AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON MARCH 16, 2000
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ClearWorks.net, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 76-0576542
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2450 Fondren, Suite 200, Houston, Texas 77063
- --------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
CLEARWORKS.NET, INC.
1999 LONG-TERM INCENTIVE PLAN
AND
1998 STOCK WARRANT PLAN
- --------------------------------------------------------------------------------
(Full titles of the plans)
Michael T. McClere, Chief Executive Officer
ClearWorks.net, Inc.
2450 Fondren, Suite 200
Houston, Texas 77063
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(713) 334-2595
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(Telephone number, including area code, of agent for service)
Copy to:
Alan L. Talesnick, Esq.
Francis B. Barron, Esq.
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, Colorado 80264
(303) 830-1776
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of securities to be Amount to be offering price per aggregate offering Amount of
registered (1) registered unit price registration fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock that may be 10,000,000 -- (2) -- (2) -- (2)
issued pursuant to
Registrant's 1999 Long Term
Incentive Plan
- ------------------------------------------------------------------------------------------------------------------------
Common Stock that may be 5,000,000 -- (2) -- (2) -- (2)
issued pursuant to
Registrant's 1998 Stock
Warrant Plan
- ------------------------------------------------------------------------------------------------------------------------
TOTALS 15,000,000 -- (2) -- (2)
========================================================================================================================
</TABLE>
(1) Consists of 10,000,000 shares issued or issuable pursuant to the Company's
1999 Long-Term Incentive Plan and 5,000,000 shares issued or issuable
pursuant to the Company's 1998 Stock Warrant Plan. Pursuant to Rule 416(c)
under the Securities Act of 1933, this registration statement also covers
an indeterminate amount of interests to be offered or sold pursuant to the
1999 Long Term Incentive Plan.
(2) The registration fee for these shares previously was paid in connection
with Registrant's registration statements on Form S-8 which were filed with
the Commission on December 29, 1999 (File No. 333-93781) and January 27,
2000 (File No. 333-95515). In accordance with General Instruction E to Form
S-8, no additional registration fee is necessary with respect to these
shares.
2
<PAGE>
INCORPORATION OF EARLIER REGISTRATION STATEMENT BY REFERENCE
This Registration Statement on Form S-8 of ClearWorks.net, Inc. (the
"Company") incorporates by reference the contents of the Company's Registration
Statement on Form S-8 (File No. 333-93781) as filed with the Securities And
Exchange Commission (the "Commission") on December 29, 1999 and the contents of
the Company's Registration Statement on Form S-8 (File No. 333-95515) as filed
with the Commission on January 27, 2000.
THE PLANS
This Registration Statement relates to 10,000,000 shares of common stock
issuable upon the exercise of stock options or stock awards that have been
granted or may be granted to key employees of the Company and its subsidiaries
and others pursuant to the Company's 1999 Long-Term Incentive Plan (the "1999
Plan"). The 1999 Plan was approved by our Board Of Directors on May 12, 1999 and
is subject to approval by the Company's stockholders at the 2000 Annual Meeting
Of Stockholders. No shares may be issued pursuant to the 1999 Plan unless and
until the 1999 Plan is approved by the stockholders. Pursuant to the 1999 Plan,
an aggregate of 10,000,000 share of common stock may be granted to key employees
and other persons who have contributed or are contributing to our success.
Alternatively, options to purchase common stock, stock appreciation rights or
cash may be granted instead of outright awards of stock. The options that may be
granted pursuant to the 1999 Plan may be either incentive options qualifying for
beneficial tax treatment for the recipient or nonqualified options.
This Registration Statement also relates to 5,000,000 shares of common
stock issuable upon the exercise of stock options that have been granted or may
be granted to key employees of the Company and its subsidiaries and others
pursuant to the Company's 1998 Stock Warrant Plan (the "1998 Plan"). The 1998
Plan was approved by our Board Of Directors on May 12, 1999. Pursuant to the
1998 Plan, we may issue warrants to purchase common stock to key employees,
directors and other persons who have contributed or are contributing to our
success. The maximum number of shares underlying all warrants that may be
granted pursuant to the 1998 Plan is limited to 5,000,000 shares.
