U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] Annual report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1999.
[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _________ to _________.
Commission File No. 000-26605
CLARION INTERNET, INC.
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(Name of Small Business Issuer in its Charter)
Nevada, U.S.A. 33-0860027
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
44489 Town Center Way, Suite D487, Palm Desert, California 92260
(Address of Principal Executive Offices)
(760) 342-8040
(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on Which Registered
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
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(Title of Class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Check here if the disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this 10-KSB or any
amendment to this Form 10-KSB. [ ]
Revenues for the year ending December 31, 1999 were $ -0-.
As of the date of this filing, the Company had approximately
5,000,000 shares of Common Stock issued and outstanding.
CLARION INTERNET, INC.
FORM 10-KSB
for the fiscal year ended December 31, 1999
TABLE OF CONTENTS
Part I
Item 1. Description of Business
Item 2 Description of Property
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of
Security Holders
Part II
Item 5 Market for the Company's Common Equity and
Related Stockholder Matters
Item 6 Management's Discussion and Analysis and
Plan of Operation
Item 7 Financial Statements
Item 8 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Part III
Item 9 Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section
16(a) of the Exchange Act
Item 10 Executive Compensation
Item 11 Security Ownership of Certain Beneficial
Owners and Management
Item 12 Certain Relationships and Related Transactions
Item 13 Exhibits and Reports on Form 8-K
SIGNATURES
PART I
Item 1. Description of Business.
(a) Business Development and Organizational Activities.
Clarion Internet, Inc. ("Clarion" or the "Company"), was
incorporated in the State of Nevada on January 9, 1999. The
Company is in its development stage, organizing and preparing to
offer an easily-accessible, high exposure Internet presence to
small and growing businesses through its electronic Internet
directory website located at "www.DesertYellowPages.com".
Accordingly, the Company has a limited operating history upon which
an evaluation of the Company, its current business and its
prospects can be based, each of which must be assessed in light of
the risks, expenses and problems frequently encountered by all
companies in the early stages of development, and particularly by
such companies entering new and rapidly developing markets like the
Internet.
Such risks include, without limitation, the lack of broad
acceptance of the company's products and services on the Internet,
the possibility that the Internet will fail to achieve broad
acceptance, the inability of the Company to generate significant
e-Commerce-based revenues from Internet customers, the Company's
inability to anticipate and adapt to a developing market, the
failure of the Company's network infrastructure (including its
server, hardware and software) to efficiently handle its Internet
traffic, changes in laws that adversely affect the Company's
business, the ability of the Company to manage its operations,
including the amount and timing of capital expenditures and other
costs relating to the expansion of the Company's operations, the
introduction and development of different or more extensive
Internet directories by direct and indirect competitors of the
Company, including those with greater financial, technical and
marketing resources, the inability of the Company to maintain and
increase levels of traffic on its website, the inability of the
Company to attract, retain and motivate qualified personnel and
general economic conditions.
(b) Business of Issuer.
Industry Background
Global commerce and the online exchange of information is new
and evolving, and it is difficult to predict with any assurance
whether the Web will prove to be a viable commercial marketplace in
the long term. The Web has experienced, and is expected to
continue to experience, significant growth in the numbers of users
and amount of traffic. To the extent that the Web continues to
experience increased numbers of users, frequency of use or
increased bandwidth requirements of users, there can be no
assurance that the Web infrastructure will continue to be able to
support the demands placed on it by this continued growth or that
the performance or reliability of the Web will not be adversely
affected.
Industry estimates indicate, according to a Myers Group study,
that spending on Internet advertising in the United States will
grow from $2 billion in 1999 to $32 billion in 2005. According to
a report by Forrester Research, money spent worldwide for Internet
advertising will reach $33 billion. The Internet has become a
compelling advertising vehicle that provides advertisers with
targeting tools not available from traditional advertising media.
Research by Jupiter Communications predicts that by 2003, the
amount of money spent on online advertising will exceed that spent
in some traditional media. The interactive nature of the Internet
and the development of "click-through" advertising banners and
other feedback tools enable advertisers to measure impression
levels, establish a dialogue with users and receive "real-time"
direct feedback from their target markets.
Such feedback provides advertisers with an effective means to
measure the attractiveness of their offerings among targeted
audiences and make modifications to their advertising campaigns on
short notice. Community sites are generally able to provide
advertisers significantly more information regarding consumers than
other websites because they collect detailed demographic data and
facilitate the development of user-created affinity groups. The
ability to target advertisements to broad audiences, specific
regional populations, affinity groups or individuals makes
community website advertising a highly versatile and effective tool
for delivering customized and cost-effective messages. One
indicator of the Internet's popularity as an advertising medium is
the growing number and diversity of Internet advertisers.
Most early Internet advertisers were technology and
Internet-related companies. Today, a growing number of Internet
advertisers consist of traditional, consumer product and service
companies. The diverse audience of users accessing community sites
has made such sites especially attractive to consumer product and
service companies advertising on the Internet. The Company
believes that this trend should continue, and that a wide variety
of companies outside the technology and Internet industries, such
as financial services, consumer goods, automotive and
pharmaceutical companies, are or will be increasingly using the
Internet, and Internet directory sites in particular, to advertise.
The Internet allows marketers to collect meaningful
demographic information and feedback from consumers, and to rapidly
respond to this information with new messages. This offers a
significant new opportunity for businesses to increase the
effectiveness of their direct marketing campaigns. In traditional
media, a significant portion of all advertising budgets is spent on
direct marketing because of its effectiveness. However, the
effectiveness of direct marketing campaigns is dependent upon the
quality of consumer data used to develop and place complementary
products or services. If and as facilities are developed and the
Web becomes a viable commercial marketplace in the long term, the
Company might be required to incur substantial expenditures in
order to adapt its services to changing Web technologies, which
could have a material adverse effect on the Company's business,
results of operations and financial condition.
