<PAGE>
As filed with the Securities and Exchange Commission on August 25, 1999
Registration No. 333-80639
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Amendment No. 10
to
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
bamboo.com, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 7379 52-2129710
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
----------------
124 University Avenue
Palo Alto, CA 94301
(650) 325-6787
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
LEONARD B. McCURDY
Chairman and Chief Executive Officer
bamboo.com, Inc.
124 University Avenue
Palo Alto, CA 94301
(650) 325-6787
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Please send copies of all communications to:
Mario M. Rosati, Esq. Kenton J. King, Esq.
Issac J. Vaughn, Esq. Gregory C. Smith, Esq.
Wilson Sonsini Goodrich & Rosati, P.C. Skadden, Arps, Slate, Meagher & Flom
650 Page Mill Road LLP
Palo Alto, CA 94304 525 University Avenue, Suite 220
(650) 493-9300 Palo Alto, CA 94301
(650) 470-4500
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. +
+Bamboo.com may not sell these securities until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+prospectus is not an offer to sell these securities, and it is not soliciting +
+an offer to buy these securities in any state where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--AUGUST 25, 1999
PROSPECTUS
- --------------------------------------------------------------------------------
4,000,000 Shares
bamboo.com, Inc.
Common Stock
[LOGO OF BAMBOO.COM APPEARS HERE]
- --------------------------------------------------------------------------------
bamboo.com is offering 4,000,000 shares of its common stock in an initial
public offering.
bamboo.com provides 360-degree virtual tours of real estate properties on the
Internet.
It is anticipated that the public offering price will be $7.00 per share.
Application has been made to include the shares for quotation in the Nasdaq
National Market under the symbol "BAMB".
$10 million of the net proceeds from the offering will be used to redeem shares
of Series C redeemable preferred stock owned by VantagePoint Venture Partners
III, L.P. and VantagePoint Communication Partners, L.P.
<TABLE>
<CAPTION>
Per Share Total
<S> <C> <C>
Initial public offering price................................ $ $
Underwriting discounts and commissions....................... $ $
Proceeds, before expenses, to bamboo.com..................... $ $
</TABLE>
See "Risk Factors" on pages 8 to 16 for factors that should be considered
beforeinvesting in the shares of bamboo.com.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
- --------------------------------------------------------------------------------
The underwriters may purchase up to 376,000 additional shares from us and up to
224,000 additional shares from the selling stockholders at the public offering
price less the underwriting discounts and commissions, solely to cover over-
allotments. Delivery and payment for the shares will be on , 1999.
Prudential Securities
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
Volpe Brown Whelan & Company
E*OFFERING
, 1999
<PAGE>
There is the old way to search
for a home. And then there's the
bamboo.com 360 degree Virtual Tour.
[LOGO OF BAMBOO.COM APPEARS HERE]
<PAGE>
BAMBOO.COM 360 VIRTUAL TOURS ENABLE HOME SELLERS, HOME BUYERS, AND REAL ESTATE
AGENTS TO HARNESS THE POWER OF THE INTERNET.
NOW, AFTER YOU SEARCH FOR A HOME ONLINE, A VIRTUAL TOUR IS ONLY A CLICK AWAY!
OUR BAMBOO.COM SERVICE PROVIDERS CAN SHOOT VIDEO IN OVER 100 METROPOLITAN
AREAS ACROSS NORTH AMERICA
[PICTURES OF WEB PAGES FEATURING BAMBOO.COM VIRTUAL TOURS]
[PICTURE OF VIDEOGRAPHER]
<PAGE>
HOME BUYER LOOK INSIDE HOMES FOR SALE ON THE INTERNET FROM THE COMFORT OF YOUR
HOME OR OFFICE, 24 HOURS PER DAY, 7 DAYS A WEEK.
HOME SELLER SHOW YOUR HOME TO POTENTIAL BUYERS ON THE INTERNET WITH AN ONLINE
OPEN HOUSE.
REAL ESTATE AGENTS A NEW INTERNET MARKETING TOOL THAT HELPS YOU PROVIDE VALUE TO
BOTH BUYERS AND SELLERS.
EACH OF OUR VIRTUAL TOURS CAN BE VIEWED AS A CONVENIENT STAND-ALONE APPLICATION
AND INSTANTLY DISTRIBUTED ANYWHERE IN THE WORLD BY EMAIL.
