependent on any large customer but conversely is
dependent upon various individual Web sites deciding to have the Company's
branded content appear on their respective Web sites. The Company believes that
the e-commerce and financial sites are suited for large corporate Web sites or
small individual sites. Since the Web sites will be able to customize the
branded content with regards to the color, logo, and highlighted content, the
branded content should be readily able to integrate into the look and feel of a
specific site whether it be a large car company or a small independent service
provider. It is in the Company's best interest to make their sites readily
brandable so that there is maximum exposure to the products sold by its
e-commerce sites and the advertisement space available on its e-commerce and
financial sites. The Company's Websites contain advertising space pre-sold and
controlled by the Company. Thus, the Company's advertisers may be competitors of
the Websites of its branding customers. To date, such potential conflict has not
resulted in any loss of existing customers, but may discourage users in the
future. The Company expects that its e-commerce business will be seasonal in the
same respect that any retail business is seasonal, with greater sales expected
in the holiday seasons.
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Proprietary Technology and Research and Development
The Company does not have any patents on any of its Internet processes.
The Company does have various technologies that it has developed which are
proprietary. The Company expects that upon delivery of said proprietary
processes and technology to the market place that competitors will attempt and
possibly may successfully replicate certain advantageous processes developed by
the Company's that are part of its branding technology. The Company has applied
for Trademark protection with regards to its name and logo. The Company has
applied for a service mark with the U.S. Patent and Trademark division of the
federal government on the mark "ubrandit" and "ubrandit.com" with and with out
the distinctive fonts and color scheme. The Company has secured the names of its
present sites with InterNIC and Network Solutions, Inc. and intends to renew the
registration in approximately two years when renewals are due. The current
business strategy of the Company focusing on the development and branding of its
destination Web sites has resulted in the Company expending significant amounts
of its resources on research and development. The Company estimates that during
the past two years the that it has spent approximately $312,000 on Company
sponsored research and development. The dollar amount spent on research
activities sponsored by customers is not a material amount.
Competition
The Internet market is extremely competitive, new, and dynamic. The
Company will be competing with companies that have far greater resources than
that of the Company. The Company, a startup company, will be competing against
Company's with far greater experience and better funding. Though the competition
is formidable management believes that because of the dynamics and huge breadth
of Web e-commerce that there are certain areas of e-commerce where the Company
can compete effectively. Through the development of private labeled systems for
financial information and e-commerce, the Company believes that it has found a
niche within the Internet industry that has yet to be fully exploited. To date,
the Company believes that no Internet company has positioned itself as the
leader in this niche area.
It is management's opinion that when the Company's branding technology
is completed its value as a content provider to the Web sites of its partners
will stem from several distinct areas, including: the appeal of brandable
content, the turnkey nature of its content, the Company's planned no-cost (or
nominal fee charged for graphic customization) to participate model, the ability
for a partner to customize their e-commerce store to reflect the unique nature
of their business, and the expected breadth of the Company's products.
23
<PAGE>
It is management's opinion that content providers represent the major
competition to the Company as they are vying for similar relationships with
third-party Internet marketers. The Company's major competitors generally fall
into the following two categories (1) e-commerce sites, such as Amazon.com and
BarnesandNoble.com, and (2) financial information providers, such as CBS
Marketwatch and PC Quote, Inc. E-commerce sites provide third-party sites with
affiliate programs similar to the partnering programs the Company will be
offering when its branding technology is complete. Larger sites may also keep an
inventory of certain books and music and thus may be able to deliver products
that are not available to the Company through its distributors. Also some of the
larger sites may be able to deliver certain products out of inventory on a more
timely basis then the Company. Financial information providers provide
third-party sites with comprehensive financial information (stock quotes, market
news, etc.) much like stockstudy.com. Many of the larger sites have the
advantages of "tie ins" with radio, print, and television media that give them
significantly greater exposure then that available to the Company primarily
dependent upon exposure through the Web.
While the Company intends to competitively price its products and
services, the Company intends to compete primarily on other factors, including
content, ease of use and customer retention. The Company believes that its
branding program has certain advantages not offered by the "affiliate programs"
offered by other e-commerce providers. Generally affiliate programs work similar
to the following. Destination Web sites will advertise a number of books, CDS,
or videos from one of the large e-commerce sites offering the products, such as
books that pertain to the destination Web site's business. When a visitor to the
site takes an interest in a book (by "clicking" a link or picture of the book's
jacket cover), the user is instantly transferred to the e-commerce Web site.
That model has been generally very successful for these e-commerce Web
sites. The e-commerce site generates additional traffic and sells more
merchandise, users enjoy the shopping and browsing experience that the
e-commerce content provides, and the affiliate site hopefully generates more
repeat users and gets a commission on certain sales the e-commerce site makes
from its users.
The Company's program will be different providing partners with a
series of Web sites, any of which can be customized and "private labeled" to the
partner's existing site. By incorporating the partner company's logo and color
scheme, the Company will be able to add sophisticated sticky content with the
general "touch and feel" of the client's own Web site. Customers who click on
the Company's branded content will technically be transported to the Company's
servers; however, the change should be transparent to the customer. The
transition should be such that the Web site visitor would be unaware that he has
left the partner's site. The Company believes that the lack of transparency in
the traditional affiliate model is a major shortcoming because in many cases the
user may eventually just bypass the affiliate site in favor of going directly to
the content provider. Also once the user becomes a customer of the content
provider many times the content provider markets directly to the user bypassing
the affiliate site that directed the business. It is the present intention of
the Company to redirect traffic back to the Company's branded sites with certain
marketing campaigns which the Company believes will increase the "sticky" nature
of the branded sites.
24
<PAGE>
The Company has determined that the most effective way to market its
products will be through multiple media advertising campaigns, including
Web-based advertisements, targeted mailings, and print and radio advertisements.
The Company has done some limited testing of e-mail based advertising that
targets webmasters. The Company intends to continue with this marketing
strategy. The Company has targeted several different types of Internet sites for
its initial marketing effort over the next 12 months. The Company believes that
these sites would significantly benefit from branding its sticky financial
information and e-commerce systems and therefore be most receptive to its
marketing efforts. Some of the sites targeted are portal sites and financial
sites. Advertising will emphasize how the Company's brandable sticky content
could significantly assist portals without providing links to the competition.
Likewise advertising to financial sites will emphasis the complete nature of the
Company's branding sticky content. Many financial information sites provide
services such as stock quotes and personal portfolio management, but lose users
to other sites when it comes to other important features such as financial
editorial content and e-commerce capabilities. The Company also will target
radio stations with a multimedia approach and a selective canvassing campaign.
Many radio station Web sites currently do not offer their users an online music
CD store. The Company will also benefit as its client base grows since the
Company plans to control the advertising space on its branded sites. As more
sites are branded the Company expects that there will be some decreases in
advertising expenditures. See "Marketing" and "Initial Marketing Prospects"
above.
Governmental Regulation
The Company will be subject to regulation by state, federal, local
authorities, with regards to content, copyright and Federal Trade Commission
regulations. No assurance can be given that unforeseen regulations will not be
adopted by the governmental authorities prohibiting the Company from conducting
business as planned or once in business limiting the success of said business
operations through the expense of complying with new regulations.
Employees
The Company currently has 11 full-time personnel plus various
consultants in management, sales, Internet and technology computer application,
programming, legal, and editorial responsibilities. The Company relies
significantly on outsourcing of its computer programming and other consulting
needs and plans to control costs by extensively utilizing outsourcing in the
future. Management of the Company expects to hire additional employees as
needed.
Further reference is made to the Company's Consolidated Financial
Statements, and the notes included therein and to the subsection "Management
Discussion and Analysis" included in Item 3 with regards to the Company'
business and planning.
25
<PAGE>
ITEM 2. FINANCIAL INFORMATION
SUMMARY OF CERTAIN INFORMATION
CAPITALIZATION
The following table sets forth the capitalization of Ubrandit.com and subsidiary
at June 30, 1999. This table should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Registration
Statement.
Short-term Debt $ - 0 -
Long-term Debt $ - 0 -
Total Stockholders equity $2,301,520
SUMMARY OF HISTORICAL FINANCIAL DATA -- UBRANDIT
The following table sets forth certain historical financial data for
Ubrandit.com for the period December 19, 1997 (date of inception of
Ubrandit.com) to December 31, 1997, and the fiscal year ended, December 31,
1998, which have been derived from the audited financial statements of
Ubrandit.com. The Company was incorporated and first began operations on
December 19, 1997. The selected historical data as of and for the six-month
period ended June 30, 1998 and 1999, are unaudited and were derived from the
accounting records of Ubrandit.com. In the opinion of management, the historical
financial statements of Ubrandit.com as of June 30, 1998 (unaudited), and for
the six-month period then ended, and the historical consolidated financial
statements of Ubrandit.com and subsidiary as of June 30, 1999 (unaudited), and
for the six-month period then ended, included all adjusting entries (consisting
only of normal recurring adjustments) necessary to present fairly the
information set forth therein. Historical financial data may not be indicative
of the Company's future performance. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and notes
thereto included elsewhere herein. Historical earnings per share and dividend
data have not been presented, as the Company was not a publicly-held company
during the periods presented below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
For the period
December 19, 1997 Fiscal Year Six months Six months
(Inception of Ended Ended Ended
Ubrandit.com) December 31, June 30, June 30,
To December 31, 1998 1998 1999
1997 (Unaudited) (Unaudited)
- ----------------------------------- ------------------ -------------- ------------ --------------
INCOME STATEMENT DATA
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ 20,616
- ----------------------------------- ------------------ -------------- ------------ --------------
Operating expenses 93 438 $ 400,225
- ----------------------------------- ------------------ -------------- ------------ --------------
Operating income (loss) -- (438) (379,609)
- ----------------------------------- ------------------ -------------- ------------ --------------
Other income, net -- -- -- 7,771
- ----------------------------------- ------------------ -------------- ------------ --------------
Extraordinary Item -- -- -- 378,749
- ----------------------------------- ------------------ -------------- ------------ --------------
Income (loss) before income taxes -- (438) (750,587)
- ----------------------------------- ------------------ -------------- ------------ --------------
Income taxes -- -- -- --
- ----------------------------------- ------------------ -------------- ------------ --------------
Net income (loss) -- (438) (750,587)
- ----------------------------------- ------------------ -------------- ------------ --------------
Earnings per share - basic and diluted (0.00) -- (0.00) (0.09)
- ----------------------------------- ------------------ -------------- ------------ --------------
BALANCE SHEET DATA
- ----------------------------------- ------------------ -------------- ------------ --------------
Total current assets $ 800 $ 44,507 $5,360 $ 1,623,733
- ----------------------------------- ------------------ -------------- ------------ --------------
Total Assets $ 800 $ 44,507 $5,722 $ 2,837,727
- -------------------------------------------------------------------------------------------------
Total current liabilities $ 400 $ 400 $ 400 $ 61,207
- ----------------------------------- ------------------ -------------- ------------ --------------
Total liabilities $ 400 $ 400 $ 400 $ 61,207
- ----------------------------------- ------------------ -------------- ------------ --------------
Total Stockholders equity $ 400 $ 44,107 $5,322 $ 2,776,520
- ----------------------------------- ------------------ -------------- ------------ --------------
</TABLE>
26
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
General
Since its inception, the main activity of the Company, an early stage
startup Company, has been organizational. The Company has sold equity shares to
raise capital, recruited and organized management, has commenced corporate
strategic planning, and has engaged in the limited development of destination
Web sites and the branding and private labeling of systems for the Company. The
Company has conducted no significant operations to date. The Company very
recently launched its brandable book, music, video store on September 20, 1999,
and expects to launch its brandable financial and other related financial sites
in the second quarter of the fiscal year ending September 30, 2000. While the
Company expects to generate revenues from advertising, e-commerce sales, and
custom programming during the next fiscal year, management expects that, the
Company will continue to operate at a loss for the foreseeable future. On March
11, 1999, the Company purchased all of the then-outstanding shares of common
stock of Global Investors Guide, which became a wholly owned subsidiary of the
Company. Global Investors Guide is an Internet development Company with a
limited operating history. As of June 30, 1999, the Company owned approximately
$156,108 in tangible property, not including depreciation of approximately
$26,837.
Certain Balance Sheet Items
In comparing the balance sheet as of June 30, 1999, to December 31,
1998, current assets increased from $44 thousand to $1.62 million. The increase
was principally due to cash received from private equity financings pursuant to
Regulation D, Rule 504, promulgated under the Securities Act of 1933. Total
assets increased from $44 thousand to $2.84 million on the June 30, 1999,
balance sheet compared to the balance sheet on December 31, 1998. The increase
was primarily due to the increase in cash as noted above, an increase in
property and equipment (primarily computer hardware and software), net of
accumulated depreciation and an increase in core technology and Goodwill, net of
accumulated amortization. Current liabilities increased from $400 to $61
thousand on the June 30, 1999, balance sheet as compared to the balance sheet on
December 31, 1998. This increase was due to increases in accounts payable,
accrued expenses and payroll taxes payable resulting from operating activities.
Recent Events
The Company's most recent unaudited financial statements are as of June 30,
1999. Stockholders Equity. Also, in August of 1999 a total of 1,482,333 shares
of Common Stock were purchased for $3.00 per share by non-U.S. persons, as
defined by Regulation S of the Securities Act of 1933, investing in a private
offering of the Company's Common Shares pursuant to Regulation S. This offering
is reflected in the notes to the Company's Financial Statements dated June 30,
1999 (unaudited) see Note 12. Subsequent Events.
Results of Operations
Six months period ended June 30, 1999; compared to the six month period ended
June 30, 1998.
Consolidated revenue for the six months ended June 30, 1999, were
$20,616, as compared to revenue of nill for the period ending June 30, 1998,
representing an increase of $20,616. The increase in revenues was due to the
renting of mailing lists (comprising eighty-eight percent of total revenue)
resulting from the acquisition of Global Investors Guide, as well as the
commencement of product sales from the Jungle Jeff website (comprising twelve
percent of total revenue).
Direct operating expenses were $171,994 during the six months ended June
30, 1999, in comparison to no such expenses for the six months ended June 30,
1998. The increase in direct operating expenses was due primarily to an increase
of $150,000 of payroll costs associated with development of web sites and
$19,000 of costs for data feeds for junglejeff.com.
27
<PAGE>
Sales, general and administrative expenses increased from $400 for the
six-month period ended June 30, 1998 to $183,189 for the six month period ended
June 30, 1999. The increase was primarily due to the following factors:
increased research and development costs of $6,000, administrative payroll of
$21,000, accounting and legal fees of associated and filings with the Securities
and Exchange Commission of $55,000, rent expense of $22,000, business fees of
$14,000, the expense of $15,000 to facilitate dessemination of press releases
and office expenses of approximately $50,000.
For the six months ended June 30, 1999 depreciation and amortization were
$45,042 as compared with $38 for the six months ended June 30, 1998. The
increase of $38,655 was due to amortization of Goodwill recorded from the
acquisition of Global Investors Guide on March 11, 1999, and depreciation of the
acquired fixed assets.
In sum revenue less operating expenses resulted in an operating loss of $379,609
for the six months ended June 30, 1999 as compared with an operating loss of
$438 for the nine months ended June 30, 1998.
Interest expense for the six months ended June 30, 1999 was $742, as compared to
$0 for the six months ended June 30, 1998. This expense related to the
convertible debt recorded from the acquisition of Global Investors Guide on
March 11, 1999.
For the six months ended June 30, 1999 interest income increased from $0 to
$8,513 over the nine-month period ended June 30, 1998. The increase interest
income was due to interest earned on cash balances received from the equity
offerings.
There were no extraordinary items of expense for the six months ended June 30,
1998 as compared to an amount of $378,749 for the loss on extinguishment of debt
for the six months ended June 20, 1999. This loss was recorded when the Company
converted $164,251 of debt and interest to an unrelated party into shares of
common stock. The 300,000 shares of stock were valued at $1.81 per share (the
price of the stock on the date of conversion)for a total of $543,000. The
difference between the total debt and accrued interest and the value assigned to
the stock was recorded as a loss on the extinguishment of debt.
Year ended December 31, 1998, compared to year ended December 31, 1997.
The Company had no operations prior to its acquisition of Global Investors Guide
in March 1999, and did not generate any revenue for the period from December 19,
1997(inception) to December 31, 1997, for the fiscal year ended December 31,
1998.
The Company incurred no expenses during the partial fiscal year ended December
31, 1997 as compared to expenses of $93 incurred in the fiscal year ended
December 31, 1998. The expenses incurred in 1998 consisted of amortization and
office expense's relating to the Company's organization.