DesertYellowPages.com
The Company's business is in developing a single point of
contact, one-stop operation for the creation of an Internet
presence. The Company will target, in particular, those existing,
not-on-line "legacy" companies, i.e., companies having older
equipment or no web presence. Such businesses are often aware of
the Internet but do not have an understanding of how to apply and
use the Internet as a business tool. Clarion Internet is in the
development stage of offering a desert Internet directory of
Coachella Valley businesses. The Company's website, which is under
development and not yet functional, will provide listings of local
businesses in an electronic Internet "yellow pages"-type directory,
allowing them to showcase their products and services, provide
contact information and, if desired, links to additional web pages,
designed and/or hosted by Clarion for an additional fee. This
means that business owners will be able to come to a single source,
Clarion, to receive all the help necessary to advertise and provide
exposure for their business, and, if desired, to build and maintain
a company website.
Clarion will contract with a client company to prepare that
company's business information for presentation in an electronic
format, design a website and various web pages, determine and
create appropriate search response requests and information
delivery mechanisms, create site visitor information analysis
algorithms, provide data storage and retrieval, as necessary,
create links to existing portals and "bannering" based upon the
client's desire to pay for commercial advertising, update the
client's information on a real-time basis, and provide liaison or
direct service through affiliated Internet Service Providers. Such
services will be performed by, or under the supervision of, Mr.
Matt Blansett, the Company's president, who is an expert and
instructor of Internet website design. The use of independent
contractors may or may not be necessary depending upon the breadth,
scope and detail of the websites required by the Company's clients,
as well as volume of the Company's business. Furthermore, as the
Company is not an Internet Service Provider ("ISP"), it is
presently in discussions with GTE, Internet Technology Institute
and Starhost as potential ISP and web hosting service providers.
Initially, most of the Company's new business will derive from
direct sales, from referrals and from print advertising in local
publications such as the Desert Sun, Palm Springs Magazine and the
White Pages. The Company's marketing strategy will include
door-to-door sales and introductions, whereby a representative of
Clarion will go directly to the prospective client's business. As
many of the Company's target business clients do not presently have
any web presence, the ease of acquiring such a web presence by
listing with Clarion's "Desert Yellow Pages" should generate
interest from business owners who wish to advertise on the
Internet.
The Company's expansion strategy will also include attending
business functions, often sponsored by local organizations such as
the Desert Chamber of Commerce, the Greater Palm Springs Convention
and Visitors Bureau, the Rotary, the Riverside Economic Development
Department and other such associations, where many of the local
business owners gather to discuss business and to solicit sales and
referrals.
Although the Internet industry is extremely competitive, there
are few local Internet-related service providers in the Coachella
Valley, where the Company is located, and still fewer providers
geared towards small and expanding businesses. There are currently
only three local Internet Service Providers in the Company's
general vicinity and approximately one dozen web design firms.
Clarion Internet is in the process of developing a "Desert Yellow
Pages" to be available on the Internet. This listing service will
be presented in a electronic Internet "yellow pages"-type directory
allowing businesses to list their services and products and contact
information, as well as links to other hosted web pages for their
particular business. No such service is currently provided in the
Company's locale, and as such, the Company's potential for
expansion is great. The Company has already contacted several
businesses and received commitments for listing on the Company's
Internet "Desert Yellow Pages".
Government Regulation.
Although the law relating to the liability of online companies
is currently unsettled, the Company does not presently anticipate
the need for any governmental approval for its products or
services. It is possible that claims could be made against online
e-Commerce companies under both United States and foreign law for
defamation, libel, invasion of privacy, negligence, copyright or
trademark infringement, or other theories based on the nature and
content of the materials disseminated through their website. If
government regulation becomes a factor and approval of the
Company's products and/or services becomes necessary at some point
in the future, the Company will seek such approval at the
appropriate time.
Employees.
As of the date of this filing, the Company has one part-time
employee, its President, Secretary and Chairman, Matthew Blansett.
The Company is also presently in discussions with potential
employees for commission-based sales positions, with marketing
companies to assist with the design and production of Company
brochures and sales material, with Internet providers to optimize
web technology and with individuals to assist in website design.
As projects are undertaken, the Company intends to hire independent
contractors to staff projects, as and if necessary.
(i) The Company's performance is substantially dependent on
the performance of its President, Matthew Blansett. In particular,
the Company's success depends on his ability to develop, design and
market the Company's website.
(ii) The Company does not carry key person life insurance on
any of its personnel. The loss of the services of any of its
executive officers or other key employees could have a material
adverse effect on the business, results of operations and financial
condition of the Company. The Company's future success also
depends on its ability to retain and attract highly qualified
technical and managerial personnel, if and when the need for such
personnel arises.
(iii) There can be no assurance that the Company will be able
to retain its key managerial and technical personnel or that it
will be able to attract and retain additional highly qualified
technical and managerial personnel in the future. The inability
to attract and retain the technical and managerial personnel
necessary to support the growth of the Company's business, due to,
among other things, a large increase in the wages demanded by such
personnel, could have a material adverse effect upon the Company's
business, results of operations and financial condition.
(c) Risk Factors.
Anticipated Losses for the Foreseeable Future.
The Company has not achieved profitability to date, and the
Company anticipates that it will continue to incur net losses for
the foreseeable future. The extent of these losses will depend, in
part, on the amount of growth in the Company's revenues from sales
of its products and services, and the possibility of advertising
revenues on its website. The Company expects that its operating
expenses will increase significantly during the next several years,
especially in the areas of sales and marketing, and brand
promotion. Thus, the Company will need to generate increased
revenues to achieve profitability. To the extent that increases in
the Company's operating expenses are not accompanied by
commensurate increases in revenues, or the Company is unable to
adjust its operating expense levels accordingly, the Company may
not be able to achieve or sustain profitability. Furthermore,
there can be no assurances that the Company's operating losses will
not increase in the future or that it can ever achieve or sustain
profitability.
Dependence on Continued Growth and Viability of the Internet.