THIS REGISTRATION STATEMENT
This registration statement relates to two separate prospectuses.
Items 1 and 2 of this Part I, and the documents incorporated herein by
reference pursuant to Item 3 of Part II of this Form S-8, constitute the first
prospectus relating to offers by our employees, consultants and others of up to
10,000,000 shares of common stock that may be issued pursuant to our 1999 Plan
and of up to 5,000,000 shares of common stock that may be issued pursuant to our
1998 Plan. Pursuant to the requirements of Form S-8 and Rule 428, we will
deliver or cause to be delivered to plan participants any required information
as specified by Rule 428(b)(1). The second prospectus, referred to as the
re-offer prospectus, relates to the re-offer or resale of any shares which are
deemed to be control securities or restricted securities under the Securities
Act of 1933.
Neither the 1999 Plan nor the 1998 Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974. Participants in either plan may
obtain additional information regarding the plans by calling us at (713)
334-2595 or writing to us at ClearWorks.net, Inc., Attention: Stockholder
Relations, 2450 Fondren, Suite 200, Houston, Texas 77063.
3
<PAGE>
REOFFER PROSPECTUS
CLEARWORKS.NET, INC.
15,000,000 Shares Of Common Stock
This prospectus relates to the transfer of up to 15,000,000 shares of
common stock of ClearWorks.net, Inc. by the selling stockholders identified in
this prospectus who may receive common stock pursuant to the plans described in
this prospectus. The shares have been, or will be, acquired by the selling
stockholders upon the exercise of options and warrants granted under our 1999
Long-Term Incentive Plan and 1998 Stock Warrant Plan, or other stock awards
pursuant to the 1999 Long-Term Incentive Plan.
The selling stockholders may sell their shares at market prices prevailing
at the time of transfer, prices related to the prevailing market prices, or
negotiated prices. Brokerage fees or commissions may be paid by the selling
stockholders in connection with sales of shares.
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders. However, we will receive proceeds from the exercise, if
any, of options and warrants that have been or may be granted pursuant to the
plans.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"CLWK". On March 15, 2000, the closing price of the common stock was $8.75 per
share.
Investing in our shares involves certain risks. See the "Risk Factors"
section beginning on page 4.
Neither the Securities And Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is March 16, 2000
<PAGE>
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TABLE OF CONTENTS
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PROSPECTUS SUMMARY..........................................................3
RISK FACTORS................................................................4
THE COMPANY.................................................................6
SELLING STOCKHOLDERS........................................................6
PLAN OF DISTRIBUTION........................................................9
LEGAL MATTERS...............................................................9
EXPERTS.....................................................................9
SECURITIES AND EXCHANGE COMMISSION POSITION ON
CERTAIN INDEMNIFICATION.....................................................9
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS AND
CAUTIONARY STATEMENTS.......................................................9
WHERE YOU CAN FIND MORE INFORMATION.........................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................10
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights information contained in this
prospectus. It may not be complete and may not contain all the information
that
you should consider before investing in the Common Stock. You should read this
entire prospectus carefully, including the "RISK FACTORS" section.
The Company We provide voice, data and video transmission
services to residential and commercial customers
located primarily in the Houston, Texas area. Our
services consist of installing and maintaining
fiber optic cable. We then sell Internet access,
telephone service, and television programming over
those lines.
The Offering The selling stockholders may use this prospectus
to sell a total of 15,000,000 shares of common
stock. The shares have been or will be acquired by
the selling stockholders pursuant to our 1999
Long-Term Incentive Plan and 1998 Stock Warrant
Plan.
We will not receive any proceeds from sales of
common stock as described in this prospectus.