28
<PAGE>
Liquidity and Capital Resources.
At present, only limited revenues are being produced by the Company. The
Company's main source of funds has been the sale of the Company's Equity
securities. The Company has issued 7,930,000 shares of its Common Stock for
approximately $1,970,780, including the most recent offering and after deduction
of offering expenses, has exchanged 1,826,000 shares of its Common Stock for all
the outstanding shares of Global Investors Guide and has converted 264,251 in
debt to 500,000 shares issued to two creditors of the Company. The Company had
$1,582,878 in cash as of June 30, 1999, the date of its latest unaudited
financial as set forth in Exhibit "B" Financial Statements. Since June 30, 1999
the Company has raised $4,446,999 in cash, less offering expenses of $35,540, by
the sale of Common Stock in a Regulation S offering. This cash is at present
being used mainly to develop and market the Company's destination Web sites and
its co-branding and private label technology and to fund certain ongoing general
and administrative expenses plus consulting expense with the total of such
expenses. The Company is currently producing revenue on a limited basis from its
e-commerce destination site junglejeff.com and sites that have branded the book,
music , video store on a beta testing basis. The Company is generating revenue
on a limited basis from its e-commerce destination site junglejeff.com and its
branded book, music and video store web sites. The Company expects to generate
material revenue from operations beginning in the 1st quarter of the next
calendar year, following the roll out of the completed branding technology and
the commencement of the Company's marketing campaign. Further, if revenues from
branding, advertising, sponsorship fees, and custom programming are realized
said revenues will be subject to all of the risks set forth in the section
entitled "RISKS FACTORS" and no profits may be realized from said revenues. The
main source of funds at the present is the sale of the Company's equity
securities. As of September 30, 1999, the Company had cash reserves of
$5,613,922. Such reserves are expected to fund operations at projected rates for
a period of 36 months. Thereafter, the Company will be dependent upon revenue
from operations. If revenue from operations is insufficient to support expenses,
additional equity or debt financing will be required to meet capital needs. The
Company does not have any commitments for additional capital. One possible
source of funding includes loans by financial institutions with the Company's
computer equipment as collateral. However, the collateral value of Company's
tangible property is limited. The Company has no material contractual
commitments for capital expenditure at present.
SUMMARY OF HISTORICAL FINANCIAL DATA - PREDECESSOR -- GLOBAL INVESTORS GUIDE
The following table sets forth certain historical data for Global
Investors Guide for the period December 3, 1996 (date of inception) to September
30, 1997, and the fiscal year ended September 30, 1998, which have been derived
from the audited financial statements of Global Investors Guide. The Company was
incorporated and first began operations on December 3, 1996. Historical
financial data may not be indicative of the Company's future performance This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and notes thereto included elsewhere herein. Historical earnings per
share and dividend data have not been presented, as the Company was not a
publicly-held company during the periods presented below.
29
<PAGE>
<TABLE>
<CAPTION>
GIG
- ---
Selected Financial Data
- -----------------------
For the period
December 3, 1996 Year ended
to September 30 September 30,
1997 1998
---------------- -------------
INCOME STATEMENT DATA
<S> <C> <C>
Revenue 86,390 341,887
Operating expenses 78,027 443,861
Operating income (loss) 8,363 (101,974)
Other (expenses) net -- (13,063)
Income (loss) before income taxes 8,363 (115,037)
Income taxes 1,576 --
Net income (loss) 6,787 (115,037)
Earnings per share
Basic and diluted 6.79 (115.04)
BALANCE SHEET DATA
Total current assets 10,439 62,649
Total assests 13,327 93,909
Total current liabilities 4,714 200,333
Total liabilities 4,714 200,333
Total stockholders eequity (deficit) 8,613 (106,424)
</TABLE>
Certain Balance Sheet Items
In comparing the balance sheet as of September 30, 1998, to September
30, 1997, current assets increased from $10,439 to $62,649. The increase was
principally due to cash and accounts receivable received from operations. Total
assets increased from $13,327 to $93,909 on the September 30, 1998 balance sheet
compared to the balance sheet on September 30, 1997. The increase was primarily
due to the increase in cash and accounts receivable as noted above and an
increase in property and equipment (primarily computer hardware and software),
net of accumulated depreciation. Current liabilities increased from $4,714 to
$200,333 on the September 30, 1998 balance sheet as compared to the balance
sheet on September 30, 1997. This increase was due to increases in due to
related party, convertible debt, and accrued interest. The due to related party
increased as a result of a transaction with a related third party whereby,
Global Investors Guide received computer equipment, services and cash.
Convertible debt and accrued interest increased as a result of debt incurred
from an unrelated third party and interest on said debt.
Results of Operations
Fiscal year ended September 30, 1998, compared to the period from
December 3, 1996, to September 30, 1997.
Consolidated revenues for the fiscal year ended September 30, 1998,
were $341,887, as compared to revenues of $86,390 for the period ending
September 30, 1997, representing a cumulative increase of approximately 296% The
increase in revenues was principally due to the additional revenues that the
Company was able to generate from its expanded sale of sponsorships and
advertising, custom programming and design, and subscriptions.
Direct operating expenses were $154,310 during the fiscal year ended
September 30, 1998 in comparison to $54,176 for the period ended September 30,
1997, representing an increase of approximately 181% over the preceding fiscal
year. Such increase was due to the following factors: an increase in research
and development of $3,000, an increase in payroll of $88,000 and an increase in
name list rental of $15,000. All of these changes are associated with the
Company's change in business focus during the latter part of the fiscal year
ended September 30, 1998.
Sales, general and administrative expenses were $279,011 during the
fiscal year ended September 30, 1998, in comparison to $23,456 for the period
ended September 30, 1997, representing an increase of approximately 1090% over
the preceding fiscal year. The increase was due primarily to an increase of rent
of $19,000, printing costs of $83,000, administrative payroll of $20,000 and
computer software costs of $30,000.
Net losses from operations for the fiscal year ended September 30, 1998,
were $101,974 as compared to net operating income of $8,363 for the fiscal year
ended September 30, 1997. The increase in net losses during the fiscal year
ended September 30, 1998, was due to the decline in revenue and increase in
costs relating to the Company's implementation of its new business plan.
Year 2000 Compliance; Year 2000 Readiness Disclosure
To the fullest extent permitted by law, the following discussion is a
"Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information
and Readiness Disclosure Act 105 P.L. 271. Such Act does not protect the Company
from violations arising under the Federal Securities laws.
30
<PAGE>
Background
Many of the world's computer systems and programs currently record
years in a two-digit format. Such computer systems or programs that have
date-sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000, and therefore, may be unable to recognize,
interpret or use dates in and beyond the year 1999 correctly. Because the
activities of many businesses are affected by dates or are date-related, the
inability of these systems or programs to use such date information correctly
could result in system failures or disruptions and lead to disruptions of
business operations in the United States and internationally (the "Year 2000
Problem"). In the case of the Company, such disruptions may include, among other
things, an inability to process transactions, send invoices, or engage in
similar routine business activities.
Issues relating to the Year 2000 Problem arise in a number of different
contexts in which the Company and its operating subsidiary use or access
computer programming. In its operations, the Company uses both third-party and
internally developed software programs and relies on customary
telecommunications services, as well as building and property logistical
services, including, without limitation, embedded computer-controlled systems.
The Company generally will also rely heavily upon suppliers, as well as data
processing, transmission and other services provided by third-party service
providers, including, without limitation, Internet access, online content,
product distribution and delivery, and information services.
The Company and its operating subsidiary will rely upon independent
internal local access network (LAN) computer systems. In addition, the Company
and its subsidiaries lease their office space from third parties and may conduct
business through multiple locations in major cities. Although the operating
subsidiary will, for the most part, conduct business independently, it will
substantially use similar third-party software and have common relationships and
dependencies with third party service providers.
Assessing the Impact of the Year 2000 Problem on the Company's
Operations
The Company has reviewed its computer systems and programs, including
information technology ("IT") and non-IT systems, and has determined that they
are in compliance with the requirements of the Year 2000. The Year 2000 problem,
however, is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year to 00. The Company
relies on a variety of third party vendors and service providers in the daily
operation of its web sites. The Company relies on third party data providers in
connection with the operation of its financial and e-commerce sites, as well as
third party financial service providers for credit card transactions and
encryption technology. The Company also relies on third party fulfillment
providers for all shipping and handling of products sold through its affiliated
e-commerce destination sites. All such third party providers depend upon
computing systems and software, and are susceptible to Year 2000 related
problems. Also many of the data feeds that third party service and data
providers use to deliver data and content to the Company are generated through
various financial markets that are also reliant on computer technology and
software. If a significant number of these computers fail to function correctly,
the Company may not be able to display correct financial information or product
related data on its web sites, or correctly process or deliver any orders from
its destination or branded sites. Although the Company could incur substantial
costs in connection with the failure of third-party computing systems and
software, such costs are not sufficiently certain to estimate at this time.
31
<PAGE>
To date, the Company has incurred over $50,000 in expenses to purchase
Year 2000 compliant servers and software. All NT based servers have been
upgraded to Microsoft service PAC 5, which is Year 2000 compliant. The Company
estimates that it will incur approximately $10,000 in staffing and related
general and administrative expenses to make existing hardware and software Year
2000 compliant. As of the date of this Registration Statement, the Company does
not expect to incur additional expenses for Year 2000 remediation. The Company
anticipates that the most reasonably likely worst case scenario on January 1,
2000 is that many of the Company's in for active providers will be unable to
distribute the financial data and product information that forms a basis for the
Company's websites. As a result, users of the branded sites will be unable to
access normally available data. The Company cannot predict how long such
disruption in service could continue. If the financial data providers are not
functional, the Company anticipates that the financial data and product data
providers could be replaced so long as the disruption is not caused by technical
problems at the New York Stock Exchange, NASDAQ and other exchanges. If the data
providers for book and music products experience year 2000 technical disruption,
the Company will experience significant delays in replacing such data providers
because only several comprehensive data providers exist.
Contingency Planning
The Company has not developed any plan to address contingencies arising
from the inability of third-party service providers to become Year 2000
compliant in a timely manner. Consequently, no assurance can be given that the
potential failure of third-party systems will not increase the Company's
operating costs or create uncertainties that may have an adverse effect on the
Company's operating results or financial condition.
The Company does not at this time have any plans to develop a
comprehensive contingency plan with respect to the possible failure of computing
systems or interruptions relating to the rollover of the two-digit year to 00.
The Company has limited its contingency planning to identifying alternative
third party providers that would be available if the Company's current providers
are unable to perform in a timely manner. The Company expects to complete its
planning and search for alternative third party vendors and service providers by
the end of the fourth quarter of this calendar year.
ITEM 3. DESCRIPTION OF PROPERTY
The Company subleases approximately 5,000 square feet of general use
office space in San Diego California as its primary corporate office. The term
of the sublease is until June 30, 2000. These offices are sufficient for the
Company to conduct its current operations. On site the Company has a secure
facility for housing one of the Company's eight high capacity Internet servers.
The other seven servers are housed at a secure location operated by CONNECTNET,
a local Internet service provider located in San Diego. The Company believes
that its current configuration of server computers and purchased bandwidth are
capable of handling the expected high volume Internet traffic during peak user
hours. In addition the Company's systems have been designed to be scalable to
meet growth beyond the expected use of the system.
32
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The
following table sets forth information concerning the beneficial
ownership of the Common Stock as of June 30, 1999 for (i) each current director
who owns shares, (ii) each executive officer of the Company who owns shares,
(iii) all persons known by the Company to beneficially own more than 5% of the
outstanding shares of the Common Stock, and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated in the footnotes
below, the address of each stockholder is 12626 High Bluff Dr., San Diego, CA
92130.
Names of Number of Shares Percent of Shares
Beneficial Owners(1) Beneficially Owned Beneficially Owned
-------------------- ------------------ ------------------
Jeff Phillips 2,006,880(3) 18.8%
Gregory V. Gibson 125,000(4) 1.2%
Roger C. Royce 112,500(5) *
Steven K. Radowicz 25,000(6) *
Michael Fagan 54,780 *
Mark Cullivan 54,780 *
J. Eric Arteburn 54,780 *
William Childers 54,780 *
All officers & Directors
as a group (nine persons)(9) 2,498,500 23.4%
- -------------------
* Less than 1%
(1) Unless otherwise noted, the Company believes that all shares are
beneficially owned and that all persons named in the table have sole
voting and investment power with respect to all shares owned by them.
(2) Beneficial ownership is determined in accordance with the applicable
rules under the Exchange Act. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person
that are currently exercisable, or become exercisable within 60 days
from the date hereof, are deemed outstanding. However, such shares are
not deemed outstanding for purposes of computing the percentage
ownership of any other person. Percentage ownership is based on
10,256,000 shares of Common Stock outstanding as of June 30, 1999.
33
<PAGE>
(3) Includes 400,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $.50 per
share.
(4) Includes 125,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $.50 per
share.
(5) Includes 37,500 shares issuable upon exercise of options exercisable at
an exercise price of $3.35 per share.
(6) Includes 25,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $1.50 per
share. Mr. Radowicz's address is Apquip Company, #8 Harris Court Unit
C1, Monterey, California 93940 .
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The names, ages and positions of the Company's Directors and executive
officers as of June 30, 1999 are listed below:
Name Age Position
- ---- --- --------
Jeff Phillips 31 President, Chief Executive Officer,
Chairman of the Board
Roger C. Royce 59 Chief Operating Officer, Director
Gregory V. Gibson 49 Vice President, Legal, Director
Steven K. Radowicz 31 Director
Michael Fagan 32 Vice President Corporate Development
Mark Cullivan 31 Vice President Operations
J. Eric Arterburn 28 Vice President Design Development
William Childers 28 Vice President MIS
JEFFERY PHILLIPS,
PRESIDENT, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Phillips was appointed as the Company's President, Chief Executive
Officer and Chairman of the Board in January 1999. From 1997 to the present, Mr.
Phillips also has been the President of Global Investors Guide of San Diego, CA.
Global Investors Guide maintains a financial research site and performs contract
programming for companies in the financial and e-commerce markets. As president,
Mr. Phillips has been in charge of budgeting, project planning and management,
and development of specialty tools as per the clients' needs. He was also
responsible for exploring and implementing the newest technology into Global
Investors Guide's Web sites pertaining to the financial Internet market. During
the past five years, Mr. Phillips has also been a marketing consultant to public
relations firms and the owner of LPC Communications, an Advertising Agency and
Market Publishing, Inc. a fulfillment and order processing company. Prior to Mr.
Phillips joining Global Investors Guide he was President of Arboc Marketing, an
independent marketing company located in Santa Barbara, CA. As president, Mr.
Phillips was responsible for designing and implementing marketing programs for
over one hundred small and medium sized businesses. Business types included
health organizations, banks, retail outlets, and manufacturing enterprises. The
company also handled political campaigns in the state of California in the
capacity of campaign management, marketing, and public relations. Mr. Phillips
received his Bachelor of Arts in Economics from the University of California,
Santa Barbara.
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<PAGE>
ROGER C. ROYCE,
DIRECTOR AND CHIEF OPERATING OFFICER.
Mr. Royce joined the Company in March of 1999 as its Chief Operating
Officer and as a member of the Board of Directors. Mr. Royce brings over 30
years of corporate experience in managing rapid growth enterprises in
conglomerate environments both in the private and public sector. Prior to his
association with the Company, Mr. Royce was Chairman and CEO of Fortune
Financial Systems, Inc., a diversified national education and training company.
Before joining Fortune Financial, he was President and CEO of Academic
Excellence Institute, Inc., an accelerated learning and distribution company,
and now serves as CEO of Westban Financial, Inc., a financial and management
consulting company. His other experience includes: President and CEO of Motel 6,
Inc., a 400 property lodging chain with revenues of $275 million and assets in
excess of $900 million employing over 7,000 employees; President of Fotomat
Labs, Inc. and Corporate Sr. Vice President and Managing Operations Director for
Fotomat Corporation, a national conglomerate holding company with a retail chain
of 3,850 photographic processing/camera stores generating sales in excess of
$265 million and 12 nationwide processing plant and manufacturing facilities
having wholesale billing of $120 million and employing over 13,000 employees;
and President of Woodfin Suites Hotels, Inc., a national hotel management and
franchise company which was the founding franchisee for the Marriott Residence
Inns chain. During his business career he has also been a consultant for
companies involved in Internet delivery systems. Mr. Royce holds a BA and MBA
from California Western University and has completed additional postgraduate
studies at UCLA and Harvard.