The Company's future success is substantially dependent upon
continued growth in the use of the Internet. To generate product
sales, advertising sales and e-Commerce service fees for Clarion,
the Internet's recent and rapid growth must continue, and
e-Commerce on the Internet must become widespread. None of these
can be assured. The Internet may prove not to be a viable
commercial marketplace. Additionally, due to the ability of
consumers to easily compare prices of similar products or services
on competing websites, gross margins for e-Commerce transactions
may narrow in the future and, accordingly, the Company's revenues
from e-Commerce arrangements may decline. If use of the Internet
does not continue to grow, the Company's business, results of
operations and financial condition would be materially and
adversely affected. Additionally, to the extent that the Internet
continues to experience significant growth in the number of users
and the level of use, there can be no assurance that its technical
infrastructure will continue to be able to support the demands
placed upon it. The necessary technical infrastructure for
significant increases in e-Commerce, such as a reliable network
backbone to minimize the occurrence and/or risk of Internet
disruptions, may not be timely and adequately developed. In
addition, performance improvements, such as high-speed modems, may
not be introduced in a timely fashion. Furthermore, security and
authentication concerns with respect to transmission over the
Internet of confidential information, such as credit card numbers,
may remain. Issues like these could lead to resistance against the
acceptance of the Internet as a viable commercial marketplace.
Also, the Internet could lose its viability due to delays in the
development or adoption of new standards and protocols required to
handle increased levels of activity, or due to increased
governmental regulation. Changes in or insufficient availability
of telecommunications services could result in slower response
times and adversely affect usage of the Internet. Demand and
market acceptance for recently introduced services and products
over the Internet are subject to a high level of uncertainty, and
there exist few proven services and products.
The Internet may not be commercially viable in the long term
for a number of reasons, including potentially inadequate
development of the necessary network infrastructure or delayed
development of enabling technologies, performance improvements and
security measures. To the extent that the Internet continues to
experience significant growth in the number of users, their
frequency of use or their bandwidth requirement, there can be no
assurance that the infrastructure for the Internet and other online
services will be able to support the demands placed upon them. In
addition, the Internet or other online services could lose their
viability due to delays in the development or adoption of new
standards and protocols required to handle increased levels of
Internet or other online service activity, or due to increased
governmental regulation. Changes in or insufficient availability
of telecommunications services to support the Internet or other
online services also could result in slower response times and
adversely affect usage of the Internet and other online services
generally and DesertYellowPages.com in particular. If use of the
Internet and other online services does not continue to grow or
grows more slowly than expected, if the infrastructure for the
Internet and other online services does not effectively support
growth that may occur, or if the Internet and other online services
do not become a viable commercial marketplace, the Company's
business, results of operations and financial condition could be
adversely affected.
Dependence on Third-Party Relationships.
The Company will be significantly dependent on a number of
third-party relationships to increase traffic to
DesertYellowPages.com. Although the Company's website does not
require links from other websites in order to be functional and/or
generate a profit. However, as such links could potentially
increase traffic to the Company's website, the Company may seek to
establish relationships with other website operators to provide
links to the Company's DesertYellowPages.com.
The Company does not presently have any agreements in place
with any website operators that provide links to
DesertYellowPages.com, and, even if the Company can establish such
relationships, the other website operators may terminate the links
at any time without notice to the Company. There can be no
assurance that third parties will regard their relationship with
the Company as important to their own respective businesses and
operations.
There can be no assurance that the Company will ever develop
such relationships with third parties to supply the Company with
links to their website. In particular, the elimination of a
pre-installed bookmark on a Web browser that directs traffic to the
Company's website could significantly reduce traffic on the
Company's website, which would have a material adverse effect on
the Company's business, results of operations and financial
condition.
Risk of System Failures.
The Company's ability to facilitate trade successfully through
its website and to provide high quality customer service, depends
upon the efficient and uninterrupted operation of its computer and
communications through its designated Internet Service Provider
(ISP). These systems and operations are vulnerable to damage or
interruption from earthquakes, floods, fires, power loss,
telecommunication failures, break-ins, sabotage, intentional acts
of vandalism and similar events. The Company does not have fully
redundant systems or a formal disaster recovery plan and does not
carry business interruption insurance to compensate it for losses
that may occur. The Company has identified alternative providers
of hosting services in the event that its ISP's services
malfunction. Despite any precautions taken by, and planned to be
taken by the Company, the occurrence of a natural disaster or other
unanticipated problems with its ISP could result in interruptions
in the services provided by the Company.
In addition, the failure by the ISP to provide the data
communications capacity required by the Company, as a result of
human error, natural disasters or other operational disruption,
could result in interruptions in the Company's service. Any damage
to or failure of the systems of the Company could result in
reductions in, or terminations of, the Company's service, which
could detrimentally affect the Company's business, results of
operations and financial condition. In the case of frequent or
persistent system failures, the Company's reputation and name brand
could also be adversely affected. Although the Company has
implemented certain network security measures, the Company and its
ISP are also vulnerable to computer viruses, physical or electronic
break-ins and similar disruptions, which could lead to
interruptions, delays, loss of data or the inability to complete
customer postings and transactions. In addition, although the
Company works to prevent unauthorized access to Company data, it is
impossible to eliminate this risk completely. The occurrence of
any or all of these events could have a long-term negative impact
on the Company's business, results of operations and financial
condition.
Competition.
The market for Internet business directories is relatively
new, rapidly evolving and intensely competitive, and the Company
expects competition to intensify further in the future. Barriers
to entry are relatively low, and current and new competitors can
launch new sites at a relatively low cost using
commercially-available software. The Company potentially competes
with a number of other companies marketing similar business
directories over the Internet. Competitive pressures created by
any of the Company's competitors, could damage the Company's
business, results of operations and financial condition. The
Company believes that the principal competitive factors in its
market are volume and selection of business listings, population of
Internet users, community cohesion and interaction, customer
service, reliability of delivery and payment by users, brand
recognition, website convenience and accessibility, price, quality
of search tools and system reliability. Some of the Company's
potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater
financial, marketing, technical and other resources than the
Company. In addition, other online directory listing services may
be acquired by, receive investments from or enter into other
commercial relationships with larger, well-established and
well-financed companies as use of the Internet and other online
services increases.
