AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 2000.
REGISTRATION NO. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CLEARWORKS.NET, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 76-0576542
(Sate or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
2450 FONDREN, SUITE 200
HOUSTON, TEXAS 77063
(Address of Principal Executive Offices)
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CLEARWORKS.NET, INC.
2000 STOCK BONUS PLAN
(FULL TITLE OF THE PLAN)
----------------------
Name, Address and Telephone Copy of Communications to:
Number of Agent for Service:
ROBERT G. REEDY
MICHAEL T. MCCLERE PORTER & HEDGES, L.L.P.
2450 FONDREN, SUITE 200 700 LOUISIANA STREET
HOUSTON, TEXAS 77063 HOUSTON, TEXAS 77002-2764
(713) 334-2595 (713) 226-0600
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED
AMOUNT TO OFFERING MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER SHARE (1) OFFERING PRICE REGISTRATION FEE
------------------------------------ ------------- ------------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share 988,896 $ 4.94 $ 4,885,146.24 $ 1,289.68
</TABLE>
(1) Pursuant to Rule 457(c), the registration fee is calculated on the basis
of the average of the high and low prices for the Common Stock on the
American Stock Exchange Board on June 30, 2000, $4.94.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The following documents listed under this Part I and the documents
incorporated by reference under Item 3 of Part II to this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act, and are incorporated herein by reference.
ITEM 1. PLAN INFORMATION
The information required to be provided to participants pursuant to this
Item is set forth in the Information Memorandum for the 2000 Stock Bonus Plan.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The written statement required to be provided to participants pursuant
to this Item is set forth in the Information Memorandum referenced in Item 1
above.
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PROSPECTUS
CLEARWORKS.NET, INC.
----------------------
714,286
COMMON STOCK
----------------------
We have prepared this prospectus for use by the selling stockholders
identified in this prospectus to allow them to sell such shares without
restriction. The selling stockholders have indicated that sales may be made by
the methods described in the section entitled "Plan of Distribution" in this
prospectus. We will file a supplemental prospectus if required to do so by
applicable securities laws to describe specific sales of shares or to identify
any selling stockholders not listed in this prospectus.
OUR COMMON STOCK TRADES ON THE AMERICAN STOCK EXCHANGE UNDER THE SYMBOL
"CLW."
We will not receive any portion of the proceeds resulting from the sale
of the shares offered by the selling stockholders under this prospectus. In
addition, we will pay for certain of the expenses relating to the registration
of the shares.
Our principal executive offices are located at 2450 Fondren, Suite 200,
Houston, Texas 77063, and our telephone number is (713) 334-2595.
----------------------
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 4
OF THIS PROSPECTUS BEFORE DECIDING TO BUY OUR SECURITIES.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS PROSPECTUS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is July 3, 2000.
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TABLE OF CONTENTS
PAGE
Where You Can Find More Information.......................................... 2
Forward-Looking Statements................................................... 3
Risk Factors................................................................. 4
About Us..................................................................... 10
Use of Proceeds.............................................................. 10
Selling Stockholders......................................................... 11
Plan of Distribution......................................................... 12
Legal Matters................................................................ 13
Experts ..................................................................... 13
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-8 with the SEC to
register the securities offered hereby. This prospectus does not contain all of
the information contained in the registration statement, including its exhibits
and schedules. You should refer to the registration statement for further
information about us and the securities the selling stockholder is offering.
Statements made in this prospectus about certain contracts or other documents
are not necessarily complete. When we make such statements, we refer you to the
copies of those contracts or other documents that are filed as exhibits to the
registration statement, because those statements are qualified in all respects
by reference to those exhibits. The registration statement, including exhibits
and schedules, is on file at the offices of the SEC and may be inspected without
charge.
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings, including the registration
statement, are available to the public over the Internet at the SEC's website at
http://www.sec.gov. You also may read and copy any document we file at the SEC's
public reference rooms in Washington, D.C.; New York, New York; and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information about
the public reference rooms.
SEC rules allow us to include some of the information required to be in
the registration statement by incorporating that information by reference to
other documents we file with them. That means we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act of 1934 until all of the securities covered by this
prospectus are sold:
o Annual Report on Form 10-KSB for the year ended December 31, 1999,
filed on April 10, 2000, as amended on July 3, 2000;
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o Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000,
filed on May 22, 2000, as amended on July 3, 2000;
o Current Reports on From 8-K, filed on January 7, February 15, and May
31, 2000 and Form 8-K/A filed on March 16, March 28 and June 7, 2000;
and
o The description of our common stock contained in the Form 8-A filed
on May 24, 2000, including any amendments or reports filed to update
the description.