GREGORY V. GIBSON,
VICE PRESIDENT LEGAL, DIRECTOR
Mr. Gibson has been an officer and director of the Company since
January of this year. Mr. Gibson has been an attorney specializing in securities
and securities broker dealerships for over 15 years. Presently Mr. Gibson is a
member of the law firm Gibson, Haglund and Paulsen and Vice President Legal for
Pennaco Energy, Inc. a Denver based public Oil and Gas Company. Prior to his
present affiliations Mr. Gibson was corporate counsel for three years to Global
Resource Investment Limited, a southern California based broker dealer
specializing in resource and foreign publicly traded securities. Prior to
working at Global Mr. Gibson was practicing securities and international law
with the law firms of Gibson and Haglund and Gibson, Ogden and Johnson. Mr.
Gibson attended Claremont Men's College and Brigham Young University for
undergraduate studies and received his juris doctorate degree from Pepperdine
University School of Law.
STEVEN K. RADOWICZ,
DIRECTOR
Mr. Radowicz has been a director of the Company since March 1999. Mr.
Radowicz, an independent director of the Company, is the managing partner and
owner of Apquip Company LLC. Located in Monterey, California, Apquip is a
Company that manufactures equipment for the wood products industry and services
a worldwide clientele. Mr. Radowicz has held numerous positions with the Company
over the past nine years and has served as the Chief Executive Officer for the
past two years. Apquip has distribution and sales throughout five continents
with many of the largest wood producing companies in the industry. While at
Apquip, Mr. Radowicz has been responsible for much of the growth of the company
setting up a network of dealers and representation for the company worldwide.
Mr. Radowicz graduated from the University of California at Santa Barbara with a
B. A. degree in business economics in 1990.
35
<PAGE>
MICHAEL FAGAN,
VICE PRESIDENT CORPORATE DEVELOPMENT
Mr. Fagan has been the Company's Vice President of Corporate
Development since March 1999. Michael Fagan, from July 1997 until assuming his
present position as VP Corporate Development with the Company, served as Vice
President of Global Investors Guide of San Diego, California. In that position,
Mr. Fagan created and implemented the company's marketing strategy and was
responsible for all Web-content-related matters. Also serving as Editor for
Global Investors Guide Financial Digest, he wrote market commentary and
interviewed financial analysts. Prior to his association with Global Investors,
from 1996 to 1997, Mr. Fagan held the position of Senior Research Analyst for
the London Taylor Group, a Southern California-based financial service provider.
From 1994 through 1996 Mr. Fagan was sales and marketing representative with The
Sporting Club at Aventine a California- based health/fitness corporation where
his responsibilities included the development and implementation of marketing
programs and the training of personnel for the company's sales force. Mr. Fagan
received his Bachelor of Science in Business Management from San Diego State
University, California, in 1992.
MARK CULLIVAN,
VICE PRESIDENT OPERATIONS, CONTROLLER
Mr. Cullivan joined the Company in March 1999. His responsibilities
include management of the Company's e-commerce sites and all in-house financial
reporting. From December 1996 to February 1999, Mr. Cullivan as President of
Market Publishing Corporation of San Diego, CA he was in charge of all the
operations of a fulfillment and order processing company. Prior to Market
Publishing, Mr. Cullivan was the Senior Sales and Marketing Analyst for the
Rembrandt Consumer Division of Den-Mat Corporation from 1993-1996. At Den-Mat,
he was responsible for the design and implementation of the corporate sales
programs utilized by the company's regional vice presidents of sales and
national network of product brokers. In addition to his corporate positions, Mr.
Cullivan has been an instructor of economics for several California colleges
from 1992 to present. He received his Bachelor of Arts and Master of Arts
degrees in Business Economics from the University of California, Santa Barbara.
J. ERIC ARTERBURN,
VICE PRESIDENT DESIGN DEVELOPMENT
Mr. Arterburn joined the Company in March of 1999 and since May of 1998
has been the Art Director of the Company's subsidiary Global Investors Guide.
Prior to working at Global Investors Guide Mr. Arterburn was the Art Director
for Internetwork Media from 1994 until 1998. Internetwork Media, a Southern
California design firm, specializes in multimedia cd-rom as well as traditional
media. At Internetwork Media, he worked on numerous projects for the Unites
States Geological Survey (USGS), the National Ocean and Atmospheric Association
(NOAA), as well as projects for Times Mirror and New Millennia. His pursuant to
his responsibilities as Art Director at Global Investors Guide and now as the
Company's Art Director he has designed and directed the content of various
projects including StockStudy.com, Newsletterz.com, IR Packages.com,
JungleJeff.com. Mr. Arterburn graduated from San Diego State University with a
Bachelor of Arts degree with a focus in Graphic Design.
36
<PAGE>
WILLIAM CHILDERS,
VICE PRESIDENT MIS
Mr. Childers was appointed as the Company's Vice President of MIS in
March 1999. Mr. Childers, prior to his association with the Company, was MIS
director for Global Investors Guide from January of 1997 to March of 1999. He
brings to Ubrandit.com 15 years of computer experience in administration,
security, planning, design, and implementation of LAN/WAN networks. His
responsibilities at Global Investors Guide included systems and software
administration and maintenance, planning and execution of the internal network
and Internet Web server farm, installation and maintenance of interoffice links,
WAN connections and leased lines, e-mail system, FTP and Web site
implementation, file and Web server maintenance, network security and anti-virus
protection, backup solutions, and disaster-preparedness planning. Prior to his
involvement with the Company and Global Investors Guide, Mr. Childers was
systems administrator and a consultant regarding Novell NetWare and Windows NT
LAN/WAN networks with small and medium sized companies. From 1994 to 1996 Mr.
Childers was a sales and Technical Consultant for Networks Plus Technology
Group, a Corporate Value added Reseller specializing in high-end applications
and equipment. Mr. Childers studied Computer Science at Colorado State
University, Fort Collins.
Employment Agreements
The Company anticipates entering into employment agreements with its
officers in the near future, the terms of which are undecided at the present
time. The Company has not as of yet entered into any employment agreement with
its officers or other employees.
Committees of the Board
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate legal principles, it is not involved in
day-to-day operating details. Members of the Board are kept informed of the
Company's business through discussions with the Chairman and other officers, by
reviewing analyses and reports sent to them, and by participating in Board and
committee meetings.
The Board has not established any committees at this time.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers received any compensation prior to the
acquisition of Global Investor's Guide in March of 1999. The following table
sets forth information concerning the compensation to be received by the
individual currently serving as the Company's Chief Executive Officer, and other
highly compensated executive officers, in 1999.
37
<PAGE>
<TABLE>
<CAPTION>
Compensation
-----------------------------
Name Annual Other Restricted Securities LTIP All
And Principal Year Salary($) Bonus Annual Stock Underlying Pay- Other
Position (1) ($) Compen- Award(s) Option/ outs Compen-
sation ($) SARS(#) ($) sation
($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeff Phillips, 99(3) 96,000 -0- -0- -0- -0- -0- -0-
CEO(2)
Roger C. Royce, 99(3) 120,000 -0- -0- -0- -0- -0- -0-
Chief Operating
Officer
Gregory V. Gibson 99(3) 96,000(4) -0- -0- -0- -0- -0- -0-
Vice President, Legal
- ----------------
</TABLE>
(1) All other compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such
perquisites and other personal benefits constituted the lesser of
$50,000 or 10% of the total annual salary and bonus of the named
executive for such year.
(2) Mr. Phillips was the President and CEO of Global Investors Guide prior
to its acquisition by the Company.
(3) Anticipated compensation determined on an annualized bases for the
twelve months following the acquisition of Global Investors Guide in
March 1999.
(4) Represents amounts paid as legal fees to Mr. Gibson's law firm.
The Company has no retirement, pension, profit sharing or medical
reimbursement plans exclusively covering its officers and directors, and does
not contemplate implementing any such plans at this time.
Directors of the Company who are also employees do not receive cash
compensation for their services as directors or members of committees of the
Board of Directors, but are reimbursed for their reasonable expenses in
connection with attending meetings of the Board of Directors or management
committees. Non-employee directors are expected to be paid a fee per Board
meeting attended, and reimbursement for expenses.
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<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of Global Investors Guide in March
1998, all of the shares of Global Investors Guide were purchased from officers
and a director of that company in exchange for restricted shares of the
Company's $.001 par value Common Stock (the "exchange shares") on a pro rata
basis. Specifically Mr. Phillips, President and director of the Company received
1,606,880 exchange shares and Messrs. Fagan, Cullivan, Childers, and Arterburn,
all executive officers of the Company, received 54,780 shares each for an
aggregate of 1,826,000 exchange shares. The Company received computer equipment,
services and cash in exchange for a $100,000 amount due to a company 100% owned
by Mr. Phillips an executive officer and director of Ubrandit.com. The aggregate
$100,000 amount due resulted from $50,000 advanced to the Company, office space
provided the Company at $1,000 a month for 12 months, receptionist, secretarial,
and clerical support services provided to the Company at $2,000 per month for 12
months, and the sale of following office equipment: copier, postage machine,
shredder, address labeler, computer printer, two fax machines, and three
computers. Said office equipment was sold to the Company for $14,000. Said
equipment was purchased by Mr. Phillip's company within the last eighteen months
for approximately $23,000. The amount due was converted to 200,000 shares of
Ubrandit.com $.001 Common Stock that were issued to said company. Mr. Phillips
has sold all his interest in said company, which is now owned by an unrelated
party. Mr. Gibson an executive officer and director, provides legal services to
the Company through his law firm Gibson, Haglund and Paulsen. As of March 31,
1999, said law firm had received $18,000 for legal services rendered.
ITEM 8. LEGAL PROCEEDINGS
No material legal proceedings to which the Company is a party are
pending nor are any known to be contemplated and the Company knows of no legal
proceedings pending or threatened, or judgments entered against any Director or
Officer of the Company in his capacity as such.
39
<PAGE>
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock, par value $.001 (the "Common Stock") trades
over the counter and is quoted on the OTC Bulletin Board System. The following
table sets forth the high and low closing prices for the Common Stock as
reported on the OTC Bulletin Board system for the quarters traded in Fiscal
1999.
Low High
---------- ----------
Year Ending September 30, 1999
Second Quarter $ .375 $ 3.625
Third Quarter 3.625 11.125
The Company has not paid any cash dividends on its Common Stock since
its incorporation and anticipates that, for the foreseeable future, earnings, if
any, will continue to be retained for use in its business. As of June 30, 1999
the Company had approximately 4,700 shareholders of its Common Stock.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is certain information concerning all sales of
securities by the Company during the past three years that were not registered
under the Securities Act:
(a) The Company, at the time operating under the named Mount Merlot
Estates, Inc., issued 40,000 shares in December of 1997 for the purchase price
of $.01 per share in reliance on the exemption from registration available under
Section 4(2) of the Securities Act. At that time, the Company had a business
plan to enter into the viticulture business and no assets. The offeree was
apprised of both the Company's start-up nature and its business plan. There was
one offeree in this offering, who made the only purchase pursuant to the terms
of an investment letter. In the investment letter the purchaser acknowledged
that (i) that he was purchasing for his own account, for investment, and not
with a view towards distribution (ii) that he solicited the offer and sale of
the securities and the offer and sale were not accompanied by any publication or
advertisement and (iii) the he understands that the shares purchased may only be
sold or otherwise transferred if they are registered under the Securities Act of
1933 or unless an exemption from such registration is available. No underwriters
were used in connection with this offering.
(b) The Company, at the time name Mount Merlot Estates, in February of
1998, offered 5,000,000 shares for a purchase price of $.01 per share in
reliance on the exemption from registration available under Rule 504 of
Regulation D promulgated under the Securities Act. Offerees were provided with a
private placement memorandum containing detailed information about the Company
and its plan to engage in the development of a Merlot viticulture operation in
Santa Ynez Valley County, California and that the securities had not been
registered under the Securities Act and may have not been registered or
qualified under applicable state securities laws. The Company required each
prospective investor to represent in writing that (i) they had adequate means of
providing for their current needs and personal contingencies and had no need to
sell the securities in the foreseeable future and (ii) they, either alone or
with their duly designated purchaser representative, had such knowledge and
experience in business and financial matters that they were capable of
evaluating the risks and merits of an investment in the securities. No
underwriters were used in connection with this offering.
40
<PAGE>
(c) The Company, at the time named Virtual Brand, Inc. to reflect the
Company's change in business plan to that of developing or acquiring an Internet
service company, in February of 1999, offered 1,890,000 shares for a purchase
price of $.50 per share in reliance on the exemption from registration available
under Rule 504 of Regulation D promulgated under the Securities Act. All
1,890,000 shares were issued by the Company in February of 1998. There were six
Offerees, which were also the only purchasers of the offering. The Company
required each prospective investor to represent in writing (i)that the investor
was a sophisticated investor with sufficient knowledge and experience to be
capable of evaluating the merit and risks of the offering (ii) that all
documents they deemed material in making an investment decision were provided by
the Company and that the investor had been afforded the opportunity to make
inquires and receive answers from management, (iii) that the investor had
substantial means of providing for his current needs and contingencies and was
capable of understanding and bearing the economic risk of the investment. (iii)
they understood that the securities had not been registered under the Securities
Act and may have not been registered or qualified under applicable state
securities laws. No underwriters were used in connection with this offering.
(d) Pursuant to an Agreement and Plan of Reorganization for the
Acquisition of All the Outstanding Shares of Common Stock of Global Investors
Guide, the Company issued 1,826,000 pro rata to all the shareholders of Global
Investment Guide to purchase all of the shares of Common Stock of the Company.
The offering of the shares was made to five accredited investors only, in
reliance on the exemption from registration available under Rule 506 of
Regulation D promulgated under the Securities Act. Said investors received 1,826
shares of the Company's Common Stock for each share of Global Investors Guide
that they owned. Each investor represented in an investment letter that (i) he
acquired said common stock for my own account for investment and not with a view
towards any distribution thereof (ii) that he understood that the shares may not
be sold or otherwise transferred unless they are subsequently registered under
the Act or unless an exemption from such registration is available. (iii)that he
understood that the investment was highly speculative with very substantial
risks and could result in a complete loss of my investment (iv) that he had such
knowledge and experience with the Company, Internet businesses, and general
business matters that he was capable of fully evaluating the merits and risks of
this investment; (v) that he was fully aware that the Company is a startup
company with very limited resources in an extremely competitive industry; and
(vi) that the Company had afforded him the opportunity to ask and had answered
all questions. All investors understood that the securities would bear a
restrictive legend prohibiting transfers except in compliance with the
provisions of the Act. No underwriters were used in connection with this
offering.
41
<PAGE>
(e) In March and April of 1999, the Company negotiated and reached a
debt conversion to common stock agreement with two of the large creditors of its
wholly owned subsidiary Global Investment Guide. Pursuant to said agreements the
Company issued to Bloomington Corporate Services 300,000 shares of the Company's
Common Stock at approximately $0.55 per share for forgiveness of $164,251.43 in
debt, and issued to Market Publishing, Inc. 200,000 shares of the Company's
Common Stock at approximately $0.50 per share for forgiveness of $100,000 in
debt. On the date of conversion, the closing price of the Company's Common Stock
was $1.81 per share. The Company has recorded a loss on extinguishment of debt
of $378,749 and a reduction of paid in capital of $262,000 in connection with
stock issued to each of Bloomington Corporate Services and Market Publishing,
Inc., respectively, which amounts equal the difference between the fair market
value of the stock issued (assuming the value equals the closing sale price of
and the amount of the debt. Both series of issuances were made in reliance on
the exemption from registration available under Section 4(2) of the Securities
Act. The Company obtained representations from both purchasers regarding that
investment sophistication and investment intent. The Company did not employ any
form of general solicitation or advertising in connection with the offer to sell
or sale of these securities. The purchasers were advised that the securities,
once purchased, could not be resold or otherwise transferred without subsequent
registration under the Securities Act and that they would carry a legend stating
said restrictions to transfer. No underwriters were used in connection with this
offering.
(f) The Company issued 1,000,000 shares in April 1999, for a purchase
price of $1.00 per share in reliance on the exemption from registration
available under Rule 506 of Regulation D promulgated under the Securities Act.
In April of 1999, the price of the Company's Common Stock ranged from $3.44 to
$6.75 per share, with an average closing price for the month of $4.72 per share.