Therefore, certain of the Company's competitors with other
revenue sources may be able to devote greater resources to
marketing and promotional campaigns, adopt more aggressive pricing
policies and devote substantially more resources to website and
systems development than the Company or may try to attract traffic
by offering services for free. Increased competition may result in
reduced operating margins, loss of market share and diminished
value in the Company's brand recognition. There can be no
assurance that the Company will be able to compete successfully
against current and future competitors. Further, as a strategic
response to changes in the competitive environment, the Company
may, from time to time, make certain pricing, service or marketing
decisions or acquisitions that could have a material adverse effect
on its business, results of operations and financial condition.
New technologies and the expansion of existing technologies may
increase the competitive pressures on the Company by enabling the
Company's competitors to offer a lower-cost service. Certain
Web-based applications that direct Internet traffic to certain
websites may channel users to directory services that compete with
the Company. Although the Company plans to establish arrangements
with online services and search engine companies, there can be no
assurance that these arrangements will ever be established or
renewed on commercially reasonable terms or that they will
otherwise bring traffic to the Company's website. In addition,
companies that control access to transactions through network
access or Web browsers could promote the Company's competitors or
charge the Company substantial fees for inclusion. Any and all of
these events could have a material adverse effect on the Company's
business, results of operations and financial condition.
Potential Fluctuations in Operating Results; Quarterly
Fluctuations.
The Company's operating results may fluctuate significantly in
the future as a result of a variety of factors, many of which are
outside of the Company's control, including but not limited to
system and operational vulnerability to damage or interruption due
to earthquakes, floods, fires, power loss, telecommunication
failures, break-ins, sabotage, intentional acts of vandalism and
similar events, as well as changes in the competitive environment.
As a strategic response to changes in the competitive environment,
the Company may from time to time make certain pricing (e.g.,
increase/reduction in rates for DesertYellowPages.com listings
and/or services), marketing decisions (e.g., increase/reduction in
advertising) or acquisitions (e.g., acquisition of competitors)
that could have a material short-term or long-term adverse effect
on the Company's business, results of operations and financial
condition. In particular, in order to accelerate the promotion of
Clarion, the Company intends to market its website, which may have
a negative impact on the Company's operating results for that
period, especially if the marketing efforts do not yield positive
results. The Company believes that it may experience seasonality
in its business, with use of the Internet and Clarion's services
being somewhat lower during the summer vacation and year-end
holiday periods. Advertising impressions (and therefore revenues)
may be expected to decline accordingly in those periods.
Additionally, seasonality may significantly affect any potential
advertising revenues during the first and third calendar quarters,
as advertisers historically spend less during these periods.
There can be no assurance that such patterns will not have a
material adverse effect on the Company's business, results of
operations and financial condition. In addition to selling its
brands, it is the Company's strategy to generate additional
revenues through e-Commerce arrangements including allowing other
companies to advertise on the Company's website. However, there
can be no assurance that the Company will receive any meaningful
revenues under these agreements in the future. The foregoing
factors, in some future quarters, may lead the Company's operating
results to fall below expectations.
Risk Of Capacity Constraints And Systems Failures.
A key element of the Company's strategy is to generate a
volume of user traffic to its website. The Company's ability to
attract customers and to achieve market acceptance of its
DesertYellowPages.com product depends significantly upon the
performance of the Company and its network infrastructure
(including its server, hardware and software). Any system failure
that causes interruption or slower response time of the Company's
products and services could result in less traffic to the Company's
website and, if sustained or repeated, could reduce the
attractiveness of the Company's products. An increase in the
volume of user traffic could strain the capacity of the Company's
technical infrastructure, which could lead to slower response time
or system failures, and could adversely affect the ability of
potential users to access the Company's website, thereby reducing
the Company's advertising revenues. In addition, as the number of
Web pages on and users of DesertYellowPages.com increases, there
can be no assurance that the Company and its technical
infrastructure will be able to grow accordingly, and the Company
faces risks related to its ability to scale up to its anticipated
customer levels while maintaining superior performance. Any
failure of the Company's server and networking systems to handle
current or higher volumes of traffic would have a negative impact
on the Company's business, results of operations and financial
condition. The Company is also dependent upon third parties to
provide potential users with Web browsers and Internet and online
services necessary for access to its site. In the past, Internet
users have occasionally experienced difficulties with Internet and
online services due to system failures, including failures
unrelated to the Company's systems. Any disruption in Internet
access provided by third parties could have a material adverse
effect on the Company's business, results of operations and
financial condition. The Company's operations are dependent in
part upon its ability to protect its operating systems against
damage from human error, fire, floods, power loss,
telecommunications failures, break-ins and similar events. The
Company does not presently have redundant, multiple-site capacity
in the event of any such occurrence. The Company's servers are
also vulnerable to computer viruses, break-ins and similar
disruptions from unauthorized tampering with the Company's computer
systems. The occurrence of any of these events could result in
interruption, which could have a detrimental effect on the
Company's business, results of operations and financial condition.
In addition, the Company's reputation could be materially and
adversely affected.
Risks Associated With New Services, Features and Functions.
There can be no assurance that the Company will be able to
expand its operations in a cost-effective or timely manner or that
any such efforts would maintain or increase overall market
acceptance. Furthermore, any new product or service launched by
the Company that is not favorably received by consumers could
damage the Company's reputation and diminish the value of its brand
name. Expansion of the Company's operations in this manner would
also require significant additional financial and operational
resources. The lack of market acceptance of the Company's products
and services could result in the Company's inability to generate
satisfactory revenues and its inability to offset their costs could
have a material adverse effect on the Company's business, results
of operations and financial condition.
Online Commerce Security Risks.