You may request a copy of these filings, which we will provide to you at
no cost, by writing or telephoning us at the following address:
ClearWorks.net, Inc.
2450 Fondren, Suite 200
Houston, Texas 77063
Attention: Stockholder Relations
(telephone: (713) 334-2595)
FORWARD-LOOKING STATEMENTS
The statements made in this prospectus or in the documents we have
incorporated by reference that are not statements of historical fact, are
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate" or "believe," or similar terminology.
The forward-looking statements include discussions about business
strategy and expectations concerning market position, future operations,
margins, profitability, liquidity and capital resources, and statements
concerning the integration into our business of the operations we have acquired.
Although we believe that the expectations in such statements are reasonable, we
can not give any assurance that those expectations will be correct.
We caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus.
Our operations are subject to several uncertainties, risks and other
influences, many of which are outside our control and any of which could
materially affect our results of operations and ultimately prove the statements
we make to be inaccurate.
Important factors that could cause actual results to differ materially
from our expectations are discussed under the heading "Risk Factors," and
elsewhere in this prospectus and in documents incorporated in this prospectus by
reference.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE DECIDING TO BUY OUR SECURITIES.
WE HAVE HAD OPERATING LOSSES IN THE PAST AND THERE IS NO GUARANTEE THAT WE WILL
AGAIN BE PROFITABLE.
We had net losses of $5,159,000 for the fiscal year ended December 31,
1999 and of $2,826,000 for the three- month period ended March 31, 2000.
Although we did have revenues of $3,032,000 for the fiscal year ended December
31, 1999, there is no assurance that our future operations will be profitable.
If we do not become profitable in the future, the value of our common stock may
fall and we could have difficulty obtaining funds to continue our operations. We
expect to continue incurring operating losses during the foreseeable future
while we expand our operations, infrastructure, service offerings and customer
base in our target markets.
SUCCESS OF OUR BUNDLED SERVICES DEPENDS ON OUR ABILITY TO FORM AND MAINTAIN
ALLIANCES WITH REAL ESTATE DEVELOPERS.
Our ability to form alliances with real estate developers to install
video, telephone and Internet communications networks in residential development
projects is necessary for the success of our business plan. The costs associated
with installing such bundled digital services in existing buildings or homes is
prohibitive. Therefore, our ability to expand our bundled digital services is
dependent on the alliances with land developers. We cannot assure you that we
can maintain those alliances or develop new alliances. Further, we depend on the
developers to promote our bundled digital services to purchasers of new homes.
We cannot assure you that the new home purchasers will utilize our services or
that we will be able to recoup our costs of installing the networks. Although we
have been delivering our bundled digital services to a number of customers, we
cannot assure you that customer demand for our bundled services will continue to
grow or be maintained.
IF WE DO NOT SUCCESSFULLY MAINTAIN OUR KEY RELATIONSHIPS WITH THIRD PARTY
VENDORS, OUR BUSINESS COULD BE ADVERSELY AFFECTED.
We rely on other companies, such as IBM, SIECOR, and Alcatel, to supply
certain key components for our bundled digital services, including, technology
to facilitate delivery of the bundled digital services, fiber optics cabling and
fiber technology and core electronics. While we have not experienced delays or
problems for such components, we cannot assure you that we will be able to
obtain such services on the scale and within the time frames required by us at
an affordable cost, or at all. Any failure to obtain such services on the scale
and within the time frames required by us at an affordable cost, or at all,
would have a material adverse effect on our business. Further, the loss of one
or more of our relationships with these organizations could have a material
adverse effect on our business, financial condition and results of operations.
WE MAY EXPERIENCE DIFFICULTIES DEVELOPING AND IMPLEMENTING OUR MARKETING AND
BUSINESS PLANS.
Although we began operations in 1997, our first launch of our bundled
digital services occurred in the second quarter of 1999. As a result, our
operating, sales and management and other strategies are still being developed,
and we do not have a history which may give us or you an indication of how we
may respond to situations presented to us. Our revenues were primarily derived
from our integration and wiring services. We anticipate focusing our wiring
services, not on product sales, but on structured wiring solutions to be
implemented for our bundled digital services. If we are not successful in
implementing our marketing and business plans on a timely basis or otherwise
effectively managing our development, our business, operating results and
financial condition will be materially adversely affected.