However, we will receive proceeds from the
exercise, if any, of options and warrants to
purchase shares of common stock, which options or
warrants have been or may be issued pursuant to
the Plans.
Company Offices Our offices are located at 2450 Fondren, Suite
200, Houston, Texas 77063, telephone number (713)
334-2595.
3
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors that
affect us, together with the other information contained in this prospectus.
We have had operating losses in the past and there is no guarantee that we will
again be profitable.
We had net losses of $252,316 for the fiscal year ended December 31, 1998
and of $757,000 for the nine-month period ended September 30, 1999. Although we
did have net earnings of $8,338 for the fiscal year ended December 31, 1997,
there is no assurance that our future operations will again be profitable.
We depend on key employees and our business may suffer if we lose either of
these employees.
We are highly dependent on the services of Michael T. McClere, our Chairman
of the Board and Chief Executive Officer, and Shannon D. McLeroy, our President
and Secretary. The loss of either or both of Mr. McClere or Mr. McLeroy could
hurt our business. We do not carry "key man" life insurance on Mr. McClere or
Mr. McLeroy, and there is no guarantee that we could replace either at an
affordable compensation level.
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, and if we fail to attract or retain such personnel our
business could suffer.
Many of our competitors have more resources than we do.
Our Bundled Digital Services sm 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.
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. We currently
represent less than 1% of the domestic cable, telecommunications, and Internet
market.
We believe that our strengths in attracting customers include: referrals
from existing customers; our sales and marketing efforts, including
establishment of strategic relationships within the residential and commercial
real estate markets; customer service; and the overall cost-effectiveness of our
products. We believe that these strengths will assist our efforts to attract a
share of the ever-increasing market of customers who are requiring that their
telephone, video and Internet services be provided by a single company. However,
this trend also could cause greater competition, resulting in increased pricing
pressures which could negatively affect our business, results of operations and
financial condition.
4
<PAGE>
New government regulation could hurt our business.
Our telecommunication and cable products are regulated by the federal,
state and local governments. We are generally required to obtain regulatory
approvals in connection with providing telephone and television services. For
example, the cable and satellite television industry is regulated by the
Congress and the Federal Communications Commission (the "FCC"), and various
legislative and regulatory proposals under consideration from time to time may
substantially affect our business. There is no guarantee that new laws or
regulations will not affect our operations or that appropriate regulatory
approvals will continue to be obtained.
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.
Our common stock is subject to penny stock regulation.
The Securities and Exchange Commission (the "Commission") has adopted rules
that regulate broker-dealer practices in connection with transactions in "penny
stocks". Generally, penny stocks are equity securities with a price of less than
$5.00 (other than securities registered on national securities exchanges or
quoted on the NASDAQ system). When our shares are traded for less than $5 per
share, as they currently are, the shares will be subject to the Commission's
penny stock rules unless (1) our net tangible assets exceed $5,000,000 during
our first three years of continuous operations or $2,000,000 after our first
three years of continuous operations; or (2) we have had average revenue of at
least $6,000,000 for the last three years. 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 prescribed by the
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer also must 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 require that prior to
a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These 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. As long as the common stock is subject to the
penny stock rules, stockholders may find it difficult to sell their common
stock.
There may be no market for the common stock, and stock prices have been
volatile.
There may be no ready market for the common stock and an investor cannot
expect to liquidate his investment regardless of the necessity of doing so.
Investors should recognize the illiquidity of an investment in the common stock.
Also, there has been an extremely limited public market for the common stock,
and there is no assurance that the market will be sustained or will expand.
5
<PAGE>
The price of the common stock is highly volatile. Due to the low price of
the common stock, many brokerage firms may not deal with the common stock
because it may not be economical for them to do so. This could have an adverse
effect on developing and sustaining the market for the common stock. In
addition, there is no assurance that an investor will be in a position to borrow
funds using the common stock as collateral.