The Company accepted subscriptions only from accredited investors. The Company
changed its name to Ubrandit.com at the time of purchase of Global Investors
Guide to better reflect its adoption and continuation of the business plan of
Global Investors Guide, the Company's current business plan, which is the
branding and private labeling of Internet sites. Offerees were provided with a
private placement memorandum containing detailed information about the Company
and its current plan. The Company required each prospective investor to
represent in writing that (i) they had received and reviewed the private
placement memorandum and understood the risks of an investment in the Company;
(ii) they had the experience and knowledge with respect to similar investments
which enabled them to evaluate the merits and risks of such investment, or they
had obtained and relied upon an experienced independent adviser with respect to
such evaluation; (iii) they had adequate means to bear the economic risk of such
investment, including the loss of the entire investment; (iv) they had adequate
means to provide for their current needs and possible personal contingencies;
(v) they had no need for liquidity of their investment in the Company; (vi) they
understood that the securities had not been registered under the Securities Act
and may have not been registered or qualified under applicable state securities
laws and, therefore, that they could not sell or transfer the securities unless
the securities were subsequently registered or an exemption therefrom was
available to them; (vii) they were acquiring the securities for investment
solely for their own account and without any intention of reselling or
distributing them; and (viii) they understood that the securities would bear a
restrictive legend prohibiting transfers except in compliance with the
provisions of the securities, the subscription agreement executed by the
purchaser and the applicable federal and state securities laws. No underwriters
were used in connection with this offering.
(g) In July of 1999, the Company issued warrants to purchase 20,000
shares of the Company's common stock to Fusion Media ("Fusion"). The warrants
were issued in consideration of services rendered by Fusion under a software
development agreement pursuant to which Fusion developed a working model of a
book/music video store. Such work was completed in June, 1999. Such issuance was
done in reliance upon the exception from registration provided under Section
4(2) of the Securities Act of 1933. All such warrants are exercisable at a price
of $4.56 per share which was the closing price of the Company common stock on
the date of grant. Warrants representing 10,000 underlying shares are
exercisable anytime after June 25, 2000, and expire after June 25, 2004.
Warrants representing the remaining 10,000 underlying shares are exercisable at
any time after December 25, 2000, and expire after June 25, 2004. Shares
issuable upon exercise of the Fusion warrants were not granted any registration
rights by the Company.
42
<PAGE>
(h) The Company issued 1,482,333 shares in September of 1999, for a
purchase price of $3.00 per share in reliance on the exemption from registration
available under Regulation S promulgated under the Securities Act. In September
of 1999, the price of the Company's Common Stock ranged from $5.00 to $7.44 per
share, with an average closing price for the month of $6.78 per share. Offerees
were provided with a private placement memorandum containing detailed
information about the Company and its current plan. The Company required each
prospective investor to represent in writing that (i) Buyer was not organized
under the laws of the United States and was not formed for the purpose of
investing in Regulation S securities and is not registered under the Securities
Act; and is not a "U.S. person" as defined by the provisions of Regulation S.
(ii) At all times, including the time that the bid and offer were made and at
the time of the execution of this Subscription Agreement, Buyer was outside the
United States; (iii) No offer to purchase the Shares was made in the United
States; nor was any selling effort made to Buyer therein; (iv) Buyer purchased
the Shares for its own account and for investment purposes and not with the view
towards distribution;(v) All subsequent offers and sales of the Shares by Buyer
shall be made in compliance with Regulation S and the Securities Act, pursuant
to registration under the Securities Act or pursuant to an exemption from such
registration. Buyer agrees not to engage in hedging transactions with regard to
the Shares unless in compliance with the 1933 Act. The Shares shall not be
resold to U.S. persons or within the United States during the restricted period
of one year as defined in Regulation S unless pursuant to registration under the
Securities Act and applicable state securities laws or pursuant to exemptions
from such registrations under said securities laws. Buyer understands that the
Shares are deemed to be "restricted securities" as defined by Regulation
ss.230.144 under the 1933 Act ("Rule 144") and subject to the limitations
therein. (vi) That the Buyer is capable of bearing the economic risk of this
investment, including the possible total loss of his investment; (vii) Buyer
understood that the Shares were not registered under the Securities Act of 1933
and that they were offered and sold pursuant to exemptions thereunder;
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
General
The authorized Common Stock of the Company consists of 25,000,000
shares of $0.001 par value common stock. The following summary of the terms and
provisions of the Company's capital stock does not purport to be complete and is
qualified in its entirety by reference to the Company's Articles of
Incorporation and By-laws, which have been filed as exhibits to the Company's
registration statement, of which this prospectus is a part, and applicable law.
Common Stock
The holders of Common Stock are entitled to one vote for each share on
all matters voted upon by stockholders, including the election of directors.
Such holders are not entitled to vote cumulatively for the election of
directors. Holders of a majority of the shares of Common Stock entitled to vote
in any election of directors may elect all of directors standing for election.
43
<PAGE>
Holders of Common Stock are entitled to participate pro rata in such
dividends as may be declared in the discretion of the Board of Directors out of
funds legally available therefor. Holders of Common Stock are entitled to share
ratably in the net assets of the Company upon liquidation after payment or
provision for all liabilities. Holders of Common Stock have no preemptive rights
to purchase shares of stock of the Company. Shares of Common Stock are not
subject to any redemption provisions and are not convertible into any other
securities of the Company. All outstanding shares of Common Stock are fully paid
and non-assessable.
The Common Stock is quoted on the OTC Bulletin Board system under the
symbol "UBRT."
As of June 30, 1999, 10,256,000 shares are issued and outstanding.
Transfer Agent
The Company's transfer agent is: Pacific Stock Transfer Company, 3690
South Eastern, Las Vegas, Nevada 89109.
1999 Stock Option and Incentive Plan
As of June 30, 1999, 1,485,000 shares have been granted to employees
and directors for exercise prices ranging from $0.50 to $3.35 per shares
pursuant to the vesting schedules of the respective agreements. No options were
granted during the last completed fiscal year ended September 30, 1998. The
following table details the shares granted to executive officers and directors:
Name Principal Position Number of shares under-
lying options
Jeff Phillips President, CEO 400,000
Roger C. Royce (1) COO 425,000
Gregory V.Gibson VP legal 125,000
Steven K. Radowicz Director 25,000
Michael Fagan VP Corporate Development 60,000
Mark Cullivan VP Operations 50,000
J. Eric Arterburn VP Design Development 50,000
William Childers VP MIS 50,000
Total: 1,185,000
- ------------------
(1) 387,500 of the options granted Mr. Royce, have been continently granted
pursuant to terms of his employment.
(2) Does not include options to purchase 106,500 shares, which have granted
to current non-executive employees of the Company. Also does not
include options granted to Jeffrey L. Taylor, a former director, to
purchase 250,000 shares of the Company's common stock..
44
<PAGE>
On January 22, 1999, the Board of Directors adopted the 1999 Stock
Option and Incentive Plan (the "Plan") which was subsequently approved by the
stockholders of the Company. The Plan is intended to provide incentive to key
employees and directors of, and key consultants, vendors, customers, and others
expected to provide significant services to, the Company, to encourage
proprietary interest in the Company, to encourage such key employees to remain
in the employ of the Company and its Subsidiaries, to attract new employees with
outstanding qualifications, and to afford additional incentive to consultants,
vendors, customers, and others to increase their efforts in providing
significant services to the Company. The Plan is administered by the Board of
Directors or can be administered by a Committee appointed by the Board of
Directors, which Committee shall be constituted to permit the Plan to comply
with Rule 16b-3 of the Act, and which shall consist of not less than two
members. The Board of Directors, or the Committee if there be one, at its
discretion, can select the eligible employees and consultants to be granted
awards, determine the number of shares to be applicable to such award, and
designate any Options as Incentive Stock Options or Nonstatutory Stock Options
(except that no Incentive Stock Option may be granted to a non-employee director
or a non-employee consultant). The stock subject to awards granted under the
Plan are shares of the Company's authorized but unissued or reacquired Common
Stock. The aggregate number of shares which may be issued as awards or upon
exercise of awards under the Plan is 2,500,000 shares. The shares that may
presently be issued pursuant to the exercise of an option awarded by the Plan
have not been registered under the Securities Act of 1933 (the "Securities Act")
nor any state securities authority and will be subject to the limitations of
Rule 144.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Revised Statutes and certain provisions of the Company's
Bylaws under certain circumstances provide for indemnification of the Company's
Officers, Directors and controlling persons against liabilities that they may
incur in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this description is
qualified in its entirety by reference to the Company's Bylaws and to the
statutory provisions.
In general, any Officer, Director, employee or agent may be indemnified
against expenses, fines, settlements or judgments arising in connection with a
legal proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by independent
decision of the Board of Directors, by legal counsel, or by a vote of the
stockholders, that the applicable standard of conduct was met by the person to
be indemnified.
The circumstances under which indemnification is granted in connection
with an action brought on behalf of the Company is generally the same as those
set forth above; however, with respect to such actions, indemnification is
granted only with respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed to have been
in the Company's best interest, and must not have been adjudged liable for
negligence or misconduct.
45
<PAGE>
Indemnification may also be granted pursuant to the terms of agreements
that may be entered in the future or pursuant to a vote of stockholders or
Directors. The statutory provision cited above also grants the power to the
Company to purchase and maintain insurance which protects its Officers and
Directors against any liabilities incurred in connection with their service in
such a position, and such a policy may be obtained by the Company. ITEM 13.
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information required by this item is contained in Item 2. Financial
Information and Item 15. Financial Statement and Exhibits.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE.
None
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
46
<PAGE>
Ubrandit.com and subsidiary
As of and for the six months ended
June 30, 1999
47
<PAGE>
Ubrandit.com and subsidiary
Table of Contents
(unaudited)
Page
----
Consolidated Balance Sheet 1
Consolidated Statement of Operations 2
Consolidated Statement of Changes in Stockholders' Equity 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5-11
48
<PAGE>
Ubrandit.com and subsidiary
Consolidated Balance Sheets
June 30, 1999
(Restated)
(Unaudited)
ASSETS
Current assets
Cash $ 1,582,878
Accounts receivable 9,108
Prepaid expenses 19,875
Deposits 11,872
--------------
Total current assets 1,623,733
Other assets:
Property and equipment - net of
accumulated depreciation 129,271
Core technology 475,000
Goodwill - net of accumulated amortization 608,543
Organizational costs - net of accumulated
amortization 1,180
--------------
$ 2,837,727
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 13,918
Accrued expenses 31,778
Payroll taxes payable 15,511
--------------
Total current liabilities 61,207
Stockholders' equity
Common stock, $0.001 par value,
25,000,000 shares authorized;
10,256,000 shares issued and
and outstanding 10,256
Additional paid in capital 3,516,944
Accumulated deficit (750,680)
--------------
Total stockholders' equity 2,776,520
--------------
$ 2,837,727
==============
See accompanying notes to consolidated financial statements.
49
<PAGE>
<TABLE>
Ubrandit.com and subsidiary
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Six months Six months
ended ended
June 30, June 30,
1998 1999
(Restated)
------------------ ------------------
<S> <C> <C>
Revenue $ 20,616
------------------ ------------------
Expenses:
Direct operating 171,994
Sales, general and administrative 400 183,189
Depreciation and amortization 38 45,042
------------------ ------------------
Total operating expenses 438 400,225
------------------ ------------------
Operating (loss) (438) (379,609)
Other income (expense):
Interest income 8,513
Interest expense (742)
------------------ ------------------
- 7,771
------------------ ------------------
Loss before extraordinary items (438) (371,838)
Extraordinary item:
Loss on extinguishment of debt (378,749)
------------------ ------------------
Net (loss) $ (438) $ (750,587)
================== ==================
Per share information:
Weighted average shares
outstanding - basic and diluted 619,669 8,591,227
================== ==================
(Loss) before extraordinary item per
share - basic and diluted $ - $ (0.04)
Extraordinary item per share - basic
and diluted - (0.05)
------------------ ------------------
Net (loss) per common share - basic
and diluted $ - $ (0.09)
================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
50
<PAGE>
Ubrandit.com and subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Six months Six months
ended ended
June 30, June 30,
1998 1999
(Restated)
--------------- ---------------
Cash flows from operating activities:
Net (loss) $ (438) $ (750,587)
--------------- ---------------
Adjustments to reconcile net (loss)
to net cash provided by
(used in) operating activities:
Depreciation and amortization 38 45,042
Extraordinary item 378,749
Changes in assets and liabilities:
(Increase) in accounts receivable (995)
(Increase) in prepaid expenses - (19,675)
Decrease in deferred offering costs - 3,000
(Increase) in deposits - (11,872)
(Increase) in organizational costs (400) (1,000)
Increase in accounts payable - (3,276)
Increase in accrued expenses 400 31,778
Increase in payroll taxes payable - 15,511
Increase in accrued interest 741
--------------- ---------------
Total adjustments 38 438,003
--------------- ---------------
Net cash (used in) operating
activities (400) (312,584)
--------------- ---------------
Cash flows from investing activities:
Purchase of fixed assets (90,991)
Cash acquired in business combination 18,653
--------------- ---------------
Net cash (used in) investing activities - (72,338)
--------------- ---------------
Cash flows from financing activities:
Net proceeds from issuance of common
stock, net of issuance costs 5,760 1,965,400
--------------- ---------------
Net cash provided by financing activities 5,760 1,965,400
--------------- ---------------
Net increase in cash
5,360 1,580,478
Cash, beginning
- 2,400
--------------- ---------------
Cash, ending
$ 5,360 $ 1,582,878
=============== ===============
Non-cash transactions
Net assets and liabilities acquired in
business combination $ (209,198)
Issuance of common stock in business
acquisition (913,000)
Goodwill recorded in business combination 1,103,538
Issuance of stock in repayment of
convertible debt and accrued interest (543,000)
Issuance of stock in repayment of
related party advances (100,000)
See accompanying notes to consolidated financial statements.
51
<PAGE>
<TABLE>
Ubrandit.com and subsidiary
Consolidated Statements of Stockholders' Equity
For the six months ended June 30, 1999
(Restated)
(Unaudited)
<CAPTION>
Common Stock Additional
-------------------------- Paid in Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 5,040,000 $ 5,040 $ 39,160 $ (93) $ 44,107
Issuance of stock for cash
at $0.50 per share net
of issuance costs 1,890,000 1,890 935,110 - 937,000
Issuance of stock in a
business combination 1,826,000 1,826 911,174 913,000
Issuance of stock as repayment for
debt and accrued interest 300,000 300 542,700 - 543,000
Issuance of stock to a related
party as repayment for advance 200,000 200 99,800 - 100,000
Issuance of stock for cash
at $1.00 per share net
of issuance costs 1,000,000 1,000 989,000 - 990,000
Net loss for the period - - - (750,587) (750,587)
----------- ----------- ----------- ----------- -----------
Balance at June 30, 1999 10,256,000 $ 10,256 $3,516,944 $ (750,680) $ 2,776,520
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
52
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 1. BASIS OF PRESENTATION
The interim financial statements included herein have been prepared by
the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading.
These statements reflect all adjustments, consisting of normal
recurring adjustments which, in the opinion of management, are
necessary for fair presentation of the information contained therein.
It is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's audited financial statements for the year ended December 31,
1998. Results of operations for the interim period are not indicative
of annual results.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on December 19, 1997 in the State of
Nevada under the name of Mount Merlot Estates, Inc. On January 14, 1999
the Company's name was changed to Virtual Brand, Inc. and amended
Articles of Incorporation were filed. The name was again changed to
Ubrandit.com on February 18, 1999 and a second set of amended articles
of Incorporation was filed with the State of Nevada. The Company's
primary concentrations are in providing of "branded" financial and
e-commerce Web-based systems to the internet in order to earn both
advertising and sponsorship revenue.
On March 11, 1999 the Company acquired Global Investors Guide
("Global") a related Corporation. The Company acquired all of the net
liabilities of Global through the issuance of 1,826,000 shares of
Company common stock in exchange for all of the outstanding shares of
Global's common stock. The transaction has been accounted for as a
purchase and accordingly, the Company recorded the acquired assets less
liabilities assumed at its cost. A difference between the cost of
Global and the sum of the fair values of the assets less liabilities
assumed was recorded as goodwill. (see Note 11).
Net income per share
The net income per share is computed by dividing the net income for the
period by the weighted average number of common shares outstanding for
the period. For the six months ended June 30, 1998 and 1999 potential
common shares and the computation of diluted earnings per share are not
considered as their effect would be anti-dilutive.
53
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Property and Equipment
Property and equipment are being depreciated by the straight-line and
accelerated methods over lives ranging from three to seven years. The
depreciation methods are designed to expense the cost of the assets
over their estimated useful lives.