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THE SUCCESSFUL COMPLETION OF ANY STRATEGIC INVESTMENTS AND BUSINESS COMBINATIONS
MAY REQUIRE SUBSTANTIAL CAPITAL AND THE INTEGRATION OF THE ACQUIRED BUSINESS.
We may pursue one or more acquisitions of companies engaged in
businesses similar to or related to our business. As consideration for such
acquisitions, we may be required to incur additional indebtedness or issue
capital. We may not be able to obtain such financing on favorable terms or at
all. In addition, we may from time to time engage in discussions with potential
business partners looking toward formation of business combinations or strategic
alliances that would expand the reach of our networks or services. We also may
look to potential strategic investors who have expressed an interest in making
an investment in us. Such acquisitions, combinations or alliances, if
consummated, could divert our resources and our management's time, and would
require integration with our existing services. We may not be successful in
completing any acquisitions, combinations or alliances or, if consummated, these
transactions may not be on terms favorable to us or successfully integrated into
our operations.
WE ARE GROWING RAPIDLY AND MAY NOT BE ABLE TO SUSTAIN OUR RAPID GROWTH.
Because of our small size, we desire to continue to grow rapidly in
order to achieve economies of scale. Although there is no assurance that this
rapid growth will occur, to the extent that it does occur it will place a
significant strain on our financial, technical, operational and administrative
resources. If we fail to continue to upgrade our technical, administrative,
operating and financial control systems, or if unexpected difficulties occur,
our business, financial condition and results of operations could be negatively
affected and our growth rate could be slowed or eliminated. There can be no
assurance that we have made adequate allowances for the costs and risks
associated with this expansion, that our systems, procedures or controls will be
adequate to support our operations or that our management will be able to
achieve the rapid execution necessary to successfully offer our products and
services and implement our business plan simultaneously.
Our rapid growth has placed, and in the future will continue to place, a
significant strain on our administrative, operational and financial resources.
Failure to retain and attract additional management personnel who can manage our
growth effectively would have a material adverse effect on us and our growth. To
manage our growth successfully, we will have to continue to improve and upgrade
operational, financial, accounting and information systems, controls and
infrastructure as well as expand, train and manage our employees. Any failure by
our management to effectively anticipate, implement and manage the changes
required to sustain our growth could have a material adverse effect on our
business, results of operations and financial condition. We may not be able to
effectively manage such change.
OUR SUCCESS DEPENDS ON MAINTAINING THE EMPLOYMENT OF KEY PERSONNEL.
We are currently managed by a small number of key management and
operating personnel whose efforts will largely determine our success. Our
success also depends upon our ability to hire and retain qualified operating,
marketing, sales, financial, accounting and technical personnel. Competition for
qualified personnel in the telecommunications industry is intense and,
accordingly, we may not be able to continue to hire or retain necessary
personnel. The loss of key management personnel would likely have a material
adverse impact on our business, results of operations and financial condition.
WE DEPEND ON THE AVAILABILITY OF SKILLED LABOR WHICH IS DIFFICULT TO ATTRACT AND
RETAIN.
We are growing rapidly, and our future success will depend to a
significant extent upon our ability to attract, train and retain skilled
technical, management, sales, marketing and consulting personnel. Competition
for skilled personnel is intense. We may not be successful in attracting and
retaining the personnel necessary to conduct our business successfully. In
addition, our inability to attract, hire assimilate and retain such personnel
could have a material adverse effect on our business, financial condition and
results of operations.
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THE INDUSTRY IN WHICH WE OPERATE IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE WHICH
COULD RENDER OUR OPERATIONS OBSOLETE.
The voice, data and video convergence industry is subject to rapid and
significant technological changes that materially affect the continued use of
fiber optic cable or the electronics utilized in our networks. Future
technological changes, including changes related to the emerging wireline and
wireless transmission and switching technologies and Internet-related services
and technologies, could have a material adverse effect on our business, results
of operations and financial condition.
The market for our services is characterized by rapidly changing
technology, evolving industry standards, emerging competition and frequent new
product and service introductions. We may not be able to successfully identify
new service opportunities and develop and bring new services to market. Our
pursuit of necessary technological advances may require substantial time and
expense, and we may not succeed in adapting our services to meet these rapid
changes.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY AND MOST OF OUR COMPETITORS HAVE
MORE RESOURCES THAN WE DO.