A significant barrier to online commerce and communications is
the secure transmission of confidential information over public
networks. The Company will rely on encryption and authentication
technology licensed from third parties to provide the security and
authentication technology to effect secure transmission of
confidential information, including, if necessary, customer credit
card numbers. There can be no assurance that advances in computer
capabilities, new discoveries in the field of cryptography, or
other events or developments will not result in a compromise or
breach of the technology used by the Company to protect customer
transaction data.
If any such compromise of the Company's security were to
occur, it could have damage the Company's reputation and,
consequently, its business, results of operations and financial
condition. Furthermore, a party who is able to circumvent the
Company's security measures could misappropriate proprietary
information or cause interruptions in the Company's operations.
The Company may be required to expend significant capital and other
resources to protect against such security breaches or to alleviate
problems caused by such breaches. Concerns over the security of
transactions conducted on the Internet and other online services
and the privacy of users may also inhibit the growth of the
Internet and other online services generally, especially as a means
of conducting commercial transactions. To the extent that
activities of the Company involve the storage and transmission of
proprietary information, such as credit card numbers, security
breaches could damage the Company's reputation and expose the
Company to a risk of loss or litigation and possible liability.
There can be no assurance that the Company's security measures will
prevent security breaches or that failure to prevent such security
breaches will not have a material adverse effect on the Company's
business, results of operations and financial condition.
Effect of Existing or Probable Government Regulations.
Government legislation has been proposed that imposes
liability for or prohibits the transmission over the Internet of
certain types of information. The imposition upon the Company and
other online providers of potential liability for information
carried on or disseminated through their services could require the
Company to implement measures to reduce its exposure to such
liability, which may require the Company to expend substantial
resources and/or to discontinue certain service offerings. In
addition, the increased attention focused upon liability issues as
a result of these lawsuits and legislative proposals could impact
the growth of Internet use.
The Company does not believe that existing regulations, most
of which were adopted prior to the advent of the Internet, govern
the operations of the Company's business nor have any claims been
filed by any state implying that the Company is subject to such
legislation. There can be no assurance, however, that State
government will not attempt to impose these regulations upon the
Company in the future or that such imposition will not have a
material adverse effect on the Company's business, results of
operations and financial condition. Several States have also
proposed legislation that would limit the uses of personal user
information gathered online or require online services to establish
privacy policies. The Federal Trade Commission has also recently
settled a proceeding with one online service regarding the manner
in which personal information is collected from users and provided
to third parties. Changes to existing laws or the passage of new
legislation, could create uncertainty in the marketplace that could
reduce demand for the services of the Company or increase the cost
of doing business as a result of litigation costs or increased
service delivery costs, or could in some other manner have a
detrimental effect on the Company's business, results of operations
and financial condition. In addition, because the Company's
services are accessible worldwide, and the Company may facilitate
sales of goods to users worldwide, other jurisdictions may claim
that the Company is required to qualify to do business as a foreign
corporation in particular states or foreign countries.
Due to the increasing popularity and use of the Internet and
other online services, it is possible that a number of laws and
regulations may be adopted with respect to the Internet or other
online services covering issues such as user privacy, freedom of
expression, pricing, content and quality of products and services,
taxation, advertising, intellectual property rights and information
security. The adoption of new laws or the application of existing
laws may decrease the growth in the use of the Internet, which
could in turn decrease the demand for the Company's services,
increase the Company's cost of doing business or otherwise have a
material adverse effect on the Company's business, results of
operations and financial condition.
Item 2. Description of Property.
The Company presently maintains its principal place of
business at 44489 Town Center Way, Suite D487, Palm Desert,
California 92260, a space provided to the Company, free of charge,
and space located at 44915 Golf Center Parkway, Suite 2, Indio,
California 92001.
Management believes that this space is suitable for the
Company's needs for the next twenty-four months.
Item 3. Legal Proceedings.
To the best knowledge of the officers and directors of the
Company, neither the Company nor any of its officers or directors
is a party to any material legal proceeding or litigation and such
persons know of no other material legal proceeding or litigation
contemplated or threatened. There are no judgments against the
Company or its officers or directors. None of the officers or
directors has been convicted of a felony or misdemeanor relating to
securities or performance in corporate office.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market For Common Equity and Related Stockholder Matters.
A. Market Information
The Common Stock of the Company is currently not traded on any
formal or national securities exchange. There is no trading market
for the Company's Common Stock at present and there has been no
trading market to date. Management is presently in discussions
with prospective market makers concerning the participation of such
market makers in the aftermarket for the Company's securities. The
Company anticipates approval for its securities to trade on the
NASD Over-The-Counter Bulletin Board ("OTC BB").
(i) There is currently no Common Stock which is subject to
outstanding options or warrants to purchase, or securities
convertible into, the Company's Common Stock.
(ii) There are currently 600,000 shares of Common Stock of the
Company which are eligible to be sold under Rule 144 under the
Securities Act of 1933 as amended or that the registrant has agreed
to register for sale by security holders.
(iii) There is currently no common equity that is being or is
proposed to be publicly offered by the registrant, the offering of
which could have a material effect on the market price of the
issuer's common equity.
B. Holders
As of the date of this filing, the Company had approximately
62 shareholders of record. Seven shareholders bought common stock
of the Company in a Rule 504 offering made in the State of New York
under its exemption statutes, with an opening Form D being filed
with the Securities and Exchange Commission on March 29, 1999. A
closing Form D notice was then timely filed on April 5, 1999,
closing the offering before the NASD's April 7, 1999 deadline. The
shares resulting from the 504 offering were issued without
restrictions as to resale. Subsequently, there have been several
sales and share exchanges by the Company's shareholders. On
October 25, 1999, the Company initiated a two-for-one forward stock
split and adjusted the par value from $0.0001 per share to $0.00005
per share. As of the date of this filing, thirty shareholders have
unrestricted stock (2,000,000 shares), and thirty-two shareholders
have restricted stock (3,000,000 shares) that are subject to Rule
144 exemptions at some point in the future. Some of these
restricted shares became eligible for trading beginning on January
12, 2000.
Applicability of Low-Priced Stock Risk Disclosure
Requirements.