Intangibles
Goodwill and Organization costs are amortized under the straight-line
method over five years. Core technology has not been placed into
service. Amortization of organization costs and goodwill expensed to
operations for the six months ended June 30, 1998 and 1999 were $38 and
$38,855, respectively.
Impairment of long-lived assets
The Company periodically reviews the carrying amount of property, plant
and equipment and its identifiable intangible assets to determine
whether current events or circumstances warrant adjustments to such
carrying amounts. As goodwill was acquired in a business combination
accounted for using the purchase method, the goodwill is included as
part of the asset grouping in determining recoverability. If goodwill
is identified with assets that are subject to an impairment loss, the
carrying amount of the identified goodwill shall be eliminated before
making any reduction of the carrying amounts of long-lived assets and
identifiable intangibles. If an impairment adjustment is deemed
necessary, such loss is measured by the amount that the carrying value
of such assets exceeds their fair value. Considerable management
judgement is necessary to estimate the fair value of assets,
accordingly, actual results could vary significantly from such
estimates. Assets to be disposed of are carried at the lower of their
financial statement carrying amount or fair value less costs to sell.
54
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
The Company realizes and records mailing list revenue on the date the
customer uses the mailing list. The rental is limited to a one-time use
for each customer at the time the list is rented.
Comprehensive Income
There were no items of other comprehensive income in six months ended
June 30, 1998 and 1999 and, thus, net income is equal to comprehensive
income in both periods.
Research and Development Costs
Research and development costs are charged to operations when incurred
and are included in operating expenses. The amounts charged to
operations for the six months ended June 30, 1998 and 1999 were
approximately $0 and $6,000, respectively.
Note 3. CONCENTRATIONS OF CREDIT RISK
The Company's funds are deposited in a federally insured institution up
to $100,000. As of June 30, 1999 the funds under deposit exceed this
insured amount by $1,468,513.
The Company derived ninety-four percent of its revenues from the rental
of customer mailing lists to one customer for the six months ended June
30, 1999. The Company anticipates these concentrations not to be
significant in the future as revenue will be derived from other
sources.
Note 4. PROPERTY AND EQUIPMENT
The following is a summary of property and equipment as of June 30,
1999, at cost, less accumulated depreciation:
Computer equipment $117,967
Office furniture 38,141
---------
Total property & equipment 156,108
Less accumulated depreciation (26,837)
---------
Net property and equipment $129,271
=========
For the six months ended June 30, 1998 and 1999, the amounts for
depreciation expense charged to operations was $0 and $6,187,
respectively.
55
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 5. LICENSE AGREEMENTS
On February 2, 1998 the Company's subsidiary Global entered into an
Information Distribution License agreement with an unrelated company.
The Agreement grants a nonexclusive, nontransferable right and license
to distribute electronically, a stock quote data feed. Under the terms
of the three-year agreement Global paid a one-time installation fee of
$1,230 in January 1998. In addition the contract requires Global to pay
a monthly fee of $970 plus redistribution fees based on the number of
months the data feed is used. The installation fee and the monthly fees
are expensed as incurred. During the six months ended June 30, 1998 and
1999 the Company paid fees of $0 and $9,700, respectively. All other
fees were paid by Global prior to the business combination.
Additionally, the Company's subsidiary Global entered into a Computer
Software License Agreement on April 21, 1998. The agreement grants
Global the right to use "NT-TASRV" operating system and provides
monthly service and support of this system. Under the terms of the
contract Global paid an initial license fee of $1,025 and pays a
monthly fee of $1,025. The installation fee and the monthly fees are
expensed as incurred. For the six months ended June 30, 1998 and 1999
the Company had paid $0 and $4,100, respectively, in fees.
In addition, the Company's subsidiary Global entered into a License
Agreement with an unrelated company on January 19, 1999. The Agreement
grants non-exclusive, non-transferable, limited right to use data feeds
for music, video, books and an encyclopedia of popular music. Under the
terms of the one-year agreement, Global will pay the greater of a
minimum monthly fee of $3,500 or a calculated fee based on a fixed
price per unit sold. These fees will be expensed as incurred. For the
six months ended June 30, 1999 the Company has paid $6,000 in fees.
Note 6. EXTRAORDINARY ITEM
During March 1999 the Company converted $164,251 of debt and interest
into 300,000 shares of common stock for a value of $543,000. Long-term
debt on the Company's balance sheet was reduced by $150,000, accrued
interest by $14,251 and the Company recorded an extraordinary loss of
$378,749.(see Note 8)
Note 7. OPERATING LEASE
The Company leases office space under an operating lease, which expires
in April 2000.
Minimum future rental payments under this non-cancelable operating
leases which has a remaining term of ten months is $95,400 for the year
ended June 30, 2000.
56
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 8. STOCKHOLDERS' EQUITY
During February 1999, 1,890,000 shares of stock were issued to various
investors at $0.50 per share for cash of $945,000, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $8,000.
On March 11, 1999 1,826,000 shares of stock were issued in conjunction
with the acquisition of Global (see Note 9).
During March1999 the Company converted $150,000 of debt and $14,251 of
accrued interest due to an unrelated party into 300,000 shares of stock
at a value of $$543,000. The stock was valued $1.81 per share, the
closing price of the Company's common stock on the date of the
conversion. The difference of $378,749 between the total debt and
accrued interest converted of $164,251 and value assigned to the shares
of stock of $543,000 was recorded as a loss on extinguishment of debt
(see Note 6). The Company issued the shares in April 1999.
During March 1999 the Company converted an amount due to a related
party of $100,000 into 200,000 shares of stock at a value of $362,000.
The stock was valued $1.81 per share, the closing price of the
Company's common stock on the date of the conversion. The difference of
$262,000 between the amount due of $100,000 and value assigned to the
shares of stock of $162,000 was recorded as a reduction in capital (see
Note 6). The Company issued the shares in April 1999.
During April 1999, 1,000,000 shares of stock were issued to various
investors at $1.00 per share for cash of $1,000,000, pursuant to a
Regulation D, Rule 506 offering. Issuance costs were $10,000.
Note 9. PRIOR PERIOD ADJUSTMENTS
The accompanying financial statements for the six months ended June 30,
1999 have been restated to correct an error for the recording of the
acquisition of Global Investors Guide. The acquisition was originally
recorded as a pooling transaction and was subsequently changed to a
purchase transaction. The effect of the restatement was to decrease the
net loss for the six months ended June 30, 1999 by $282,046 ($0.03 per
share). Retained earnings has been adjusted for the effects of the
restatement.
The accompanying financial statements for the six months ended June 30,
1999 have been restated to correct an error for the recording of the
goodwill acquired from the acquisition of Global Investors Guide. The
adjustment was made in order to reflect a greater stock price used to
value the goodwill acquired . The effect of the restatement was to
increase the net loss for the six months ended June 30, 1999 by $9,735
($0.001 per share). Retained earnings has been adjusted for the effects
of the restatement.
57
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 9. PRIOR PERIOD ADJUSTMENTS (Continued)
The accompanying financial statements for the six months ended June 30,
1999 have been restated to correct an error for the reduction of the
goodwill acquired in the acquisition of Global Investors Guide for
impairment loss. The adjustment was made in order to allocate a portion
of the excess estimated fair value of the net liabilities assumed over
the value of the shares issued to a core technology intangible asset.
The effect of the restatement was to decrease the net loss for the six
months ended June 30, 1999 by $475,000 ($0.06 per share). Retained
earnings has been adjusted for the effects of the restatement.
The accompanying financial statements for the six months ended June 30,
1999 have been restated to correct an error for the accounting for the
long-term debt and for the amount due to a related party which were
converted to stock. The adjustment was made in order to reflect a
greater stock value. The effect of the restatement was to increase the
net loss for the six months ended June 30, 1999 by $378,749 ($0.04 per
share). Retained earnings has been adjusted for the effects of the
restatement.
Note 10. STOCK OPTION PLAN
The Company adopted an incentive stock option plan on March 11, 1999.
Under the plan, the Company may grant up to 2,500,000 in options for
the purchase of common stock. The exercise price of each option shall
not be less than eighty five percent (85%) of the fair market value of
the common stock at the date of grant. The maximum term of the options
is five years. Of the 1,159,000 options granted 785,000 are fully
vested and the remainder vest within one year from the date of grant.
Pursuant to the terms of an employment contract the Company issued
350,000 stock purchase options to an officer of the Company. Of the
350,000 options granted, one third will vest September 1999, one third
will vest in March 2000 and the remaining one third will vest March,
2001.
The Company applies APB Opinion 25 in accounting for its stock
compensation plan. No compensation cost has been recognized for the
period ending June 30, 1999. In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 requires the disclosure of the compensation
cost for stock-based incentives granted after January 1, 1995 based on
the fair value at grant date for awards. Applying SFAS No. 123 would
result in pro forma net (loss) and (loss) per share ("EPS") amounts as
follows:
<TABLE>
<CAPTION>
Six months ended Six months ended
June 30, 1999 June 30, 1998
---------------- ----------------
<S> <C> <C>
Pro forma Net loss ($2,783,114) ($438)
Pro forma loss per share - basic ($0.32) ($0.00)
</TABLE>
The weighted-average fair value of options granted during 1999 was
$0.97.
58
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 10. STOCK OPTION PLAN (Continued)
The fair value of each option is estimated on the date of grant using
an option-pricing model with the following weighted-average assumptions
used for grant: risk-free interest rate of 4.8%, dividend yields of 0%;
volatility factors of the expected market price of the Company's shares
of Common Stock of 1.10; and a weighted average expected life of the
option of 5 years.
Following is a summary of the status of the options during the period
ended June 30, 1999:
<TABLE>
<CAPTION>
Incentive Stock Option Plan Others
--------------------------- -------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Shares Price Shares Price
--------- ----- ------- -----
<S> <C> <C> <C> <C>
Outstanding at January 1, 1999 - - - -
Granted 1,159,000 $0.91 350,000 $3.35
Exercised - - - -
Forfeited - - - -
--------- ----- ------- -----
Outstanding at June 30, 1999 1,159,000 $0.91 370,000 $3.40
========= ===== ======= =====
Options exercisable at
June 30, 1999 785,000 $0.50 - -
========= ===== ======= =====
</TABLE>
Following is a summary of the status of the options outstanding at June
30, 1999:
<TABLE>
<CAPTION>
Outstanding Options Exercisable Options
--------------------------------- ---------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Contractual Exercise Exercise
Price Range Number Life Price Number Price
----------- -------- ----------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Incentive Stock Option Plan:
$0.50-$0.75 785,000 4.5 years $0.50 785,000 $0.50
$1.50-$1.50 350,000 5.7 years $1.50 - -
$4.31-$4.31 10,000 6.0 years $4.31 - -
$6.75-$6.75 14,000 5.0 years $6.75 - -
Others:
$3.35-$4.31 350,000 5 years $3.35 - -
</TABLE>
59
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 11. ACQUISITION
On March 11, 1999 the Company entered into an Agreement and Plan of
Exchange with a related corporation, Global Investors Guide. As of
March 11, 1999 Global became a wholly owned subsidiary of the Company.
The acquisition was accounted for as a purchase in which the Company
acquired all of the net liabilities of Global and all of the
outstanding shares of Global's common stock. In the transaction the
Company issued 1,826,000 shares of common stock, at a price per share
of $0.50, for a value of $913,000. A price of $0.50 per share was used
to value the stock issued in the acquisition transaction. The sale of
approximately 2,000,000 shares one month prior to the merger is the
best indicator of value of the stock. The excess estimated fair value
of the net liabilities assumed over the value of the shares issued was
$1,122,198 and was allocated as follows: core technology $475,000
goodwill $647,198. Management determined the goodwill fair value by
reference to the present value of the estimated future cash inflows of
the acquired assets, and believes the valuation to be reasonable,
appropriate and not impaired. The goodwill is being amortized using the
straight-line method over five years (See Note 2). Management also
believes the value allocated to core technology, the difference between
the excess estimated fair value of the net liabilities assumed over the
value of the shares issued less the goodwill, is reasonable,
appropriate and not impaired.
The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the business combination had
occurred on January 1, 1998, and 1999, respectively:
Six months ended June 30,
-------------------------
1998 1999
---- ----
Total revenues $286,862 $30,686
Earnings before taxes ($115,415) ($1,323,958)
Net earnings ($115,415) ($1,323,958)
Earnings per share ($0.05) ($0.013)
The pro forma results of operations do not purport to be indicative of
the results which would actually have been obtained had the merger
occurred on the dates indicated or which may be obtained in the future.
Note 12. INCOME TAXES
The Company has a Federal net operating loss carryforward of
approximately $360,000, which will expire in the year 2014. The tax
benefit of this net operating loss of approximately $90,000 has been
offset by a full allowance for realization. This carryforward may be
limited upon the consummation of a business combination under Section
381 of the Internal Revenue Code.
60
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 13. YEAR 2000
The Company has assessed its exposure to date sensitive computer
software programs that may not be operative subsequent to 1999 and has
implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruption of normal business
operations are encountered. However, because there is no guarantee that
all systems of outside vendors or other entities on which the Company's
operations rely will be 2000 compliant, the Company remains susceptible
to consequences of the Year 2000 issue.
Note 14. SUBSEQUENT EVENTS
During August 1999, 1,482,333 shares of stock were issued to various
investors at $3.00 per share for cash of $4,446,999 pursuant to a
Regulation S offering. Issuance costs were $35,540. During July 1999
the company issued warrants to purchase 20,000 shares of the Company's
common stock to an unrelated third party in consideration of consulting
services rendered. These warrants are exercisable at $4.56 per share,
which was fair market value at date of issuance. One half of the
warrants vest one year from date of grant and the balance vest eighteen
months after date of grant. The warrants expire in June 2004. In
accordance with SFAS No. 123 these warrants were recorded as
compensation expense as of the date of issuance. The weighted average
fair value of the warrants was $2.36 per warrant for calculated
compensation expense of $47,090. The following weighted average
assumptions were used for grant:
Risk-free interest rate 4.8%
Dividend yields 0.0%
Volatility factors of expected market price of
The Company's shares of common stock 1.10
Weighted average expected life of the warrants 1.5 years
61
<PAGE>
<TABLE>
Ubrandit.com/Global Investors Guide
Pro Forma Combined Statements of Operations
For the year ended December 31, 1998
(Unaudited)
<CAPTION>
Global Investors Pro Forma
Ubranit.com Guide Note Pro Forma Combined
(Audited) (Unaudited) References Adjustments (Unaudited)
--------------- --------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue $ - $ 361,678 $ 361,678
--------------- --------------- ---------------
Expenses:
Direct operating - 134,048 134,048
Sales, general and administrative 80 269,752 269,832
Depreciation and amortization 13 11,497 3 95,964 107,474
--------------- --------------- ---------------
Total operating expenses 93 415,297 511,354
--------------- --------------- ---------------
Operating income (loss) (93) (53,619) (149,676)
Other (expense):
Interest -
--------------- --------------- ---------------
Net income (loss) $ (93) $ (53,619) $ (149,676)
=============== =============== ===============
Per share information:
Weighted average shares
outstanding - basic and diluted 777,041 2 1,826,000 2,603,041
=============== ===============
Net income per common share -
basic and diluted $ (0.00) $ (0.06)
=============== ===============
</TABLE>
See notes to pro forma combined financial statements.
62
<PAGE>
<TABLE>
Ubrandit.com/Global Investors Guide
Pro Forma Combined Statements of Operations
For the six months ended June 30, 1999
(Unaudited)
<CAPTION>
Global Investors Pro Forma
Ubranit.com Guide Note Pro Forma Combined
(Unaudited) (Unaudited) References Adjustments (Unaudited)
--------------- --------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenue $ 4,679 $ 26,007 $ 30,686
--------------- --------------- ----------------
Expenses:
Direct operating 67,090 159,194 226,284
Sales, general and administrative 23,744 182,080 205,824
Depreciation and amortization 4,067 8,657 3 63,834 76,558
--------------- --------------- ----------------
Total operating expenses 94,901 349,931 508,666
--------------- --------------- ----------------
Operating income (loss) (90,222) (323,924) (477,980)
Other income(expense):
Interest income 8,513 8,513
Interest (742) (742)
--------------- --------------- ----------------
7,771 - 7,771
--------------- --------------- ----------------
Loss before extraordinary items (82,451) (323,924) (470,209)
Extraordinary item:
Loss on extinguishment of debt (378,749) (378,749)
--------------- --------------- ----------------
Net income (loss) $ (461,200) $ (323,924) $ (848,958)
=============== =============== ================
Per share information:
Weighted average shares
outstanding - basic and diluted 8,591,227 2 1,826,000 10,417,227
=============== ================
(Loss) before extraordinary item
per share - basic and diluted $ (0.01) $ (0.05)
Extraordinary item per share -
basic and diluted (0.04) (0.04)
--------------- ----------------
Net income per common share -
basic and diluted $ (0.05) $ (0.08)
=============== ================
</TABLE>
See notes to pro forma combined financial statements.