Our bundled digital services business is in intense competition with
many cable, telephone and Internet companies, and competition is expected to
increase. Our ability to compete depends upon many factors, some of which are
beyond our control, including the timing of introduction of new products and
enhancements to existing products that we and our competitors have developed,
customer service and support, sales and marketing efforts, and the performance,
price and reliability of our products. We operate in a highly competitive
environment and currently do not have a significant market share in any of our
markets. We currently represent less than 1% of the domestic cable,
telecommunications, and Internet market. Our competition includes Internet
service providers, telecommunications companies and cable television companies
that have longer operating histories, longer customer relationships, and
substantially greater financial, management, technical development, sales,
marketing, and other resources. Most of our actual and potential competitors
have substantially greater financial, technical, marketing and other resources
(including brand name recognition) than we do. Also, the continuing trend toward
business alliances in the telecommunications industry and the absence of
substantial barriers to entry in the cable data and Internet services markets,
could give rise to significant new competition.
In each of our markets, our primary competitor with respect to
telecommunications is the incumbent local exchange carrier commonly referred to
in our industry as an ILEC, serving that geographic area. ILECs are established
providers of dedicated and local telephone services to all or virtually all
telephone subscribers within their respective service areas. ILECs also have
long-standing relationships with regulatory authorities at the federal and state
levels. We are considered a competitive local exchange carrier known in our
industry as a CLEC. In addition to the ILECs, we also face strong competition
from other CLECs. While recent FCC administrative decisions and initiatives
provide increased business opportunities to voice, cable, data and Internet
service providers such as us, they also provide the ILECs with increased pricing
flexibility for their private line and special access and switched access
services and increased opportunities for other CLECs. If future regulatory
decisions afford the ILECs increased access services, pricing flexibility or
other regulatory relief, such decisions could also have a material adverse
effect on us and other competitors to the ILECs.
In the local exchange market, we also face competition or prospective
competition from several other carriers, most of which have significantly
greater financial resources than us. For example, AT&T Communications, MCI
Worldcom and Sprint Corporation which historically have been purely long
distance carriers, have each begun to offer local telecommunications services in
major U.S. markets using their own facilities or by resale of the ILECs', other
CLECs' or other providers' unbundled network elements or services. In addition
to these long distance service providers, entities that currently offer or are
potentially capable of offering local switched services include companies that
have previously been known purely as competitive access providers, cable
television companies, electric utilities, microwave carriers, wireless telephone
system operators and large
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customers who build private networks. These entities, upon entering into
appropriate interconnection agreements or resale agreements with other CLECs or
with ILECs, including regional Bell operating companies, can offer single source
local and long distance services. New start-up companies also may enter markets
and provide services in competition with us. In addition, a continuing trend
towards business combinations and alliances in the telecommunications industry
may create significant new competitors. Most of these combined entities may have
resources far greater than ours. These combined entities may provide a bundled
package of telecommunications products, that is in direct competition with the
products offered by us.
We will also face competition from various fixed wireless services,
wireless communications services, FCC Part 15 unlicenced wireless radio devices,
and other services that use existing point-to-point wireless channels on other
frequencies. The FCC has issued or is in the process of issuing licenses for
these services to provide broadband integrated telecommunications services on a
point-to-point and/or point-to-multipoint basis. Many of these service providers
have already raised substantial capital and have commenced building their
wide-area networks, primarily in urban areas. Upon entering into appropriate
interconnection agreements with ILECs, these service providers can provide
integrated voice and data services comparable to those currently offered by us
or intended to be offered by us. Many of these companies have announced plans to
target small and medium-sized businesses and may enjoy certain advantages over
us with respect to the speed with which they can deploy their own facilities
directly serving end user premises to the extent that they need not lease or
resell "last mile" facilities from the ILEC.
With respect to mobile wireless telephone system operators, the FCC has
authorized cellular personal communications service and other cellular mobile
radio service, also known as CMRS, providers to offer wireless services to fixed
locations, rather than just to mobile customers, in whatever capacity such CMRS
providers choose. Previously, cellular providers could provide service to fixed
locations only on an ancillary or incidental basis. This authority to provide
fixed as well as mobile services will enable CMRS providers to offer wireless
local loop service and other services to fixed locations (e.g., office and
apartment buildings) in direct competition with us and other providers of
traditional wireless telephone service.