The securities of the Company will be considered low-priced or
"designated" securities under rules promulgated under the Exchange
Act. Penny Stock Regulation Broker-dealer practices in connection
with transactions in "Penny Stocks" are regulated by certain rules
adopted by the Securities and Exchange Commission. Penny stocks
generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks
and the risk associated with the penny stock market. The
broker-dealer must also provide the customer with current bid and
offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock
held in the customer's account. In addition, the penny stock rules
generally require that prior to a transaction in a penny stock, the
broker-dealer must make a written determination that the penny
stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject
to the penny stock rules. When the Registration Statement becomes
effective and the Company's securities become registered, the stock
will likely have a trading price of less than $5.00 per share and
will not be traded on any national exchanges. Therefore, the
Company's stock will become subject to the penny stock rules and
investors may find it more difficult to sell their securities,
should they desire to do so.
C. Dividend Policy
The Company has not paid any dividends to date. In addition,
it does not anticipate paying dividends in the immediate
foreseeable future. The Board of Directors of the Company will
review its dividend policy from time to time to determine the
desirability and feasibility of paying dividends after giving
consideration to the Company's earnings, financial condition,
capital requirements and such other factors as the board may deem
relevant.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other
periodic reports as the Company may determine to be appropriate or
as may be required by law. The Company will be required to comply
with periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of
the Company is Alexis Stock Transfer, Inc., 43725 Monteray Avenue,
Suite "A", Palm Desert, California 92260.
Item 6. Management's Discussion and Analysis or Plan of
Operation.
(a) Plan of Operation.
During the fourth quarter of 1999, the Company had no revenue
from operations. At the beginning of the period, the Company had
cash on hand of $17,887. At the end of the same period, the
Company's cash on hand was $13,779, reflecting a net loss of
$4,108. The Company's net loss resulted from expenses for
accounting fees, rent, office expense and telephone. As a result,
the Company's Deficit Accumulated During Development Stage
increased from $8,163 to $32,271, during the fourth quarter of
1999.
Management intends to continue its general operational
strategy by soliciting customers from the greater Coachella Valley
area of the Inland Basin/Palm Springs regions of California, a
region currently under-serviced for purposes of Internet and
electronic commerce applications. This will be accomplished
through print media advertisement and by word-of-mouth through
existing contacts of the Company's President.
The Company has already solicited clients for listing on its
DesertYellowPages.com website, and has received tentative
commitments from some of these businesses to list. The commitments
are in the form of agreements to pay the proposed fees charged,
with a first month's fee assessed upon sign-up, in addition to a
one-time, associated charge for preparation and setup of the
website listing. The Company has chosen not to collect these
charges until the product is prepared and delivered to the
customer, at which time the pre-agreed fees are due and payable,
and the customer's information will be displayed on the website.
None of these customers have been asked to pay as of December 31,
1999, because the site had not been formalized for purposes of
displaying actual customer listings. Once DesertYellowPages.com is
completed and prepared for commercial use, then these customers
will constitute the initial listing resource and will provide
immediate income for the Company. This will aid the Company in
meeting its revenue goals, and will establish a cadre of satisfied
customers, who should in turn refer clients to the site.
Based upon the low monthly overhead associated with current
operations, the Company believes that it has sufficient cash on
hand to meet its anticipated needs for working capital, capital
expenditures and business expansion for the next six months of
operations, before any revenues are obtained. Should the business
expand, and if the needs of the clientele require further equipment
support, the Company will need to raise additional capital.
Shirley Bethurum, the former Secretary of the Company, has
committed to interest-free (if converted into common stock of the
Company) advances of the Company's operating costs, until such time
as the Company can generate sufficient revenues and/or an alternate
source of funding is secured.
Item 7. Financial Statements.
Report of Independent Auditors
We consent to the incorporation by reference in the Annual Report
on Form 10-KSB of our report dated March 7, 2000 of Clarion
Internet, Inc. for the year ended December 31, 1999.
Pinkham & Pinkham, P.C.
Certified Public Accountants
March 7, 2000
Cranford, New Jersey
<PAGE>
CLARION INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
TABLE OF CONTENTS
Report of Independent Auditors
Balance Sheet
Statement of Operations
Statement of Stockholders' Equity (Deficit)
Statement of Cash Flows
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clarion Internet Inc.
44489 Town Center Way
#D487
Palm Desert, CA 92260
We have audited the accompanying Balance Sheet of Clarion Internet
Inc. (a development stage company), as of December 31, 1999, and
the related statements of operations, stockholders' equity
(deficit) and cash flows for the period of January 8, 1999 (date of
inception) to December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe 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 Clarion
Internet Inc. (a development stage company) as of December 31, 1999
and the results of its operations and cash flows for the period
January 8, 1999 (date of Inception) to December 31, 1999, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note
5 to the financial statements, the Company is still in the
development stage and has no established source of revenue. This
raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also
described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
March 7, 2000
Pinkham & Pinkham, P.C.
Certified Public Accountants
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1999
ASSETS
Current Assets
Cash $ 13,779
-----------
$ 13,779
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,000
-----------
Stockholders' equity
Common stock, $.00005 par value
Authorized 100,000,000 shares
Issued and Outstanding
5,000,000 shares 250
Additional paid-in capital 44,800
Deficit accumulated during development stage (32,271)
-----------
12,779
-----------
$ 13,779
===========
See Notes to Financial Statements
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
Statement of Operations
For the Period January 8, 1999 (Date of Inception)
to December 31, 1999
Revenues $ -
Operations
General and administrative 32,271
-----------
Total expenses 32,271
-----------
Net loss $ (32,271)
===========
Net loss per common share $ (.02)
===========
Weighted average share of
Common stock outstanding 1,647,059
-----------
See Notes to Financial Statements
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
<TABLE>
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During
Common Stock paid-in Development
Shares Amount Capital Stage Total
------- ------ ---------- ---------- ----------
Inception date of
January 8, 1999 500,000 $ 50 $ - $ - $ 50
Common stock
issued 1,000,000 100 24,900 - 25,000
October 25, 1999
2 for 1 split par
value decreased from
.0001 to .00005 1,500,000 - - - -
December 15, 1999
Stock issued for services 2,000,000 100 19,900 - 20,000
Net loss - - - (32,271) (32,271)
--------- ------ --------- --------- ---------
Balance,
December 31, 1999 5,000,000 $ 250 $ 44,800 $ (32,271) $ 12,779
</TABLE>
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Period January 8, 1999 (Date of Inception)
to December 31, 1999
Cash flows from operating activities:
Net loss $ (32,271)
Adjustments to reconcile net loss to net cash
provided by operating activities.