[PICTURE OF EMAIL VIRTUAL TOUR]
"WE ACTIVELY ENCOURAGE RE/MAX ASSOCIATES TO STAY ON THE CUTTING EDGE OF
TECHNOLOGY, AND CERTAINLY OFFERING A VIRTUAL TOUR OF REAL ESTATE IS ONE OF THE
MOST EXCITING CONSUMER SERVICES AVAILABLE TODAY. BAMBOO.COM HAS CREATED A
WIN-WIN FOR EVERYONE WITH ITS AFFORDABLE AND TURNKEY VIRTUAL HOME TOURS FOR REAL
ESTATE AGENTS, AND EASY ACCESS FOR THE CONSUMER, WITH NO INTERNET PLUG-INS OR
DOWNLOADS REQUIRED. BY FAR, IT'S THE BEST VIRTUAL TOUR PRODUCT ON THE MARKET
TODAY." DAVE LINIGER, CO-FOUNDER AND CHAIRMAN, RE/MAX INTERNATIONAL, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 4
Risk Factors........................ 8
Forward Looking Statements.......... 17
Use of Proceeds..................... 18
Dividend Policy..................... 18
Capitalization...................... 19
Dilution............................ 20
Selected Consolidated Financial
Data............................... 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 22
Business............................ 28
<CAPTION>
Page
----
<S> <C>
Management.......................... 39
Interests of Management and Others
in Transactions.................... 48
Principal Stockholders.............. 51
Description of Capital Stock........ 53
Shares Eligible for Future Sale..... 57
Underwriting........................ 58
Legal Matters....................... 60
Experts............................. 60
Available Information............... 60
Index to Consolidated Financial
Statements......................... F-1
</TABLE>
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the information contained in
this prospectus is accurate as of any date other than the date on the front
cover of this prospectus.
3
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and may not contain all of the information that
investors should consider before investing in the common stock of bamboo.com.
Investors should read the entire prospectus carefully.
bamboo.com
We are a provider of 360-degree virtual tours of real estate properties on
the Internet. Bamboo.com virtual tours provide a more complete visual
representation of a property than traditional still photographs, allowing
viewers to easily pan left or right or zoom in for a closer view. We provide a
comprehensive virtual tour service to real estate agents that includes
videotaping the inside and outside of a home or other property, processing the
videotape into a complete virtual tour and distributing the virtual tour. We
distribute our virtual tours to a variety of Web sites, including real estate
destination sites and Internet portals. We also distribute our virtual tours by
email to real estate agents for easy redistribution to their clients and
prospective home buyers. Utilizing our extensive service provider network, we
offer our virtual tour service in over 200 cities, towns, boroughs and counties
across the United States and Canada. Although we have recently experienced
growth in our sales, we have a history of significant losses, and as of June
30, 1999, we had an accumulated deficit of $19.0 million.
According to the United States Department of Commerce, the market for all
housing and related products and services was in the aggregate over $900
billion in 1997, representing 11.5% of the United States gross domestic product
and is one of the largest sectors of the economy. The largest segment of the
U.S. real estate industry is the market for existing home sales. According to
the National Association of Realtors, which is comprised of approximately
720,000 residential and commercial real estate agents, there were approximately
5 million existing home sales in the United States in 1998, representing $625
billion in transaction value. As the real estate industry increasingly
leverages the geographic reach and rich media potential of the Internet, we
believe virtual tours will become a standard method to market real estate, the
way still photographs are a standard method today.
In order to accelerate the adoption and enhance the benefits of our
bamboo.com virtual tours, we have established key relationships to provide our
virtual tours to the following leading real estate destination Web sites:
. REALTOR.com, the official Web site of the National Association of
Realtors;
. HomeSeekers.com;
. Microsoft HomeAdvisor;
. Homes.com;
. HomeBuilder.com; and
. LoopNet.
Our virtual tours are exclusively promoted, marketed and endorsed by the
HomeStore.com, REALTOR.com and HomeBuilder.com Web sites. Our virtual tours are
also promoted, marketed and endorsed exclusively by HomeSeekers.com, Inc. on
the HomeSeekers.com site. Under these exclusive arrangements these real estate
destination Web sites will not promote or market on their Web sites or through
their direct sales forces any virtual tours other than bamboo.com virtual
tours. Our agreements with the other real estate destination sites enable our
virtual tours to be posted on these sites but do not include exclusive
promotional or marketing arrangements. These real estate destination Web sites
provide a broad distribution network for our virtual tours but we do not
currently receive any significant revenue from these Web sites.
4
<PAGE>
These Web sites also provide real estate content to Internet portals. As a
result, our virtual tours can currently be viewed on America Online, @Home
Network, Excite, GO Network/Infoseek, Netscape Netcenter and Yahoo!
We have also established relationships with real estate brokerage firms,
multiple listing services and companies that provide technology to the real
estate industry.
Our objective is to be the leading global provider of online virtual tours to
the real estate industry. We plan to achieve this goal by pursuing the
following key strategies:
. Aggressively grow our virtual tour business;
. Establish bamboo.com as the dominant brand for online virtual tours;
. Develop new key relationships;
. Continue to enhance our virtual tour experience;
. Expand our virtual tour business to other real estate segments;
. Pursue e-commerce opportunities; and
. Pursue international expansion opportunities.