63
<PAGE>
<TABLE>
Ubrandit.com/Global Investors Guide
Pro Forma Combined Statements of Operations
For the six months ended June 30, 1998
(Unaudited)
<CAPTION>
Global Investors Pro Forma
Ubranit.com Guide Note Pro Forma Combined
(Unaudited) (Unaudited) References Adjustments (Unaudited)
--------------- --------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenue $ - $ 286,862 $ 286,862
--------------- --------------- ----------------
Expenses:
Direct operating - 98,780 98,780
Sales, general and administrative 400 230,987 231,387
Depreciation and amortization 38 8,238 3 63,834 72,110
--------------- --------------- ----------------
Total operating expenses 438 338,005 402,277
--------------- --------------- ----------------
Operating income (loss) (438) (51,143) (115,415)
Other (expense): - -
Interest - -
--------------- --------------- ----------------
Net income (loss) $ (438) $ (51,143) $ (115,415)
=============== =============== ================
Per share information:
Weighted average shares
outstanding - basic and diluted 619,669 2 1,826,000 2,445,669
=============== ================
Net income per common share -
basic and diluted $ (0.00) $ (0.05)
=============== ================
</TABLE>
See notes to pro forma combined financial statements.
64
<PAGE>
Ubrandit.com/Global Investors Guide
Pro Forma Combined Financial Information
(Unaudited)
The following unaudited pro forma combined statements of operations reflect the
combination of the Company's and Global Investors Guide's statements of
operations for the year ended December 31, 1998 and the six months ended June
30, 1999 and 1998 and assumes that the combination occurred on January 1, 1998.
The pro forma financial information is presented for illustrative purposes only
and does not purport to be indicative of the operating results or financial
position that would actually have occurred if the transaction had been in effect
on the date indicated, nor is it indicative of future operating results or
financial position. The pro forma adjustments are based upon available
information and assumptions that the Company believes are reasonable in the
circumstances.
The pro forma information should be read in conjunction with the Company's
consolidated financial statements and the notes thereto as of June 30, 1999 and
for the six months then ended.
The acquisition of Global Investors Guide by Ubrandit.com is accounted for under
the purchase method of accounting and accordingly, the Company recorded the
acquired assets less liabilities assumed at its cost. A difference between the
cost of Global and the sum of the fair values of the assets less liabilities
assumed was recorded as goodwill. The unaudited pro forma combined statement of
operations data are not necessarily indicative of the results that would have
been reported had such events actually occurred on the date specified no are
they indicative of the Company's future results.
65
<PAGE>
Ubrandit.com/Global Investors Guide
Pro Forma Combined Financial Information
(Unaudited)
Pro forma adjustments to reflect the acquisition of Global Investors Guide by
Ubrandit.com ("Acquisition") and giving effect to the following:
(1) The Pro Forma Statement of Operations assumes that the Acquisition occurred
on January 1, 1998. For the purposes of the Pro Forma Combined Statement of
Operations for the year ended December 31, 1998 and the six months ended
June 30, 1999 and 1998, Ubrandit.com's historical statements of operations
for the year ended December 31, 1998 and the six months ended June 30, 1999
and 1998 were combined with Global Investors Guide's ("Global") historical
statements of operations for the year ended December 31, 1998 and the six
months ended June 30, 1999 and 1998.
(2) The acquisition of Global will be accounted for by the purchase method of
accounting. To record the transfer of all outstanding 1,000 shares of
Global's common stock to Ubrandit.com and the issuance of 1,826,000
Ubrandit.com shares of common stock to the shareholders of Global. These
shares were valued at a price per share of $0.50, for a total value of
$913,000. A price of $0.50 per share was used to value the stock issued in
the acquisition transaction. The sale of approximately 2,000,000 shares one
month prior to the merger is the best indicator of value of the stock. The
excess estimated fair value of the net liabilities assumed over the value
of the shares issued was $1,122,198. An impairment loss of $475,000 was
recorded for a net value of goodwill of $647,198. The net liabilities of
Global acquired by Ubrandit.com totaled $209,198.
The consideration received from Global was allocated as follows:
Cash $18,652
Accounts receivable $8,263
Fixed assets -net $44,518
Accounts payable $30,631
Short-term debt $250,000
Goodwill, net $647,198
(3) To adjust for the amortization of purchased Goodwill using the
straight-line method over five years. The monthly amortization is
calculated as $10,639 per month. The adjustments to the Pro Forma income
statements for the year ended December 31, 1998 and the six months ended
June 30, 1998 and 1999 are $127,668, $63,834 and $63,834.
(4) Ubrandit.com and Global have net operating loss carryforwards. The tax
benefits of these net operating losses have been offset by full allowances
for realization. These carryforwards may be limited upon the consummation
of a business combination under Internal Revenue Code 382.
66
<PAGE>
Global Investors Guide
As of September 30, 1997,and September 30, 1998
and for the period December 3, 1996 to
September 30, 1997 and
the year ended September 30, 1998
67
<PAGE>
Global Investors Guide
Table of Contents
Page
----
Report of Independent Auditors 68
Balance Sheets 69
Statements of Operations 70
Statements of Changes in Stockholders' Equity 71
Statements of Cash Flows 72
Notes to Financial statements 78 - 81
68
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Global Investors Guide
Del Mar, California
We have audited the accompanying balance sheets of Global Investors Guide as of
September 30, 1997 and September 30, 1998 and the related statements of
operations, stockholders' equity, and cash flows for the periods December 3,
1996 to September 30, 1997 and the year ended September 30, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Investors Guide as of
September 30, 1997 and September 30, 1998 and the results of its operations, and
its cash flows for the period December 3, 1996 to September 30, 1997 and the
year ended September 30, 1998, in conformity with generally accepted accounting
principles.
/s/Stark Tinter & Associates, LLC
- ---------------------------------
Stark Tinter & Associates, LLC
Englewood, Colorado
June 7, 1999
69
<PAGE>
<TABLE>
<CAPTION>
Global Investors Guide
Balance Sheets
September 30,
1997 1998
----------------- -----------------
ASSETS
<S> <C> <C>
Current assets
Cash $ 10,439 $ 42,804
Accounts receivable 18,820
Prepaid expenses 1,025
----------------- -----------------
Total current assets 10,439 62,649
Other assets:
Property and equipment - net of
accumulated depreciation 2,888 31,260
----------------- -----------------
$ 13,327 $ 93,909
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accrued expenses $ 4,714 $ 8,681
Due to related party 28,589
Convertible debt 150,000
Accrued interest 13,063
----------------- -----------------
Total current liabilities 4,714 200,333
Stockholders' equity (deficiency)
Common stock, no par value,
25,000,000 shares authorized; 1,000,
issued and outstanding in 1997 and 1998 1,826 1,826
Retained earnings (deficit) 6,787 (108,250)
----------------- -----------------
Total stockholders' equity (deficiency) 8,613 (106,424)
----------------- -----------------
$ 13,327 $ 93,909
================= =================
</TABLE>
See accompanying notes to the Financial statements
70
<PAGE>
<TABLE>
Global Investors Guide
Statements of Operations
<CAPTION>
For the period
December 3, 1996 Year ended
to September 30, September 30,
1997 1998
---------------------------- ---------------------
<S> <C> <C>
Revenue $ 86,390 $ 341,887
---------------------------- ---------------------
Expenses:
Direct operating 54,176 154,310
Sales, general and administrative 23,456 279,011
Depreciation and amortization 395 10,540
---------------------------- ---------------------
Total operating expenses 78,027 443,861
---------------------------- ---------------------
Operating income (loss) 8,363 (101,974)
Other (expense):
Interest - (13,063)
---------------------------- ---------------------
Income (loss) before income taxes 8,363 (115,037)
Income taxes 1,576 -
---------------------------- ---------------------
Net income (loss) $ 6,787 $ (115,037)
============================ =====================
Per share information:
Weighted average shares outstanding
basic and diluted 1,000 1,000
============================ =====================
Net income per common share - basic
and diluted $ 6.79 $ (115.04)
============================ =====================
</TABLE>
See accompanying notes to the Financial statements
71
<PAGE>
<TABLE>
Global Investors Guide
Statements of Stockholders' Equity
For the period December 3, 1996 to September 30, 1998
<CAPTION>
Retained
Common Stock Earnings
Shares Amount (Deficit) Total
-------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
Balance at December 3, 1996 -- $ -- $ -- $ --
Issuance of stock at $0.01 per share
in consideration for services
rendered 1,000 1,826 -- 1,826
Net income for the period -- -- 6,787 6,787
--------- --------- --------- ---------
Balance at September 30, 1997 1,000 1,826 6,787 8,613
Net loss for the year -- -- (115,037) (115,037)
--------- --------- --------- ---------
Balance at September 30, 1998 1,000 $ 1,826 $(108,250) $(106,424)
========= ========= ========= =========
See accompanying notes to the Financial statements
</TABLE>
72
<TABLE>
Global Investors Guide
Statements of Cash Flows
<CAPTION>
For the period
December 3, 1996 Year ended
to September 30, September 30,
1997 1998
------------------------ -------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 6,787 $ (115,037)
------------------------ -------------------
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 395 10,540
Changes in assets and liabilities:
(Increase) in accounts receivable (18,820)
(Increase) in prepaid expenses (1,025)
Increase in accrued expenses 4,714 3,967
Increase in accrued interest 13,063
------------------------ -------------------
Total adjustments 5,109 7,725
------------------------ -------------------
Net cash provided by (used in) operating
activities 11,896 (107,312)
------------------------ -------------------
Cash flows from investing activities:
Purchase of fixed assets (3,283) (38,912)
Proceeds from related party advances 28,589
------------------------ -------------------
Net cash (used in) investing activities (3,283) (10,323)
------------------------ -------------------
Cash flows from financing activities:
Proceeds from convertible debt 150,000
Net proceeds from issuance of common
stock, net of issuance costs 1,826
------------------------ -------------------
Net cash provided by financing activities 1,826 150,000
------------------------ -------------------
Net increase in cash 10,439 32,365
Cash, beginning - 10,439
------------------------ -------------------
Cash, ending $ 10,439 $ 42,804
======================== ===================
</TABLE>
See accompanying notes to the Financial statements
73
<PAGE>
Global Investors Guide
Notes to Financial Statements
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on December 3, 1996 in the State of
California. The Company's primary concentrations are in providing of
"branded" financial and e-commerce Web-based systems to the Internet in
order to earn both advertising and sponsorship revenue. The Company
also derives revenue from custom programming and website design.
Net income per share
The net income per share is computed by dividing the net income for the
period by the weighted average number of common shares outstanding for
the period. For the period December 3, 1996 to September 30, 1997 and
for the six months ended March 31, 1998 there were no potential common
shares to include in a computation of diluted earnings per share.
Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Property and Equipment
Property and equipment are being depreciated by the straight-line and
accelerated methods over lives ranging from three to five years. The
depreciation methods are designed to expense the cost of the assets
over their estimated useful lives.
Revenue Recognition
The Company recognizes revenue when website design is complete.
The Company recognizes advertising revenue when received as the
customer may terminate their advertising at any time. The sole customer
generating advertising had terminated prior to September 30, 1998.
The Company realizes and records mailing list revenue on the date the
customer uses the mailing list.. The rental is limited to a one-time
use for each customer at the time the list is rented.
Comprehensive Income
There were no items of other comprehensive income in the period
December 3, 1996 to September 30, 1997 and the year ended September 30,
1998 and, thus, net income is equal to comprehensive income for both
periods.
74
<PAGE>
Global Investors Guide
Notes to Financial Statements (Continued)
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Research and Development Costs
Research and development costs are charged to operations when incurred
and are included in operating expenses. The amounts charged to
operations for the period December 3, 1996 to September 30, 1997 and
the year ended September 30, 1998 were approximately $4,975 and $8,000,
respectively.
Note 2. CONCENTRATIONS OF CREDIT RISK
For the year ended September 30, 1998 the Company derived 54% of its
revenues from one customer for sponsorship advertising on e-commerce
Web-based systems to the Internet. The Company anticipates these
concentrations not to be significant in the future as revenue will be
derived from other sources.
Note 3. RELATED PARTY TRANSACTIONS
The Company received computer equipment, services and cash from a
company controlled by a majority stockholder of the Company. These
items were received in exchange for an amount due of $28,589 as of
September 30, 1998. This amount due was converted to stock in March
1999 (see Note 10).
Note 4. PROPERTY AND EQUIPMENT
The following is a summary of property and equipment, at cost, less
accumulated depreciation:
September 30,
--------------
1997 1998
---- ----
Computer equipment $3,283 $42,195
Less accumulated depreciation 395 10,935
------ ------
Net property and equipment $2,888 $31,260
====== =======
For the period December 3, 1996 to September 30, 1997, the year ended
September 30, 1998, the amounts for depreciation expense charged to
operations were $395 and $10,540, respectively.
Note 5. LICENSE AGREEMENTS
On February 2, 1998 the Company entered into an Information
Distribution License agreement with an unrelated company. The Agreement
grants a nonexclusive, nontransferable right and license to distribute
electronically, a stock quote data feed. Under the terms of the
three-year agreement Global paid a one-time installation fee of $1,230
in January 1998. In addition the contract requires Global to pay a
monthly fee of $970 plus redistribution fees based on the number of
months the data feed is used. During the year ended September 30, 1998,
the Company paid fees of $9,331 and $2,200, respectively. As of
September 30, 1998 there is an amount due of $5,830.
75
<PAGE>
Note 5. LICENSE AGREEMENTS (Continued)
Additionally, the Company entered into a Computer Software License
Agreement on April 21, 1998. The agreement grants Global the right to
use "NT-TASRV" operating system and provides monthly service and
support of this system. Under the terms of the contract Global paid an
initial license fee of $1,025 and pays a monthly fee of $1,025. For the
year ended September 30, 1998 the Company had paid $7,175 in fees.
Note 6. CONVERTIBLE DEBT
As of September 30, 1998 the Company had an outstanding note payable of
$150,000 to an unrelated party due November, 2000. The terms of the
note require a balloon payment of $150,000 of principle and cumulative
interest accrued at 9.5%. The debt and accrued interest were converted
to stock in March 1999 (see Note 10).
Note 7. STOCKHOLDERS' EQUITY
During December 1996 the Company issued 1,000 shares of stock to an
officer of the Company in consideration for services provided to the
Company.
Note 8. INCOME TAXES
The Company has a Federal net operating loss carryforward of
approximately $108,000, which will expire in the year 2014. The tax
benefit of this net operating loss of approximately $27,000 has been
offset by a full allowance for realization. This carryforward may be
limited upon the consummation of a business combination under Section
381 of the Internal Revenue Code.
Note 9. YEAR 2000
The Company has assessed its exposure to date sensitive computer
software programs that may not be operative subsequent to 1999 and has
implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruption of normal business
operations are encountered. However, because there is no guarantee that
all systems of outside vendors or other entities on which the Company's
operations rely will be 2000 compliant, the Company remains susceptible
to consequences of the Year 2000 issue.
Note 10. SUBSEQUENT EVENTS
In March 1999 the Company converted $150,000 of debt and $14,251 of
accrued interest due to an unrelated party into 300,000 shares of stock
at a value of $543,000 The stock was valued $1.81 per share, the
closing price of the Company's common stock on the date of the
conversion. The difference of $378,749 between the total debt and
accrued interest converted of $164,251 and value assigned to the shares
of stock of $543,000 was recorded as a loss on extinguishment of debt
(see Note 6). The Company issued the shares in April 1999.
76
<PAGE>
Note 10. SUBSEQUENT EVENTS (Continued)
In March 1999 the Company converted the amount due to a related party
of $28,589 in addition to subsequent disbursements of $71,411, for a
total due of $100,000, into 200,000 shares of stock. The stock was
valued $1.81 per share, the closing price of the Company's common stock
on the date of the conversion. The difference of $262,000 between the
amount due of $100,000 and value assigned to the shares of stock of
$162,000 was recorded as a reduction in capital (see Note 3). The
Company issued the shares in April 1999.