For the foreseeable future, trading in the common stock, if any, will occur
in the over-the-counter market and the securities will be quoted on the OTC
Bulletin Board. The closing price for the common stock on March 15, 2000 was
$8.75. We do not anticipate that the common stock will qualify for listing on
the NASDAQ stock market or any other market or exchange in the near future.
Holders of the common stock may be unable to sell their common stock when they
wish to do so, if at all. In addition, the free transferability of the common
stock will depend on the securities laws of the various states in which it is
proposed the common stock be traded.
A block of our stock is owned by insiders.
As of March 15, 2000, our current officers and directors as a group,
together with their affiliates, beneficially owned approximately 38.6 percent of
our stock.
THE COMPANY
We sell voice, data and video transmission services to residential and
commercial customers. Our operations are primarily focused in the Houston, Texas
area and we also have a small office in Las Vegas, Nevada. In addition, we have
entered into agreements to begin offering similar services to customers in the
San Antonio, Texas area.
In order to provide our services, we install and maintain fiber optic and
copper data transmission lines from our data transmission facilities to our
prospective customers' properties. After the lines have been installed, we sell
our customers telephone service, access to the Internet, and cable and satellite
television programs, all of which are transmitted in digital format over the
same lines. We refer to our ability to simultaneously offer telephone, Internet
and video products as "Bundled Digital Services sm", and we have applied for
trademark protection for the term Bundled Digital Services sm.
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.
SELLING STOCKHOLDERS
We are registering, on behalf of the selling stockholders, a total of
10,000,000 shares of common stock that may be issued pursuant to the 1999 Plan
and a total of 5,000,000 shares that may be issued pursuant to the 1998 Plan.
These shares may be issued to the selling stockholders upon (1) the grant of
stock awards pursuant to the 1999 Plan, (2) the exercise, if any, of options to
purchase common stock, which options have been or may be granted pursuant to the
1999 Plan, or (3) the exercise, if any, of warrants to purchase common stock,
which warrants have been or may be issued pursuant to the 1998 Plan.
6
<PAGE>
If shares are issued to the selling stockholders as described above, the
selling stockholders, or their donees, pledgees, transferees or other successors
in interest, may choose to sell their shares from time to time on any national
securities exchange or quotation service (including the OTC Bulletin Board), in
the over-the counter market or through the writing of options, at market prices
prevailing at the time of the sale, in privately negotiated transactions or
through a combination of these methods. In addition, the selling stockholders,
or their donees, pledgees, transferees or other successors in interest, may
choose one or more of the following alternatives:
* a block trade in which a broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal in order to facilitate the transaction;
* purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus; and
* ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
The selling stockholders may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the shares in the
course of hedging in positions they assume. The selling stockholders also may
sell shares short and deliver shares to close out short positions, or loan or
pledge shares to broker-dealers that in turn may sell the shares.
If the selling stockholders sell shares to or through underwriters,
broker-dealers or agents, such underwriters, brokers, dealers or agents may
receive commissions in the form of discounts, concessions or commissions from
the selling stockholder or commissions from purchasers of shares from whom they
may act as agent or to whom they may sell as principal. Any particular
discounts, concessions or commissions regarding particular underwriters,
broker-dealers or agents may be in excess of those customary for the types of
transactions involved.
The selling stockholders and any broker-dealers who act in connection with
the sale of their shares of our common stock under this prospectus may be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities Act
of 1933 and any commissions received by them and profit on any resale of their
shares of our common stock as principals might be deemed to be underwriting
discounts and commissions under the Securities Act.
The following table sets forth the name and position of each prospective
selling stockholder who is a director or executive officer of our company; the
number of shares of common stock owned as of the date of this prospectus,
including shares which may be acquired pursuant to the exercise of outstanding
options and warrants; and the number of shares and the percentage of all
outstanding shares owned assuming the sale of all the shares covered by this
prospectus.