WE OPERATE IN A HIGHLY REGULATED INDUSTRY AND THERE CAN BE NO ASSURANCE THAT WE
WILL RECEIVE THE REGULATORY APPROVALS TO CONDUCT OUR OPERATIONS.
Under Federal Telecommunications Act of 1996, commonly referred to as
the FTA, state and local legal requirements which prohibit or have the effect of
prohibiting any entity from providing any intrastate or interstate
telecommunications service are preempted. States and local authorities continue
to have the authority to regulate, however, and to require telecommunications
carriers to obtain certification, licenses, permits or similar approvals before
providing services. Thus, our ability to provide additional intrastate services
is independent upon our receipt of requisite state regulatory approval. The
inability to obtain the necessary approvals could have a material adverse effect
on our business, results of operations and financial condition. We have received
CLEC status in Texas and Nevada. We can make no assurances that we will maintain
such certification or that we will receive CLEC status in any other state.
The FTA imposes a duty upon all ILECs to negotiate in good faith with
potential competitive telecommunications providers such as us to provide
interconnection to the ILEC's network, exchange local traffic, make unbundled
network elements available and permit resale of most local telephone services.
In the event that negotiations with the ILECs do not succeed, we have a right to
seek arbitration with the state regulatory authority of any unresolved issues.
Arbitration decisions involving interconnection arrangements in several states
have been challenged and appealed to federal courts.
Although passage of the FTA should result in increased opportunities for
companies that are competing with the ILECs or other CLECs, current or future
regulations adopted by the FCC or state regulators or other legislative or
judicial initiatives relating to the telecommunications industry could have a
material adverse effect on
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our business. In addition, although the FTA makes entry into the in-region long
distance market by regional Bell operating companies conditional upon their
offering of local interconnection arrangements to other telecommunications
service providers, these ILECs may nonetheless delay the timely implementation
of the required interconnection and other legal requirements.
Internet-related information services are not currently subject to
direct regulation by the FCC or any other U.S. agency other than regulation
applicable to businesses generally. The FCC is considering whether additional
regulations should be applied to Internet services and whether Internet service
providers, or ISPs, should pay interexchange access charges and universal
service fees. Moreover, as discussed below, the FTA and similar state laws
create civil and criminal penalties for the knowing transmission of "indecent"
material over the Internet. Additionally, the FTA may permit telecommunications
companies, regional Bell operating companies or others to increase the scope or
reduce the cost of their Internet access services. These and other changes in
the regulatory environment relating to the telecommunications or
Internet-related services industry could have an adverse effect on our
Internet-related services business.
We can make no assurances that appropriate regulatory approvals will
continue to be obtained, or that approvals required with respect to the
telephone and cable services for our bundled services will be obtained. The
enactment by Federal, state and governments of new laws regulations or a change
in the interpretation of existing regulations could cause a material adverse
affect for the market for our services if these laws or regulations require
significant capital outlays or restrictions on our businesses or if we fail to
maintain compliance with any newly enacted regulations.
THE POTENTIAL LIABILITY OF INTERNET ACCESS PROVIDERS IS UNCERTAIN.
The law governing the liability of on-line services providers and
Internet access providers for participating in the hosting or transmission of
objectionable materials or information currently is unsettled. Because we do not
hold ourselves out as editing or otherwise controlling the content of
communications that traverse our systems, we are generally unaffected by
government content regulation.
However, the ultimate imposition of potential liability on Internet
access providers for information which they host, distribute, or to transport
could materially change the way they must conduct business. To avoid undue
exposure to such liability, Internet access providers could be compelled to
engage in burdensome investigation of subscriber materials or even discontinue
offering services altogether. Any such event could have a material adverse
effect on our business, results of operations and financial condition.
THE SUCCESS OF OUR BUNDLED DIGITAL SERVICES IS SUBJECT TO MANY FACTORS BEYOND
OUR CONTROL.
The costs associated with integrating bundled digital services into
existing homes or buildings is prohibitive. Therefore, the success of our
bundled digital services is dependent on residential and commercial development
and construction. As such, we are subject to same national and regional economic
and demographic factors that affect demand in the housing industry generally.
These factors include inflation, the costs of raw materials, interest rates, the
availability of financing, and consumer confidence. Any of these factors could
cause development of residential and commercial properties to be limited or
discontinued which could cause a material adverse effect on the success on our
bundled digital services.
THERE IS A LIMITED TRADING MARKET FOR OUR COMMON STOCK.