In January 1999, the Company entered into a License Agreement with an
unrelated company. The Agreement grants non-exclusive,
non-transferable, limited right to use data feeds for music, video,
books and an encyclopedia of popular music. Under the terms of the
one-year agreement, Global will pay the greater of a minimum monthly
fee of $3,500 or a calculated fee based on a fixed price per unit sold.
77
<PAGE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
78
<PAGE>
MOUNT MERLOT STATES, INC.
TABLE OF CONTENTS
Page Number
-----------
ACCOUNTANT'S REPORT 84
FINANCIAL STATEMENTS:
Balance Sheets 85
Statements of Operations and Deficit
Accumulated During the Development Stage 86
Statements of Changes in Stockholder's Equity 87
Statements of Cash Flows 88
Notes to the Financial Statements 89 - 90
79
<PAGE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
Of Mount Merlot Estates, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheets of Mount Merlot Estates, Inc. (a
development stage company) as of December 31, 1998 and December 31, 1997 and the
related statements of operations, cash flows and changes in stockholders' equity
for the period from December 19, 1997 (date of inception) to December 31, 1998.
These financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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 by
management, as well as evaluating the overall financial statement presentation.
I believe that our my provides a reasonable basis for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Mount Merlot Estates, Inc. as of
December 31, 1998 and December 31, 1997 the results of its operations, cash
flows, and changes in stockholders' equity for the years then ended as well as
the cumulative period from December 19, 1997(inception) to December 31, 1998, in
conformity with generally accepted accounting principles.
/s/David Coffey
- ------------------
David Coffey, CPA
February 3, 1999
80
<PAGE>
<TABLE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<CAPTION>
December 31,
1998 1997
-------- --------
ASSETS
<S> <C> <C>
Cash $ 44,187 $ 400
Organizational costs less accumulated
amortization 320 400
-------- --------
$ 44,507 $ 800
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 400 $ 400
-------- --------
Total liabilities 400 400
-------- --------
Stockholders' equity
Common stock, $0.001 par value,
25,000,000 shares authorized;
5,040,000 and 40,000 shares issued
and outstanding, respectively 5,040 40
Additional paid in capital 39,160 360
Deficit accumulated during the
development stage (93) --
-------- --------
Total stockholders' equity 44,107 400
-------- --------
$ 44,507 $ 800
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
81
<PAGE>
<TABLE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE EVELOPMENT STATE
FOR THE PERIOD FROM DECEMBER 19, 1997 TO DECEMBER 31, 1998
(With Cumulative Figures From Inception)
<CAPTION>
Inception
Year ended December 19, 1997
December 31, 1998 to Date
------------------- -----------------
<S> <C> <C>
Sales $ -- $ --
Expenses
Amortization 80 80
office expenses 13 13
--------- ---------
Total expenses 93 93
Net Loss $ (93) $ (93)
========= =========
Deficit accumulated, beginning of year $ --
Deficit accumulated during the development stage $ (93)
========= =========
Per share information:
Weighted average shares
outstanding - basic and diluted 777,041 750,423
========= =========
Earnings per share - basic and diluted $ (0.00) $ (0.00)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
82
<PAGE>
<TABLE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY and the notes
PERIOD FROM DECEMBER 19, 1997 (DATE OF INCEPTION) TO DECEMBER 31, 1998
<CAPTION>
Additional
Common Stock Paid in
Shares Amount Capital Total
-------------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Balance at December 19, 1997 -- -- -- --
Issuance of stock for cash 40,000 40 360 400
--------- --------- --------- ---------
Balance at December 31, 1997 40,000 $ 40 $ 360 $ 400
Issuance of stock for cash 5,000,000 5,000 45,000 50,000
Less offering costs -- -- (6,200) (6,200)
Less net loss -- -- -- (93)
--------- --------- --------- ---------
Balance at December 31, 19978 5,040,000 $ 5,040 $ 39,160 $ 44,107
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
83
<PAGE>
<TABLE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FROM DECEMBER 19, 1997 TO DECEMBER 31, 1998
<CAPTION>
Inception
Year ended December 19, 1997
December 31, 1998 to Date
------------------------- --------------------------
<S> <C> <C>
Cash flows provided by operating activities:
Net loss $ (93) $ (93)
Noncash expenses included in net loss
Amortization 80 80
Increase in accounts payable - 400
------------------------- --------------------------
Net cash provided by operating
activities (13) 387
------------------------- --------------------------
Cash flows used by investing activities:
Organizational costs - (400)
------------------------- --------------------------
Net cash (used by) investing activities - (400)
------------------------- --------------------------
Cash flows from financing activities:
Sale of common stock 5,000 5,040
Paid-in capital 45,000 45,360
Less offering costs (6,200) (6,200)
------------------------- --------------------------
Net cash provided by financing activities 43,800 44,200
------------------------- --------------------------
Net increase in cash 43,787 44,187
Cash at beginning of period 400 -
------------------------- --------------------------
Cash at end of period $ 44,187 $ 44,187
========================= ==========================
</TABLE>
The accompanying notes are an integral part of these financial statements
84
<PAGE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on December 19, 1997 under the laws of the state of
Nevada. The business purpose of the Company is to engage in the development of a
Merlot viticulture operation in Santa Ynez County, California.
The Company will adopt accounting policies and procedures based upon the nature
of future transactions.
The net income per share is computed by dividing the net income for the period
by the weighted average number of common shares outstanding for the period
NOTE B. ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60 months.
NOTE C. STOCK OFFERING
On February 20, 1998, the Company prepared a stock offering for 5,000,000 shares
of common stock $.01 per share, pursuant to Regulation 504 of the Securities Act
of 1993, as Amended, (the "Act"). The Company sold 5,000,000 shares of common
stock at $0.01 and received net proceeds of $50,000.
NOTE D SUBSEQUENT EVENTS - STOCK OPTION AND INCENTIVE PLAN
On January 4, 1999, the Board of directors adopted "the Stock Option and
Incentive Plan". The aggregate number of shares which may be issued as awards
under the plan is 2,5000,000 shares. As of February 3, 1999, the non statutory
stock options to purchase 1,275,000 shares have been granted to key employees
and directors for the exercise price of $0.50 per share. The options expire
January 25, 2004.
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INDEX TO EXHIBITS
2.1 Agreement and Plan of Reorganization for the Acquisition of all of the
Outstanding Shares of Common Stock of Global Investors Guide by
Ubrandit.com*
3.1 Ubrandit.com Articles of Incorporation and amendments*
3.2 Ubrandit.com By-laws*
10.1 1999 Stock Option and Incentive Plan*
10.2 Form of Incentive Stock Option Agreement*
10.3 Form of Non-Statutory Stock Option Agreement*
10.4 Information Distribution Agreement with S&P Comstock dated as of
January 16, 1998*
10.5 Database License Agreement with Baker & Taylor, Inc. dated as of
January 1, 1999 *
10.6 Computer Software License Agreement with Townsend Analytics, dated
April 21, 1998 *
10.7 License Agreement with Muze Inc. [undated] *
11.1 Statement of Computation of per share earnings reference is made to the
Income Statement of the Financial Statements *
21.1 Subsidiary of Registrant Global Investment Guide, Inc. Articles of
Incorporation *
21.2 Subsidiary of Registrant Global Investment Guide, Inc. By-laws *
27.1 Financial Data Schedule *
- --------
* Previously filed
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CERTAIN DEFINITIONS
The following are definitions of terms commonly used in the Internet industry
and in this document.
Archive
A collection of files stored on a computer network - often
retrievable by FTP (File Transfer Protocol).
Authentication
A security measure for checking a network user's identity.
Backbone
The Internet's high speed data highways that serve as major
access points to which other networks connect.
Bandwidth
The amount of data you can send through a network connection.
Bandwidth is usually measured in bits-per-second (bps).
Branding
"Private Labeling" or "branding" means that when Ubrandit.com
creates content for a client's Web site (such as content from
its e-commerce or financial destination sites), the content
will contain the client company's name, logo, and navigation
buttons, and will include very minimal information about
Ubrandit.com or its affiliates.
Browser
Another name for a client program that allows users to access
documents on the WWW (World Wide Web). Browsers can be both
text-based or graphic.
Client
A remote computer connected to a host or server computer. Also
refers to the software that makes this connection possible.
Cyberspace
A term coined by author William Gibson in his novel
"Neuromancer." Cyberspace is currently used to refer to the
digital world constructed by computer networks, in particular
the Internet.
Domain Name
The address that identifies an Internet site. Domain Names
consist of at least two parts. The part on the left is the
name of the company, institution, or other organization. The
part on the right identifies the highest subdomain. This can
be a country, such as ca for Canada, fr for France, or the
type of organization: com for commercial; edu for educational,
etc. The IP address is translated into the domain name by the
DNS.
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DNS
Domain Name System -- A database system that translates an IP
address into a domain name. For example, a numeric address
like 205.206.106.50 is converted into wwli.com.
Download
To transfer files from one computer to another. The most
common way of doing this on the Internet is by FTP (File
Transfer Protocol).
e-commerce
A term used to describe the ability of users to research,
compare, and buy products and services directly from companies
and individuals who have sites on the World Wide Web.
e-mail (electronic mail)
A way of sending messages on computers attached to local or
global networks.
Electronic Mall
A virtual shopping mall where you can browse and buy products
and services online.
Electronic Storefront
A virtual space in an electronic mall. This consists of space
on a server (usually at a Web site) where HTML documents are
stored.
Encryption
A way of making data unreadable to everyone except the
receiver. An increasingly common way of sending credit card
numbers over the Internet when conducting commercial
transactions.
Firewall
The computer file system of a site's inner network that is
protected against unauthorized access by Internet users.
FTP
(File Transfer Protocol) -- A way of moving files across
networks. With FTP you can login to another Internet site and
download or send files. Some sites have public file archives
that you can access by using FTP with the account name
"anonymous" and your e-mail address as password. This type of
access is called anonymous FTP.
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Gateway
A computer system for exchanging information across
incompatible networks that use different protocols. For
example, many commercial services have e-mail gateways for
sending messages to Internet addresses.
Hit
In the context of the WWW (World Wide Web), it refers to the
act of accessing an HTML (hypertext markup language) document
on a Server.
Home Page
The first page on a Web site that acts as the starting point
for navigation.
Host
A computer that acts as a server.
Hyperlink
These are links in HTML documents that you can click on to go
to other Web resources.
Hypermedia
The multimedia links on the Web that lead to sound, graphics,
video, or text resources.
Information Packet
A bundle of data sent over a network. The protocol used
determines the size and makeup of the packet.
Internet
A global collection of computer networks that exchange
information by the TCP/IP (Transmission Control
Protocol/Internet Protocol) suite of networking protocols.
Internet Account
An account with an ISP that allows you to access the Internet.
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IP Address
The Internet Protocol address - the numeric address that is
translated into a domain name by the DNS (Domain Name System).
ISDN
Integrated Services Digital Network -- Digital
telecommunications lines with two channels that can yield a
combined capacity of 128 kbps.
ISP (Internet Service Provider)
A company that provides various kinds of Internet accounts to
organizations and individuals.
Load
On the WWW (World Wide Web), HTML (Hypertext Markup Language)
documents and graphics are loaded into the browser whenever a
URL (Universal Resource Locator) or is accessed.
Mailing-List
A discussion forum where participants subscribe to a list and
receive messages via e-mail.
Modem
A device for translating the digital data of computers into
analog signals. Two or more computers connected together over
phone lines are therefore able to exchange files and generally
communicate with each other.
Navigate
To move around on the WWW (World Wide Web) by following
hypertext paths from document to document on different
computers.
Netizen
A citizen of the Internet.
Newsfeed
ISPs get their newsgroups from different newsfeeds, or news
sources, by transferring them over the Internet or other
networks.
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Newsgroup
A discussion forum on the Internet similar to that found on
local BBS's (bulletin board system). There are currently
around 15,000 different groups covering a wide range of
topics.
Newsreader
Application software for reading and posting articles to
newsgroups.
Online
When a user is connected to a network, they are described as
being online.
Page View or Unique Visitors
A term used to describe the number of times that a page is
actually viewed as opposed to hits wherein a page may have
many hits depending on the structure and design of the page.
Password
A secret combination of letters and other symbols needed to
login to a computer system.
Platform
The type of computer or operating system on which a software
application runs. For example, some common platforms are PC,
Macintosh, Unix, and NeXT.
POP (Point of Presence)
The nearest connection point at which a user may connect to a
remote site - usually that of the ISP (Internet Service
Provider) or telephone company. This is relevant when ordering
a dedicated line since you have to pay for mileage.
Post
Subscribers to newsgroups and mailing lists take part in
discussions by sending or posting their articles or comments
online.
Postmaster
An alias on a mail server for administering routing of e-mail.
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Preference Setting
A set of parameters on software tools, especially WWW (World
Wide Web) browsers, that allows a signature file to e-mail or
newsgroup messages, change the color and appearance of text,
etc.
Protocol
A specification that describes how computers will talk to each
other on a network.
Real-Time Chat
This is one use of the Internet that allows live conversation
between online users by typing on a computer terminal. The
most common tools are Talk and IRC (International Relay Chat).
Script
In the context of the WWW, a (gateway) script is a program
that runs on a Web server and processes requests based on
input from the browser.
Search Engine
Programs on the Internet that allow users to search through
massive databases of information.
Server
A host computer on a network that answers requests for
information from it. The term server is also used to refer to
the software that makes the process of serving information
possible.
Signature File
A file automatically attached to outgoing e-mail messages and
postings to newsgroups.
SMTP
Simple Mail Transfer Protocol - standard protocol on the
Internet for delivering e-mail.
Stickiness
Stickiness (retention) is one of the most important trends on
today's Internet. The concept is to find ways of keeping Web
users glued to a particular Web site. The key to stickiness or
retention is providing users with an abundance of useful
content that they are able to find virtually all their needs
onsite or in other words - one stop shopping.
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Surf
To search for information in the cyberspace reality of the WWW
(World Wide Web) by navigating in a nonlinear way.
TCP/IP
The Transmission Control Protocol (TCP) and the Internet
Protocol (IP) are protocols that let different types of
computers communicate with each other. The Internet is based
on this suite of protocols.
URL
Universal Resource Locator -- An address you use to tell your
browser where to find a resource. For example, the URL for the
World Wide Language Institute is http://wwli.com.
Username
The name assigned to users of a computer network. By
convention, default usernames usually consist of a person's
initial(s) plus their family name. For example, if your name
is Ricardo Garcia, your username would be rgarcia. Typing your
username on the computer screen is part of the login procedure
and identifies you to the computer system.
Viewer
Most browsers use helper applications, sometimes called
"viewers," to display full-size graphics and play sound and
video clips. These are separate applications that the browser
initiates after it has downloaded the image or clip.
Virtual
An adjective that refers to objects, activities, etc., that
exist or are carried on in cyberspace. For example, on the WWW
(World Wide Web) you can find virtual or electronic malls and
storefronts.
Webmaster
The person responsible for administering a Web site.
WWW or Web
World Wide Web -- A hypermedia-based system for accessing
Internet sites by clicking on hyperlinks.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized. Ubrandit.com
by:
Jeff Phillips,
President and Chief Executive Officer
94
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
UBRANDIT.COM
(FORMALLY VIRTUAL BRAND, INC.)
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), is made as of ________
(the "Effective Date") by and between UBRANDIT.COM (formally Virtual Brand,
Inc.), a Nevada corporation, (the "COMPANY") and ________________________ (the
"EMPLOYEE"), pursuant to the Company's 1999 Stock Option and Incentive Plan (the
"Plan").