7
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<TABLE>
<CAPTION>
After Offering
--------------
Number Of Shares Number Of Shares
Owned Prior To Covered By Number Of
Name Position Offering (1) Prospectus Shares Percent
---- -------- ------------ ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Michael T. McClere Chief Executive Officer, 6,103,699 (2) 500,000 5,603,699 25.1%
Chairman Of The Board,
and Director
Shannon D. McLeroy President and Secretary 2,875,625 (3) 500,000 2,375,625 11.1%
Carl A. Chase Chief Financial Officer 400,000 (4) 400,000 -0- -0-
</TABLE>
- --------------
(1) "Beneficial ownership" is defined in the regulations promulgated by the
U.S. Securities and Exchange Commission as having or sharing, directly or
indirectly (i) voting power, which includes the power to vote or to direct
the voting, or (ii) investment power, which includes the power to dispose
or to direct the disposition, of shares of the common stock of an issuer.
The definition of beneficial ownership includes shares underlying options
or warrants to purchase common stock, or other securities convertible into
common stock, that currently are exercisable or convertible or that will
become exercisable or convertible within 60 days. Unless otherwise
indicated, the beneficial owner has sole voting and investment power.
(2) Includes options to purchase up to 500,000 shares of common stock at an
exercise price of $2.00 per share, which options will be exercisable until
December 9, 2004. These options were granted pursuant to the 1999 Plan and
will become exercisable only upon approval of the 1999 Plan by the
stockholders. 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.
(3) Includes options to purchase up to 500,000 shares of common stock at an
exercise price of $2.00 per share, which options will be exercisable until
December 9, 2004. These options were granted pursuant to the 1999 Plan and
will become exercisable only upon approval of the 1999 Plan by the
stockholders. 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.
(4) Consists of options to purchase up to 400,000 shares of common stock for
$.25 per share until December 9, 2004. Exercise of these options is subject
to stockholder approval of the 1999 Plan. Upon receipt of stockholder
approval, options to purchase 100,000 of these shares will then be
immediately exercisable and options to purchase 100,000 shares will become
exercisable on each of August 16, 2001, August 16, 2002 and August 16,
2003.
8
<PAGE>
PLAN OF DISTRIBUTION
15,000,000 shares may be offered by the selling stockholders pursuant to
this prospectus, including 6,027,500 shares underlying issued and outstanding
warrants and options. Warrants to purchase 3,010,000 shares currently are
exercisable and options to purchase 1,277,375 shares will become exercisable
upon approval of the 1999 Plan by our stockholders. We will not receive proceeds
from any sales of the 15,000,000 shares described in this prospectus. Any funds
received upon the exercise of options or warrants covered by this prospectus
will be added to our working capital.
LEGAL MATTERS
Patton Boggs LLP, Denver, Colorado, has acted as our counsel in connection
with this offering, including the validity of shares that may be offered by this
prospectus.
EXPERTS
The audited financial statements of ClearWorks.net, Inc. appearing in our
Form 10-SB/A-3 filed with the Securities And Exchange Commission on October 20,
1999 have been examined by McManus & Co., P.C., certified public accountants.
These financial statements are incorporated into this prospectus by reference to
that Form 10-SB/A-3 in reliance upon the report of that firm included with the
financial statements and upon the authority of that firm as experts in auditing
and accounting.
SECURITIES AND EXCHANGE COMMISSION
POSITION ON CERTAIN INDEMNIFICATION
Pursuant to Delaware law, our Board Of Directors has the power to indemnify
officers and directors, present and former, for expenses incurred by them in
connection with any proceeding they are involved in by reason of their being or
having been an officer or director. The person being indemnified must have acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to our best interests. Our Bylaws grant this indemnification to our
officers and directors.
To the extent that indemnification for liability arising under the
Securities Act may be permitted to directors, officers or persons controlling
our company pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore
unenforceable.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS AND
CAUTIONARY STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact included in this prospectus,
including without limitation the statements under "Prospectus Summary" and "Risk
Factors", regarding our financial position, business strategy, plans and
objectives for future operations and capital expenditures, are forward-looking
statements. Although we believe that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, we can give no assurance that the
expectations will prove to have been correct.