On May 25, 2000, our common stock was listed on the American Stock
Exchange. We have no way to estimate what our average daily trading volume for
our common stock will be. Despite the increase in the number of shares of common
stock to be publicly held as a result of this offering, should additional equity
be issued, we cannot assure you that a more active trading market will develop.
Because there is a small public float in our common stock and it is thinly
traded, sales of small amounts of common stock in the public market could
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materially adversely affect the market price for our common stock. If a more
active market does not develop, we may not be able to sell shares in the future
promptly, for prices that we deem appropriate, or perhaps at all.
A BLOCK OF OUR STOCK IS OWNED BY INSIDERS.
As of June 28, 2000, our current officers and directors as a group,
together with their affiliates, beneficially owned approximately 33% of our
stock. Accordingly, these stockholders will have substantial influence over
policies and our management.
WE HAVE NOT PAID DIVIDENDS AND DO NOT EXPECT TO IN THE FORESEEABLE FUTURE, SO
OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR INVESTMENT
WITHOUT SELLING THEIR SHARES.
We have not paid dividends since our inception and do not expect to in
the foreseeable future, so our shareholders will not be able to receive a return
on their investments without selling their shares. We presently anticipate that
all earnings, if any, will be retained for development of our business. Any
future dividends will be subject to the discretion of our board of directors and
will depend on, among other things, future earnings, our operating and financial
condition, our capital requirements and general business conditions.
THE MARKET PRICE OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED BY SALES OF
SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC MARKET OR THE PERCEPTION THAT
SUCH SALES COULD OCCUR.
As of June 28, 2000, we had 24,334,925 shares of common stock
outstanding. Approximately 4,510,606 additional shares of common stock were
issuable upon the exercise of outstanding options, warrants and convertible
securities. The market price of our common stock could be adversely affected by
sales of substantial amounts of common stock in the public market or the
perception that such sales could occur.
ABOUT US
We provide voice, data and video transmission services to residential
and commercial customers located primarily in the Houston, Texas area. We also
have officers in San Antonio, Texas, Las Vegas, Nevada and Phoenix, Arizona. Our
services consist of installing and maintaining fiber optic cable and copper
wire. We then sell Internet access, telephone service, and television
programming over those lines. We refer to our ability to simultaneously offer
telephone, Internet and video products as "Bundled Digital Services".
Our main corporate office is located at 2450 Fondren, Suite 200,
Houston, Texas 77063. Our telephone number is (713) 334-2595 and our fax number
is (713) 334-6565.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common
stock offered by the selling stockholders.
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SELLING STOCKHOLDERS
The following table sets forth certain information concerning the
selling stockholders. Assuming that the selling stockholders offer all of their
shares of common stock, the selling stockholders will not have any beneficial
ownership. The shares are being registered to permit the selling stockholders
and certain of their respective pledgees, donees, transferors or other
successors in interest to offer the shares for resale from time to time. See
"Plan of Distribution."
<TABLE>
<CAPTION>
NUMBER OF
SHARES OWNED NUMBER OF PERCENTAGE OF
AND TO BE OWNED NUMBER OF SHARES OWNED SHARES
PRIOR TO OFFERING SHARES BEING AFTER OWNED AFTER
SELLING STOCKHOLDER POSITION (1)(2) OFFERED (2) OFFERING(2)(3) OFFERING(2)
------------------------- ------------------ ------------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Michael T. McClere (4)... Chief Executive 5,950,842 357,143 5,593,699 23%
Officer, Chairman
of The Board, and
Director
Shannon D. McLeroy (5)... Chief Operating 2,712,769 357,143 2,355,625 9.68%
Officer, President
and Secretary
</TABLE>
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(1) The selling stockholder has sole voting and sole investment power with
respect to all shares owned.
(2) Ownership is determined in accordance with Rule 13d-3 under the Exchange
Act. The actual number of shares beneficially owned and offered for sale
hereunder is subject to adjustment and could be materially less or more
than the estimated account indicated depending upon factors which we
cannot predict at this time.
(3) Assumes the sale of all shares offered hereby to persons who are not
affiliates of the selling stockholder.