WHEREAS, the Board of Directors of the COMPANY and the shareholders
have adopted the Plan as of January 25, 1999, to which this Agreement and the
option granted hereunder ("Option") are subject; and
WHEREAS, the Board of Directors of the COMPANY has determined that it
is to the advantage and in the best interest of the COMPANY and its shareholders
to grant the Option provided for herein to EMPLOYEE as an inducement to remain
in the employ of the COMPANY, and as an incentive for increased effort during
such service.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company grants to EMPLOYEE the right and Option
to purchase from the COMPANY, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of _________shares of the authorized $.001 par
value common stock of the COMPANY, at the purchase price of per share (being not
less than the fair market value per share of said stock on the date hereof) as
EMPLOYEE may from time to time elect, exercisable on or after the Effective Date
hereof pursuant to the vesting schedule attached hereto and marked Exhibit "A",
for a period of _______years until_________ (the latter date hereinafter
referred to as the "Terminal Date"), with certain provisions regarding the
nature and tax treatment of the Option upon exercise being determined pursuant
to the terms of paragraph 5. TERMINATION OF OPTIONS. No partial exercise of such
Option may be for less than 100 full shares, unless the number purchased is the
total number at the time purchasable under the option. In no event shall the
COMPANY be required to transfer fractional shares to EMPLOYEE. This Agreement
and the Option granted hereunder are subject to the Plan, a copy of which is
attached hereto and incorporated herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from Effective Date, as hereinabove provided, by written notice
which shall;
(a) state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name the
shares are to be issued (if the shares are issued to individuals), the names,
addresses and Social Security Numbers of such persons;
(b) contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as are
required by law or as may be satisfactory to the COMPANY's counsel;
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<PAGE>
(c) be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or persons other
than the EMPLOYEE, be accompanied by proof, satisfactory to counsel for the
COMPANY, of the right of such person or persons to exercise the Option; and
(d) be accompanied by a payment for the purchase price of
those shares with respect to which the Option is being exercised in the form of
cash or check.
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option. The
COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b) compliance
with all then applicable requirements of law; and (c) admission of such shares
for trading privileges on any stock exchange on which the stock may then be
listed.
4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the number
of shares of Common Stock of the COMPANY subject to be granted upon exercise of
this Option which it now holds as authorized and unissued shares. If the Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased shares which were subject thereto shall be
free from any restrictions occasioned by this Option Agreement. If the COMPANY
has been listed on a stock exchange, the COMPANY will not be required to issue
or deliver any certificate or certificates for shares to be issued hereunder
until such shares have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange on which outstanding shares of the
same class may then be listed and until the COMPANY has taken such steps as may,
in the opinion of counsel for the COMPANY, be required by law and applicable
regulations, including the rules and regulations of the Securities and Exchange
Commission, and state blue sky laws and regulations, in connection with the
issuance or sale of such shares, and the listing of such shares on each such
exchange. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted hereunder
to the extent such rights shall not have been exercised, shall terminate and
become null and void on the Terminal Date. If EMPLOYEE ceases to be in the
continuous employ of the COMPANY (whether by resignation, retirement, dismissal,
or otherwise), EMPLOYEE must exercise the Option within 90 days of termination
of employment or the Option will lose the benefits of an Incentive Stock Option
and if vested will continue to be exercisable until the Terminal Date, but shall
be treated for tax purposes as a non-statutory stock option except that: (a) in
the event of termination of such employment for any reason other than the
permanent disability of EMPLOYEE, as defined in Section 22(e)(3) of the Internal
Revenue Code, as amended and as presently in effect (the "Code"), EMPLOYEE may
at any time within a period of one year thereafter exercise the Option granted
hereunder to the extent such Option was exercisable by EMPLOYEE on the date of
the termination of such employment; and (b) in the event of the permanent
disability of EMPLOYEE while in the employ of the COMPANY, the Option granted
hereunder, to the extent that EMPLOYEE was entitled to exercise such Option on
the date of EMPLOYEE's disability, may be exercised within one year after such
termination as a result of disability by EMPLOYEE or the person or persons to
whom EMPLOYEE's rights under the Option granted hereby shall pass by will or by
the applicable laws of descent and distribution. Notwithstanding anything herein
to the contrary, however, the Option and all rights herein granted shall in all
events terminate and become null and void 5 years from the date of this
Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of EMPLOYEE, the
Option and all rights granted hereunder shall be exercisable only by EMPLOYEE,
and except as in paragraph 4 otherwise provided, the Option and all rights
granted hereunder shall not be transferred, assigned, pledged, or hypothecated
in any way (whether by operation of law or otherwise), and shall not be subject
2
<PAGE>
to execution, attachment, or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate, or otherwise dispose of such Option or of such
rights contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon such Option or such rights, such Option and such rights
shall immediately become null and void.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise the
Option granted hereunder as to the first increment of shares as shown in Exhibit
"A," EMPLOYEE must remain in the continuous employ of the COMPANY for the period
of at least six months from the date hereof.
8. STOCK AS INVESTMENT. By accepting this Option, the EMPLOYEE
acknowledges for EMPLOYEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired for investment and not for distribution,
and upon the transfer of any or all of the shares subject to the Option granted
hereunder, the EMPLOYEE, or heirs or legatees receiving such shares, shall
deliver to the COMPANY a representation in writing that such shares are being
acquired in good faith for investment and not for distribution. The EMPLOYEE
shall not dispose (whether by sale, exchange, gift, or any other transfer) of
any shares of stock acquired pursuant to the exercise of the Option granted
hereunder, within two years after the grant of this Option or one year after the
transfer of such shares to him upon his exercise of such Option. EMPLOYEE
further recognizes that any disposition (whether a sale, exchange, gift, or any
other transfer) of any shares of stock prior to the aforementioned periods will
not only be a breach of this Agreement, but will also disqualify the Option as a
incentive stock Option under Section 422A of the Code.
9. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of any
change in the common stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option may
be substituted for the Option granted hereunder or such Option may be assumed by
an employer corporation, or a parent or subsidiary of such corporation, in
connection with any transaction to which such Section is applicable. Upon the
dissolution or liquidation of the COMPANY other than in connection with a
transaction to which such Section is applicable, the Option granted hereunder
shall terminate and become null and void, but EMPLOYEE shall have the right
immediately prior to such dissolution or liquidation to exercise the Option
granted hereunder to the full extent not before exercised.
10. RIGHT AS SHAREHOLDER. Neither EMPLOYEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges of
a stock holder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the shareholder of
record on the books of the COMPANY.
11. NOTICES. Any notice to be given under the terms of this Agreement
shall be addressed to the COMPANY in care of its Secretary at the main offices
for the transaction of its business, and any notice to be given to EMPLOYEE
shall be addressed to EMPLOYEE at the address set forth above, or at such other
place as either party may hereafter designate in writing to the other. Any such
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as herein required, certified and deposited (postage and
certification prepaid) in a post office regularly maintained by the United
States Government.
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<PAGE>
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of
and be binding upon each successor of the COMPANY. All obligations imposed upon
the EMPLOYEE and all rights granted to the COMPANY under this Agreement shall be
binding upon the EMPLOYEE's heirs, legal representatives, and successors. This
Agreement shall be the sole and exclusive source of any and all rights which the
EMPLOYEE, EMPLOYEE's heirs, legal representatives, or successors may have in
respect to the Plan or any options or Common Stock granted or issued thereunder,
whether to EMPLOYEE, or to any other person.
13. INTERNAL REVENUE CODE. All Options granted hereunder are granted
pursuant to the Internal Revenue Code, as amended, as it is in force and effect
at the date of grant.
14. RESOLUTION OF DISPUTES. Any dispute or disagreement which should
arise under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement will be determined by the Board of
Directors of the COMPANY. Any determination made hereunder shall be final,
binding, and conclusive for all purposes. Any conflict between any provision in
this Agreement and any provision of the Plan shall be resolved in favor of the
provisions of this Agreement.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President, to be sealed by its corporate seal, and
attested by its Secretary, and EMPLOYEE has hereunto set her hand as of the date
and year first above written, which is the time of the granting of the Option
hereunder.
"COMPANY"
UBRANDIT.COM
"EMPLOYEE"
a Nevada corporation
By: __________________________ ____________________________
President
ATTEST:
By: __________________________
Secretary
4
NONSTATUTORY STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
UBRANDIT.COM
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement"), is made as
of __________(the "Effective Date") by and between Ubrandit.com a Nevada
corporation, formally Virtual Brand, Inc., (the "COMPANY") and _____________(the
"OPTIONEE"), pursuant to the COMPANY's 1999 Stock Option and Incentive Plan (the
"Plan").
WHEREAS, the Board of Directors of the COMPANY has adopted the Plan as
of January 25, 1999, subject to Shareholders approval, to which this Agreement
and the Option granted hereunder are subject; and
WHEREAS, the Board of Directors of the COMPANY has determined that it
is to the advantage and in the best interest of the COMPANY and its shareholders
to grant the Option provided for herein to OPTIONEE to afford additional
incentive to consultants, vendors, customers, and others to increase their
efforts in providing significant services to the COMPANY.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and Option
to purchase from the COMPANY, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of ________shares of the authorized $.001 par
value common stock of the COMPANY, at the purchase _____________per share (being
not less than the fair market value per share of said stock on the date hereof)
as OPTIONEE may from time to time elect, exercisable on or after the Effective
Date hereof pursuant to the vesting schedule attached hereto and marked Exhibit
"A", for a period of _____years until __________(the latter date hereinafter
referred to as the "Terminal Date"), regardless of whether or not OPTIONEE is
employed by the COMPANY at the time of exercise. No partial exercise of such
Option may be for less than 100 full shares, unless the number purchased is the
total number at the time purchasable under the option. In no event shall the
COMPANY be required to transfer fractional shares to OPTIONEE. This Agreement
and the Option granted hereunder are subject to the Plan, a copy of which is
attached hereto and incorporated herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from time to time, as hereinabove provided, by written notice which
shall;
(a) state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name the
shares are to be issued (if the shares are issued to individuals), the names,
addresses and Social Security Numbers of such persons;
(b) contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as are
required by law or as may be satisfactory to the COMPANY's counsel;
(c) be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or persons other
than the OPTIONEE, be accompanied by proof, satisfactory to counsel for the
COMPANY, of the right of such person or persons to exercise the Option; and
<PAGE>
(d) be accompanied by a payment for the purchase price of
those shares with respect to which the Option is being exercised in the form of
cash or check or the purchase price may be paid (i) by the surrender of Shares
in good form for transfer, owned by the OPTIONEE and having a Fair Market Value
on the date of exercise equal to the purchase price, or in any combination of
cash and Shares, as long as the sum of the cash so paid and the Fair Market
Value of the Shares so surrendered equal the purchase price, (ii) by
cancellation of indebtedness owed by the Company to the OPTIONEE, (iii) with a
full recourse promissory note executed by the OPTIONEE, or (iv) any combination
of the foregoing. The interest rate and other terms and conditions of such note
shall be determined by the Board or the Committee. The OPTIONEE shall pledge his
Shares to the Company for the purpose of securing the payment of such note.
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option. The
COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b) compliance
with all then applicable requirements of law; and (c) admission of such shares
for trading privileges on any stock exchange on which the stock may then be
listed.
4. TERMINATION OF OPTION. The Option and all rights granted hereunder
to the extent such rights shall not have been exercised, shall terminate and
become null and void on the Terminal Date. Any options that vest shall not
terminate prior to the Terminal Date regardless of whether or not OPTIONEE is in
the employment of the Company.
5. TRANSFERABILITY OF OPTION. This Option may be transferred by will or
the laws of descent or distribution and may be exercised during the lifetime of
the OPTIONEE or by an assignee of the OPTIONEE pursuant to the terms of Sections
7.5 and 8.3 of the Plan.
6. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the number
of shares of Common Stock of the COMPANY subject to be granted upon exercise of
this Option which it now holds as authorized and unissued shares. If the Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased shares which were subject thereto shall be
free from any restrictions occasioned by this Option Agreement. If the COMPANY
has been listed on a stock exchange, the COMPANY will not be required to issue
or deliver any certificate or certificates for shares to be issued hereunder
until such shares have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange on which outstanding shares of the
same class may then be listed and until the COMPANY has taken such steps as may,
in the opinion of counsel for the COMPANY, be required by law and applicable
regulations, including the rules and regulations of the Securities and Exchange
Commission, and state blue sky laws and regulations, in connection with the
issuance or sale of such shares, and the listing of such shares on each such
exchange. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
7. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of any
change in the common stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option may
be substituted for the Option granted hereunder or such Option may be assumed by
an employer corporation, or a parent or subsidiary of such corporation, in
connection with any transaction to which such Section is applicable. Upon the
dissolution or liquidation of the COMPANY other than in connection with a
transaction to which such Section is applicable, the Option granted hereunder
shall terminate and become null and void, but OPTIONEE shall have the right
immediately prior to such dissolution or liquidation to exercise the Option
granted hereunder to the full extent not before exercised.
<PAGE>
8. RIGHT AS SHAREHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges of
a stock holder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the shareholder of
record on the books of the COMPANY.
9. NOTICES. Any notice to be given under the terms of this Agreement
shall be addressed to the COMPANY in care of its Secretary at the main offices
for the transaction of its business, and any notice to be given to OPTIONEE
shall be addressed to OPTIONEE at his current residential address, or at such
other place as either party may hereafter designate in writing to the other. Any
such notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as herein required, certified and deposited
(postage and certification prepaid) in a post office regularly maintained by the
United States Government.
10. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of
and be binding upon each successor of the COMPANY. All obligations imposed upon
the OPTIONEE and all rights granted to the COMPANY under this Agreement shall be
binding upon the OPTIONEE's heirs, legal representatives, and successors. This
Agreement shall be the sole and exclusive source of any and all rights which the
OPTIONEE, OPTIONEE's heirs, legal representatives, or successors may have in
respect to the Plan or any options or Common Stock granted or issued thereunder,
whether to OPTIONEE, or to any other person.
11. RESOLUTION OF DISPUTES. Any dispute or disagreement which should
arise under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement will be determined by the Board of
Directors of the COMPANY. Any determination made hereunder shall be final,
binding, and conclusive for all purposes. Any conflict between any provision in
this Agreement and any provision of the Plan shall be resolved in favor of the
provisions of this Agreement.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President and attested by its Secretary, and
OPTIONEE has hereunto set his hand the date and year first above written, which
is the time of the granting of the Option hereunder.
"COMPANY" "OPTIONEE"
UBRANDIT.COM
a Nevada corporation
By: ___________________________ ______________________________
President
ATTEST:
By: ___________________________
Secretary
Exhibit A
UBRANDIT.COM
MEMBERS OF MANAGEMENT AND BOARD OF DIRECTORS
PRIOR TO MARCH 11, 1999 ACQUISITION DATE
Board of Directors
Name Title
- --------------------------------------------------------------------------------
Jeff Phillips Chairman of Board
Gregory v. Gibson Board Member
Steven K. Radowicz Board Member
Management
Name Title
- --------------------------------------------------------------------------------
Michael Fagan Vice President of Operations
J. Eric Arterburn Vice President Design Development
William Childers Vice President MIS
Mark Cullivan Vice President Processing and Fulfillment
Elizabeth Kern Assistant Secretary
103
UBRANDIT.COM AND SUBSIDIARY
MEMBERS OF MANAGEMENT AND BOARD OF DIRECTORS
PRIOR TO MARCH 11, 1999 ACQUISITION DATE
Board of Directors
Name Title
- --------------------------------------------------------------------------------
Jeff Phillips Chairman of Board
Gregory v. Gibson Board Member
Steven K. Radowicz Board Member
Management
Name Title
- --------------------------------------------------------------------------------
Michael Fagan Vice President of Operations
J. Eric Arterburn Vice President Design Development
William Childers Vice President MIS
Mark Cullivan Vice President Processing and Fulfillment
Elizabeth Kern Assistant Secretary
104
UBRANDIT.COM
SCHEDULE OF OWNERSHIP INTERESTS
PRIOR TO MARCH 11, 1999 ACQUISITION DATE
Shareholder Number of Shares
- --------------------------------------------------------------------------------
Various non-management/non-board member shareholders 6,930,000
105
UBRANDIT.COM AND SUBSIDIARY
SCHEDULE OF OWNERSHIP INTERESTS
AS OF MARCH 11, 1999 ACQUISITION DATE
Shareholder Number of Shares
- --------------------------------------------------------------------------------
Various non-management/non-board member shareholders 6,930,000
JEFF PHILIPS 1,606,880
MIKE FAGAN 54,780
J. ERIC ARTERBURN 54,780
MARK CULLIVAN 54,780
WILL CHILDERS 54,780
---------
8,756,000
---------
GLOBAL INVESTORS GUIDE
SCHEDULE OF OWNERSHIP INTERESTS
PRIOR TO MARCH 11, 1999 ACQUISITION DATE
Shareholder Number of Shares
Mark Cullivan 30
William Childers III 30
Michael Fagan 30
J. Eric Arterburn 30
Jeff Phillips 880
-----
1,000
-----
106
GLOBAL INVESTORS GUIDE
MEMBERS OF MANAGEMENT AND BOARD OF DIRECTORS
PRIOR TO MARCH 11, 1999 ACQUISITION DATE
Board of Directors
Name Title
Jeff Phillips Chairman of Board
Management
Name Title
Jeff Phillips President
107