9
<PAGE>
Additional statements concerning important factors that could cause actual
results to differ materially from our expectations ("Cautionary Statements") are
disclosed in the "Risk Factors" section and elsewhere in this prospectus. All
written and oral forward-looking statements attributable to us or persons acting
on our behalf subsequent to the date of this prospectus are expressly qualified
in their entirety by the Cautionary Statements.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-8 we filed
with the Commission under the Securities Act. This prospectus does not contain
all the information included in the registration statement and exhibits to the
registration statement. Statements included in this prospectus concerning the
content of any contract or other document referred to are not necessarily
complete. For further information, please review the registration statement and
to the exhibits and schedules filed with the registration statement. In each
instance where a statement contained in this prospectus regards the contents of
any contract or other document filed as an exhibit to the registration
statement, you should review the copy of that contract or other document filed
as an exhibit to the registration statement for complete information. Those
statements are qualified in all respects by this reference.
We are subject to the periodic reporting and other informational
requirements of the Exchange Act. The reports and other information that we file
with the Commission can be inspected and copied at public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
Room 1024 and at the following regional offices of the Commission: 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade
Center, New York, New York 10048. Copies of these materials also can be obtained
at prescribed rates by writing to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549. Documents filed electronically by us
with the Commission are available at the Commission's World Wide Web site at
http://www.sec.gov. The SEC's World Wide Web site contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission. Information about the operation of the
Commission's public reference facilities may be obtained by calling the
Commission at 1-800-SEC-0330.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means: incorporated documents are considered part of this
prospectus; we can disclose important information to you by referring to those
documents; and information we file with the Securities And Exchange Commission
will automatically update and supersede this incorporated information.
We incorporate by reference the documents listed below, which were filed
with the Commission under the Exchange Act:
* Our Quarterly Report on Form 10-QSB for the quarter ended September
30, 1999 which was filed with the Commission on November 12, 1999.
* The description of our common stock contained in our General Form For
Registration Of Securities on Form 10-SB/A-3 which was filed with the
Commission on October 20, 1999; and
10
<PAGE>
* Any reports filed under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this prospectus and prior to
the termination of the offering made under this prospectus.
We will provide without charge to each person to whom a copy of this
prospectus has been delivered, upon request, a copy of any or all of the
documents referred to above that have been or may be incorporated in this
prospectus by reference. Requests for such copies should be directed to
ClearWorks.net, Inc., Attention: Stockholder Relations, 2450 Fondren, Suite 200,
Houston, Texas 77063, (713) 334-2595.
* * * * *
11
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation Of Documents By Reference.
- -------------------------------------------------
The documents listed in (a) and (b) below are incorporated by reference in
the registration statement. All documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, prior to the filing of a post-effective amendment 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 the
registration statement and to be part thereof from the date of the filing of
such documents.
(a) Our Quarterly Report on Form 10-QSB for the quarter ended September
30, 1999 which was filed with the Commission on November 12, 1999;
(b) The description of our common stock contained in our General Form For
Registration Of Securities on Form 10-SB/A-3 which was filed with the
Commission on October 20, 1999; and
(c) Any reports filed under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this prospectus and prior to
the termination of the offering made under this prospectus.
Item 4. Description Of Securities.
- ----------------------------------
Employees may receive "Stock Appreciation Rights" which may consist of a
right to receive a payment, in cash or common stock, equal to the excess of the
"Fair Market Value" or other specified valuation of a specified number of shares
of common stock on the date the stock appreciation rights is exercised over
specified strike price as set forth in the applicable award agreement. For this
purpose, "Fair Market Value" shall be based upon the highest and lowest sales
price per share of common stock on the consolidated transaction reporting system
for the principal such national securities exchange on that date. If no sale was
so reported on that date, "Fair Market Value" shall be determined as of the last
preceding date on which such a sale was so reported.