Common stock issued for services 20,000
Changes in assets and liabilities:
Increase in current Assets -
Increase in current liabilities 1,000
-----------
Net cash used in operating activities (11,271)
Cash Flows from financing Activities
Issuance of common stock for cash 25,050
-----------
Net increase in cash 13,779
Cash - beginning of period -
-----------
Cash - end of period $ 13,779
===========
See accompanying notes to financial statements
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1-
History and Organization of the Company
On January 8, 1999, Clarion Internet Inc. (the "Company") was
incorporated under the laws of the State of Nevada. The
Company currently has no operations and, in accordance with
SFAS #7, is considered a development stage company.
Note 2-
Summary of Significant Accounting Policies
Accounting Method
The Company records income and expenses using the accrual
method of accounting.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Cash Equivalents
For the purpose of the statements of cash flows, all highly
liquid investments with a maturity of three months or less are
considered to be cash equivalents. There are no cash
equivalents as of December 31, 1999.
Adoption of Statement of Accounting Standard No. 123
In 1997, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"). SFAS 123 encourages, but does not require
companies to record at fair value compensation cost for
stock-based compensation plans. The Company has chosen to
account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and related
interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted
market price of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock.
The difference between the fair value method of SFAS-123 and
APB 25 is immaterial.
Adoption of Statement of Accounting Standard No. 128
In February 1997, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No.
128, "Earnings per Share" (SFAS 128). SFAS 128 changes the
standards for computing and presenting earnings per share
(EPS) and supersedes Accounting Principles Board Opinion No.
15, "Earnings per Share." SFAS 128 replaces the presentation
of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex
capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the
numerator and denominator of the diluted EPS computation. SFAS
128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods.
This Statement requires restatement of all prior-period EPS
data presented.
As it relates to the Company, the principal differences
between the provisions of SFAS 128 and previous authoritative
pronouncements are the exclusion of common stock equivalents
in the determination of Basic Earnings Per Share and the
market price at which common stock equivalents are calculated
in the determination of Diluted Earnings Per Share.
Basic earnings per common share is computed using the weighted
average number of shares of common stock outstanding for the
period. Diluted earnings per common share is computed using
the weighted average number of shares of common stock and
dilutive common equivalent shares related to stock options and
warrants outstanding during the period.
The adoption of SFAS 128 had no effect on previously reported
loss per share amounts for the year ended December 31, 1999.
For the year ended December 31, 1999, primary loss per share
was the same as basic loss per share and fully diluted loss
per share was the same as diluted loss per share.
Fair Value of Financial Instruments
The carrying amount of the Company's financial instruments,
which principally include cash, accounts payable and accrued
expenses, approximates fair value due to the relatively short
maturity of such instruments.
Income Taxes
Based upon present Internal Revenue regulations governing the
utilization of net operating loss carryovers, most of this
loss carryover may not be available to the Company.
The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes,
effective July 1993. SFAS No.109 requires the establishment
of a deferred tax asset for all deductible temporary
differences and operating loss carryforwards. Because of the
uncertainties discussed in Note 2, however, any deferred tax
asset established for utilization of the Company's tax loss
carryforwards would correspondingly require a valuation
allowance of the same amount pursuant to SFAS No. 109.
Accordingly, no deferred tax asset is reflected in these
financial statements.
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial
Accounting Standards No. 109, (SFAS # 109), "Accounting for
Income Taxes". A deferred tax asset or liability is recorded
for all temporary difference between financial and tax
reporting. Deferred tax expense (benefit) results from the
net change during the year of deferred tax assets and
liabilities. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or
greater chance the carry forwards will expire unused.
Accordingly, the potential tax benefits of the loss carry
forwards are offset by a valuation allowance of the same
amount.
Organization Costs
Costs incurred to organize the Company will be expensed as
incurred.
Note 3 -
Income Taxes
There is no provision for income taxes for the period ended
December 31, 1999, due to the net loss and no state income tax
in the state of the Company's domicile and operations, Nevada.
The Company's total deferred tax asset as of December 31, 1999
is as follows:
Net operating loss carry forward $ 12,271
Federal tax rate 15%
--------
Deferred tax asset 1,841
Valuation allowance (1,841)
--------
Net deferred tax asset $ -
========
The federal net operating loss carry forward will expire in
various amounts from 2016 to 2017. No tax benefit has been
reported in the financial statements, because the Company
believes there is a 50% or greater chance the carry forwards
will expire unused. Accordingly, the potential tax benefits
of the loss carry forwards are offset by a valuation allowance
of the same amount. There is no State tax asset as Nevada has
no Corporate state income tax.
Note 4-
Shareholders' Equity
Common Stock
As of January 8, 1999, Clarion Internet, Inc. authorized
100,000,000 shares of common stock with a $0.0001 par value.
500,000 of these shares were issued to the company's officers.
On March 29, 1999, Clarion Internet, Inc. had a limited
offering of 1,000,000 shares for $.025 per share and raised $
25,000.
Total shares issued and outstanding are 1,500,000 as of report
date.
On October 25, 1999 the company initiated a 2 for one stock
split bringing the number of shares outstanding to 3,000,000
and adjusting the par value from .0001 to .00005.
On December 15, 1999 the company paid an officer and director
for services rendered with 2,000,000 shares of common stock.
This brings the number of shares issued and outstanding to
5,000,000 shares as of December 31, 1999.