(4) Represents 357,143 shares issued pursuant to the Stock Bonus Plan. Also
includes Class A warrants to purchase 210,000 shares of common stock
held by Mr. McClere, Class A warrants to purchase 50,000 shares held by
the Rachel McClere 1998 Trust and Class A warrants to purchase 200,000
shares held by the McClere Family Trust. The Class A warrants currently
are exercisable at an exercise price of $3.00 per share until the
warrants expire on April 24, 2003. Also includes Class B warrants to
purchase 210,000 shares of common stock held by Mr. McClere, Class B
warrants to purchase 50,000 shares held by the Rachel McClere 1998 Trust
and Class B warrants to purchase 200,000 shares held by the McClere
Family Trust. The Class B warrants currently are exercisable at an
exercise price of $6.00 per share until the warrants expire on April 24,
2008. Also includes 312,500 shares held by the Rachel McClere 1998 Trust
and 1,250,000 shares held by the McClere Family Trust. Also includes
1,500,000 shares of common stock and warrants to purchase 480,000 shares
of common stock, all of which are held by Tech Technologies Services
LLC. Mr. McClere owns 90 percent of the outstanding equity interests in
Tech Technologies. The warrants held by Tech Technologies consist of the
following: (A) currently exercisable Class A warrants to purchase
240,000 shares of common stock at an exercise price of $3.00 per share
until the warrants expire on April 24, 2003, and (B) currently
exercisable Class B warrants to purchase 240,000 shares of common stock
at an exercise price of $6.00 per share until the warrants expire on
April 24, 2008.
(5) Represents 357,143 shares issued pursuant to the Stock Bonus Plan. Also
includes immediately exercisable Class A warrants to purchase 300,000
shares of common stock at an exercise price of $3.00 per share until the
warrants expire on April 24, 2003. Also includes immediately exercisable
Class B warrants to purchase 300,000 shares of common stock at an
exercise price of $6.00 per share until the warrants expire on April 24,
2008. Also includes 625 shares held by Mr. McLeroy's wife.
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PLAN OF DISTRIBUTION
The selling stockholders may sell shares of our common stock in
transactions on exchanges or markets as our common stock may be then listed for
trading. Shares may be sold in privately-negotiated transactions, in
underwritten offerings, or by a combination of such methods of sale. Sales of
shares of common stock may be made at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. As used in this prospectus,
"selling stockholders" includes pledgees, donees, transferees and other
successors in interest to the selling stockholders selling shares received from
a selling stockholder after the date of this prospectus. The selling
stockholders may effect such transactions by selling the shares of common stock
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the selling
stockholders or the purchasers of the shares for whom such broker-dealers may
act as agent or to whom they sell as principal, or both (which compensation to a
particular broker-dealer might be in excess of customary commissions).
Other methods by which selling stockholders may sell shares of our
common stock include, without limitation:
o "at the market" to or through market makers or into an existing
market for our common stock,
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents,
o through transactions in options or swaps or other derivatives,
whether exchange-listed or otherwise,
o through block trades,
o through short sales, or
o any combination of any such methods of sale.
The selling stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to those broker
dealers of the common stock offered by this prospectus, which common stock such
broker-dealers may resell under this prospectus. The selling stockholders may
also make sales under Rule 144 of the Securities Act if an exemption from
registration is available.
The selling stockholders and any broker-dealers who act in connection
with the sale of shares of our common stock under this prospectus may be deemed
to be "underwriters" as that term is defined in the Securities Act, and any
commissions received by them and profit on any resale of the shares of our
common stock as principal might be deemed to be underwriting discounts and
commissions under the Securities Act.
Under certain registration rights agreements with certain of the selling
stockholders, we have agreed to indemnify certain of the selling stockholders
and each underwriter, if any, against certain liabilities, including certain
liabilities under the Securities Act as amended, or will contribute to payments
such selling stockholders or underwriters may be required to make in respect of
certain losses, claims, damages or liabilities.
After we are notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of common
stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
o the name of each such selling stockholder and of the participating
broker-dealer(s),
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o the type and number of securities involved,
o the price at which such securities were sold,
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
o that such broker-dealer(s) did not conduct any investigations to
verify the information set out or incorporated by reference in this
prospectus, and
o other facts material to the transaction.
LEGAL MATTERS
The legality of the securities offered hereby will be passed on for us
by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The audited financial statements of ClearWorks.net, Inc. appearing in
our Annual Report (Form 10-KSB) for the year ended December 31, 1999, have been
audited by KPMG LLP, independent auditors, as set forth in their report thereon.