Item 5. Interest Of Named Experts And Counsel.
- ----------------------------------------------
Not applicable.
Item 6. Indemnification Of Officers And Directors.
- --------------------------------------------------
The provisions of the General Corporation Law of Delaware provide for the
indemnification of the directors and officers of the Company. These provisions
generally permit indemnification of directors and officers against costs,
liabilities and expenses of any threatened, pending or completed action, suite
or proceeding that any such person may incur by reason of serving in such
positions if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interest of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such persona had been adjudged to be liable
II-1
<PAGE>
to the corporation, unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper. Any determination that indemnification of a director or an
officer, unless ordered by the court, must be made by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than quorum; or if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion; or by the
stockholders.
In addition to the general indemnification section, Delaware law provides
further protection for directors under Section 102(b)(7) of the General
Corporation Law of Delaware. This section was enacted in June 1986 and allows a
Delaware corporation to include in its Certificate Of Incorporation a provision
that eliminates and limits personal liability of a director for monetary damages
for breaches of the director's fiduciary duty of care, provided that any such
provision does not (in the words of the statute) do any of the following:
"eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under section 174 of this Title [dealing with willful
or negligent violation of the statutory provision concerning
dividends, stock purchases and redemptions], or (iv) for any
transaction from which the director derived an improper personal
benefit. No such provision shall eliminate or limit the liability
of a director for any act or omission occurring prior to the date
when such provision becomes effective. . ."
The Eleventh Article of the Articles 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.
II-2
<PAGE>
Item 8. Exhibits.
- ------- ---------
4.1 Long-Term Incentive Plan (Incorporated by reference to
Exhibit 10(f) to Registrant's Form 10-SB filed on June 30,
1999.)
4.2 Stock Warrant Plan (Incorporated by reference to Exhibit 10(g)
to Registrant's Form 10-SB filed on June 30, 1999.)
4.3 Specimen Warrant Certificate (Incorporated by reference to
Exhibit 4.2 to Registrant's registration statement on
Form S-8 filed on December 29, 1999).
5.1 Opinion of Patton Boggs LLP regarding legality.
23.1 Consent of Patton Boggs LLP (included in Exhibit 5.1).
23.2 Consent of McManus & Co., P.C.
24.1 Power of Attorney (included in Part II of this registration
statement under the caption "Signature").
II-3
<PAGE>
Item 9. Undertakings.
- ------- -------------
(a) The undersigned Company 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;
(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 set forth in the registration
statement;
(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 Company pursuant to Section 13 or Section 15(d) of the Exchange Act
and are incorporated by reference to 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies and verifies 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 the 16th day of
March, 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 the undersigned officers and directors
of the Registrant, by virtue of their signatures to this registration statement
appearing below, hereby constitute and appoint Michael T. McClere or Shannon D.
McLeroy and each or either of them, with full power of substitution, as
attorneys-in-fact in their names, place and stead to execute any and all
amendments to this registration statement in the capacities set forth opposite
their name and hereby ratify all that said attorneys-in-fact and each of them or
his substitutes may do by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael T. McClere Chief Executive Officer (Principal March 16, 2000
- -------------------------------- Executive Officer); Chairman Of The
Michael T. McClere Board; and Director
/s/ Shannon D. McLeroy President; and Secretary March 16, 2000
- --------------------------------
Shannon D. McLeroy
/s/ Carl A. Chase Chief Financial Officer; and Treasurer March 16, 2000
- -------------------------------- (Principal Financial Officer and
Carl A. Chase Principal Accounting Officer)
/s/ Dennis Majeski Director March 16, 2000
- --------------------------------
Dennis Majeski
Director March __, 2000
- --------------------------------
Raymond G. Harrell III
</TABLE>
II-5
<PAGE>
Exhibit Index
4.1 Long-Term Incentive Plan (Incorporated by reference to
Exhibit 10(f) to Registrant's Form 10-SB filed on June
30,1999.)