Note 5-
Going Concern
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
The Company has not established revenues sufficient to cover
its operating costs and allow it to continue as a going
concern. It is the intent of the Company to seek a merger
with an existing, operating company. Until that time, the
stockholders/officers and/or directors have committed to
advancing the operating costs of the Company.
Note 6-
Related Party Transactions
The Company neither owns nor leases any real or personal
property. An officer has provided office services without
charge. Such costs are immaterial to the financial statements
and accordingly are not reflected herein. The officers and
directors are involved in other business activities and most
likely will become involved in other business activities in
the future. If a specific business opportunity becomes
available, such persons may face a conflict of interest. A
Company policy for handling such a conflict has not yet been
formulated.
Note 7-
Common Stock
During the year ended December 31, 1999, the Company issued
common stock to an officer in exchange for services performed
totaling $20,000. The dollar amounts assigned to such
transactions have been recorded at the fair value of the
services received, because the fair value of the services
received was more evident than the fair value of the stock
surrendered.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act.
(a) Directors and Executive Officers:
Matthew Blansett, 35, has been President and a Director of the
Company since its inception, and in October of 1999, he was
appointed Secretary of the Company. Mr. Blansett has been teaching
in the Desert Sands Unified School District since 1994. Mr.
Blansett has taught language and technology-related courses, and
has been involved with the school district's Language Assessment
Team, its Technology Committee and its Technology Pilot Project.
Mr. Blansett received his Bachelors of Arts in Education and
Psychology from Central State University, Edmond, Oklahoma, in
1989. He has also completed the required course work for his
Masters in Education, in Instructional Technology, from the
California State University, at San Bernardino.
Mr. Blansett has extensive education and experience in
Internet service, web design and computer technology. He is
currently employed full time as the "Technology Mentor for the Year
2000" of the Desert Sands Unified School District. His
responsibilities include setup of each classroom within the
district with Internet access, web page design for each teacher,
Internet usage instruction for staff and students and classes on
design and creation of web pages. Mr. Blansett presently devotes
20-40 hours per week, depending upon the needs of the Company, to
furthering the business of the Company.
During the past five years, none of the officers or directors
of the Company has been subject to a bankruptcy petition, criminal
conviction, or any order, judgment or decree, not subsequently
reversed, suspended or vacated of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities, or found to be guilty
of any securities laws infractions.
(b) There are no significant employees who are not described
as executives above, and there are no family relationships among
directors, executive officers or any nominees to these positions.
Item 10. Executive Compensation.
<TABLE>
SUMMARY COMPENSATION TABLE
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Year Salary($) Bonus($) Other Restricted Securities LTIP All
Principal annual stock awards underlying payouts other
position compensation options/SARs ($) compen-
(Medical) (#) sation
($)
-----------------------------------------------------------------------------------------------------
Matthew 2000 12,000(1) 0 0 0 0 0 0
Blansett 1999 12,000(2) 0 0 0 0 0 0
(President,
Secretary &
Chairman)
The existing directors of the Company currently serve on a
non-compensated basis.
(1) Mr. Blansett has agreed to defer his salary, allowing it
to accrue until the Company is able to generate sufficient cash
flow funds to pay Mr. Blansett's salary.
(2) During the year ended December 31, 1999, the Company
issued 2,000,000 shares of Common Stock to Mr. Blansett in
exchange for services performed totaling $20,000.
</TABLE>
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
(a) Security ownership of certain beneficial owners. The
table below identifies any individual (including any "group") who
is known to the Company to be the beneficial owner of more than
five percent of any class of the small business issuer's voting
securities:
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Matthew Blansett 2,400,000 48.0%
30540 San Eljoy
Cathedral City, CA 92234
</TABLE>
(b) Security ownership of management. The table below sets forth
the ownership by all directors and nominees, each of the named executive
officers of the Company, and all directors and executive officers of the
registrant as a group.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Matthew Blansett 2,400,000 48.0%
30540 San Eljoy
Cathedral City, CA 92234
Common All Officers and
Directors as a Group
(two persons) 2,400,000 48.0%
</TABLE>
There are no agreements between or among any of the
shareholders which would restrict the issuance of shares in a
manner that would cause any change of control of the Company.
There are no voting trusts, pooling arrangements or similar
agreements in place between or among any of the shareholders, nor
do the shareholders anticipate the implementation of such an
agreement in the near term.
Item 12. Certain Relationships and Related Transactions.
Matthew Blansett (President, Secretary & Chairman) is
presently the owner-operator of the business and owns 2,400,000
shares or 48.0% of the issued and outstanding stock. The salary
for Mr. Blansett, $1,000 per month (deferred) was not established
by arms-length negotiations and may not be equivalent to salaries
of persons in similar positions in competitive companies. During
the year ended December 31, 1999, the Company issued 2,000,000
shares of Common Stock to Mr. Blansett in exchange for services
performed totaling $20,000. The dollar amounts assigned to such
transactions have been recorded at the fair value of the services
received, because the fair value of the services received was more
evident than the fair value of the stock surrendered.
During the preceding year, the Company conducted an offering
under Rule 504, raising a total of $25,000 in cash. This offer was
conducted by the officers of the company and no compensation was
paid to them for the funds raised. Expenses of the offering were
legal and accounting, and were satisfied from the proceeds of the
offering in the amount of $4,000. Neither the law firm nor the
accounting firm have any equity interest in the Company.
Item 13. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CLARION INTERNET, INC.
(Registrant)
Date: March 27, 2000 By: /s/ Matthew Blansett
Matthew Blansett
President, Secretary
and Chairman
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Date: March 27, 2000 By: /s/ Matthew Blansett
Matthew Blansett
President, Secretary
and Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 13779
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13779
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13779
<CURRENT-LIABILITIES> 1000
<BONDS> 0
0
0
<COMMON> 250
<OTHER-SE> 44800
<TOTAL-LIABILITY-AND-EQUITY> 13779
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32271
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (32271)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32271)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