Such financial statements are incorporated herein by reference in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATED OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by ClearWorks.net, Inc., a Delaware
corporation (the "Company" or "Registrant"), with the Securities and Exchange
Commission ("Commission") are incorporated into this registration statement
("Registration Statement") by reference:
o Annual Report on Form 10-KSB for the year ended December 31, 1999,
filed on April 10, 2000, as amended on July 3, 2000;
o Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000,
filed on May 22, 2000, as amended on July 3, 2000;
o Current Reports on From 8-K, filed on January 7, February 15, and May
31, 2000 and Form 8-K/A filed on March 16, March 28 and June 7, 2000;
and
o The description of our common stock contained in the Form 8-A filed
on May 24, 2000, including any amendments or reports filed to update
the description.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the filing date of this Registration
Statement and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents. The Company will provide without
charge to each participant in the Stock Bonus Plan, upon written or oral request
of such person, a copy (without exhibits, unless such exhibits are specifically
incorporated by reference) of any or all of the documents incorporated by
reference pursuant to this Item 3.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL permits a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action.
In a suit brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of the
case, and the corporation may not
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indemnify for amounts paid in satisfaction of a judgment or in settlement of the
claim. In any such action, no indemnification may be paid in respect of any
claim, issue or matter as to which such persons shall have been adjudged liable
to the corporation except as otherwise provided by the Delaware Court of
Chancery or the court in which the claim was brought. In any other type of
proceeding, the indemnification may extend to judgments, fines and amounts paid
in settlement, actually and reasonably incurred in connection with such other
proceeding, as well as to expenses (including attorneys' fees).
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interest of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable to
criminal actions and to actions brought by or in the name of the corporation.
The determination as to whether a person seeking indemnification has met the
required standard of conduct is to be made (i) by a majority vote of a quorum of
disinterested members of the board of directors, or (ii) by independent counsel
in a written opinion, if such a quorum does not exist or if the disinterested
directors so direct, or (iii) by the stockholders.
The above discussion of our certificate of incorporation and bylaws and
the DGCL is not intended to be exhaustive and is qualified in its entirety by
the certificate, bylaws and statute.
The Eleventh Article of the Certificate of Incorporation of the Company
provides that the Company shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 6.10 of the Company's Bylaws provides that the Company shall
indemnify all of its officers and directors, past, present and future, against
any and all expenses incurred by them, including but not limited to legal fees,
judgments and penalties which may be incurred, rendered or levied in any legal
action brought against any or all of them for or on account of any act or
omission alleged to have been committed while acting within the scope of their
duties as officers or directors of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------
4.1 2000 Stock Bonus Plan
5.1 Opinion of Porter & Hedges, L.L.P. with respect to legality of
securities (filed herewith).
23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).
23.2 Consent of KPMG LLP (filed herewith).
24.1 Powers of Attorney (included on signature page).
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<PAGE>
ITEM 9. UNDERTAKINGS
(a) UNDERTAKING TO UPDATE
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement; and
(iii) include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) UNDERTAKING WITH RESPECT TO DOCUMENTS INCORPORATED BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) UNDERTAKING WITH RESPECT TO INDEMNIFICATION
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with
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<PAGE>
the securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registration
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 3rd day of July,
2000.
CLEARWORKS.NET, INC.
By: /s/ MICHAEL T. MCCLERE
Michael T. McClere
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael T. McClere or Shannon D. McLeroy and each
or either of them his true and lawful attorney-in- fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all pre- and post-effective
amendments and supplements to this Registration statement, and to file the same,
or caused to be filed the same, with all exhibits thereto, and to her documents
in connection therewith, with the Securities and Exchange Commission, granting
unto such attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or the substitute or substitutes of him, may lawfully do or cause to be
done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on this 3rd day of July 2000.
SIGNATURE TITLE
/s/ MICHAEL T. MCCLERE Chairman of the Board, Chief Executive Officer
Michael T. McClere and Director (Principal Executive Officer)
/s/ SHANNON D. MCLEROY Chief Operating Officer, President and Secretary
Shannon D. McLeroy (Principal Financial Officer & Principal
Accounting Officer)
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SIGNATURE TITLE
/s/ D. DENNIS MAJESKI Director
D. Dennis Majeski
___________________________ Director
Raymond G. Harrell, III
/s/ HAL PETERSON Director
Hal Peterson
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------
4.1 2000 Stock Bonus Plan
5.1 Opinion of Porter & Hedges, L.L.P. with respect to legality of
securities (filed herewith).
23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).
23.2 Consent of KPMG LLP (filed herewith).
24.1 Powers of Attorney (included on signature page).
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