4.2 Stock Warrant Plan (Incorporated by reference to Exhibit
10(g) to Registrant's Form 10-SB filed on June 30, 1999.)
4.3 Specimen Warrant Certificate (Incorporated by reference to
Exhibit 4.2 to Registrant's registration statement on Form S-8
filed on December 29, 1999).
5.1 Opinion of Patton Boggs LLP regarding legality.
23.1 Consent of Patton Boggs LLP (included in Exhibit 5.1).
23.2 Consent of McManus & Co., P.C.
24.1 Power of Attorney (included in Part II of this registration
statement under the caption "Signature").
Exhibit 5.1
Patton Boggs LLP
1660 Lincoln Street
Suite 1900
Denver, Colorado 80264
(303) 830-1776
March 16, 2000
ClearWorks.net, Inc.
2450 Fondren, Suite 200
Houston, Texas 77063
Gentlemen and Ladies:
We have acted as counsel for ClearWorks.net, Inc., a Delaware corporation
(the "Company"), in connection with preparation of the Company's Registration
Statement on Form S-8 (the "Registration Statement") under the Securities Act of
1933, as amended, concerning registration of the transfer of up to an aggregate
of 15,000,000 shares (the "Shares") of the Company's $.001 par value common
stock (the "Common Stock"). The share consists of (1) up to an aggregate of
10,000,000 Shares that may be issued pursuant to stock awards that may be
granted pursuant to the Company's 1999 Long-Term Incentive Plan (the "1999
Plan") or that may be issued upon the exercise of options to purchase Common
Stock, which options have been or may be issued pursuant to the 1999 Plan, and
(2) up to 5,000,000 Shares that may be issued upon the exercise of warrants to
purchase Common Stock, which warrants have been or may be issued pursuant to the
Company's 1998 Stock Warrant Plan (the "1998 Plan").
We have examined the Certificate Of Incorporation and Bylaws of the
Company, the record of the Company's corporate proceedings concerning the
registration described above, the 1999 Plan and 1998 Plan. In addition, we have
examined such other certificates, agreements, documents and papers, and we have
made such other inquiries and investigations of law as we have deemed
appropriate and necessary in order to express the opinion set forth in this
letter. In our examinations, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, photostatic, or
conformed copies and the authenticity of the originals of all such latter
documents. In addition, as to certain matters we have relied upon certificates
and advice from various state authorities and public officials, and we have
assumed the accuracy of the material and the factual matters contained therein.
Subject to the foregoing and on the basis of the aforementioned
examinations and investigations, it is our opinion that the Shares, if and when
issued as contemplated by the 1999 Plan or 1998 Plan, as the case may be, and as
described in the Registration Statement, will have been duly authorized and
legally issued, and will constitute fully paid and non-assessable shares of the
Company's Common Stock.
<PAGE>
We hereby consent (a) to all references to this firm in the Registration
Statement; and (b) to the filing of this opinion as an exhibit to the
Registration Statement.
This opinion is to be used solely for the purpose of the registration of
the Shares and may not be used for any other purpose.
Very truly yours,
/s/ PATTON BOGGS LLP
PATTON BOGGS LLP
PB: ALT/FBB
Exhibit 23.2
McManus & Co., P.C.
Certified Public Accountants
INDEPENDENT AUDITORS' CONSENT
------------------------
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 pertaining to the 1999 Long-Term Incentive
Plan and 1998 Stock Warrant Plan of ClearWorks.net, Inc. (the "Company"). We
also consent to the incorporation by reference therein of our report dated May
18, 1999 with respect to the consolidated financial statements of the Company
and its subsidiaries for the year ended December 31, 1998 as included in its
Form 10-SB/A-3 filed with the Securities And Exchange Commission on October 20,
1999.
Morris Plains, New Jersey
March 14, 2000
/s/ McManus & Co., P.C.
-------------------------------------
McManus & Co., P.C.