We originally incorporated in Ontario, Canada in 1995. On January 1, 1999 we
reorganized our business as a Delaware corporation. We changed our name from
Jutvision Corporation to bamboo.com, Inc. in April 1999. Our principal
executive offices are located at 124 University Avenue, Palo Alto, California
94301. Our telephone number at this location is 650-325-6787. Our Web site
address is www.bamboo.com. Information contained on our website does not
constitute part of this prospectus. bamboo.com and the bamboo.com logo are
trademarks of bamboo.com, Inc. Each trademark, trade name or service mark of
any other company appearing in this prospectus belongs to its holder.
5
<PAGE>
The Offering
<TABLE>
<S> <C>
Shares offered by bamboo.com........ 4,000,000 shares
Total shares outstanding after this
offering........................... 20,383,650 shares
Use of proceeds .................... For working capital and general corporate
purposes and to redeem the Series C
redeemable preferred stock.
Proposed Nasdaq National Market
symbol............................. BAMB
</TABLE>
The common stock to be outstanding after the offering is based on the shares
outstanding as of June 30, 1999. The shares outstanding include all outstanding
shares of Class B common stock.
The common stock to be outstanding excludes:
. 6,027,386 shares of common stock issuable as of June 30, 1999 upon the
exercise of outstanding stock options issued at a weighted average
exercise price of $0.28 per share under our stock option plan;
. 280,000 shares of common stock issuable upon the exercise of an
outstanding warrant;
. 197,608 shares of common stock reserved for issuance under our stock
option plan; and
. 700,000 shares of common stock reserved for issuance under our employee
stock purchase plan.
Except as otherwise indicated, information in this prospectus assumes the
following:
. The conversion of all outstanding shares of Series A and Series B
preferred stock into shares of common stock upon the consummation of
this offering;
. A 2.8-for-one split of our outstanding common stock to be effected prior
to the consummation of this offering;
. The redemption of all outstanding shares of Series C redeemable
preferred stock upon the consummation of this offering;
. The filing of our amended and restated certificate of incorporation, the
provisions of which are summarized in "Description of Capital Stock;"
and
. No exercise of the underwriters' over-allotment options.
Risk Factors
You should consider the risk factors before investing in bamboo.com's common
stock and the impact from various events which could harm our business.
6
<PAGE>
Summary Consolidated Financial Data
The following table summarizes our consolidated statements of operations for
the years ended December 31, 1997 and 1998 and our unaudited consolidated
statements of operations for the six month periods ended June 30, 1998 and 1999
and our unaudited consolidated balance sheet as of June 30, 1999 on an actual
and pro forma as adjusted basis. See our consolidated financial statements and
related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Six Months Ended
Consolidated Statement of Years ended December 31, June 30,
Operations Data: -------------------------- -------------------------
1997 1998 1998 1999
------------ ------------- ----------- ------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues................ $ 45,553 $ 77,410 $ 39,391 $ 536,074
Cost of revenues........ 15,204 67,710 34,155 449,035
----------- ------------- ----------- ------------
Gross profit............ 30,349 9,700 5,236 87,039
Operating expenses:
Sales and marketing.... 9,672 883,469 417,485 5,768,969
General and
administrative........ 122,034 723,607 406,208 3,002,080
Research and
development........... 41,567 242,917 252,954 296,480
Stock-based
compensation.......... -- -- -- 6,955,478
----------- ------------- ----------- ------------
173,273 1,849,993 1,076,647 16,023,007
----------- ------------- ----------- ------------
Loss from operations.... (142,924) (1,840,293) (1,071,411) (15,935,968)
Interest income......... -- -- -- 123,534
Interest expense........ -- -- -- (81,298)
----------- ------------- ----------- ------------
Net loss................ (142,924) (1,840,293) (1,071,411) (15,893,732)
Beneficial conversion
feature of Series B
convertible preferred
stock.................. -- -- -- (1,000,000)
----------- ------------- ----------- ------------
Net loss attributable to
common stockholders.... $ (142,924) $ (1,840,293) $(1,071,411) $(16,893,732)
=========== ============= =========== ============
Net loss per common
share--basic and
diluted................ $ (0.05) $ (0.31) $ (0.22) $ (2.14)
=========== ============= =========== ============
Weighted average common
shares--basic and
diluted................ 2,818,873 5,953,169 4,855,128 7,894,274
=========== ============= =========== ============
</TABLE>
<TABLE>
<CAPTION>
As of June 30, 1999
-----------------------
(unaudited)
Pro Forma
Actual As Adjusted
Consolidated Balance Sheet Data: ----------- -----------
<S> <C> <C>
Cash and cash equivalents.............................. $18,157,878 $32,142,878
Working capital ....................................... 16,064,367 30,049,367
Total assets .......................................... 20,627,506 34,612,506
Debt: Series C redeemable preferred stock ............. 4,452,398 --
Total stockholders' equity ............................ 13,026,626 31,464,024
</TABLE>
The preceding consolidated balance sheet data is shown on a pro forma as
adjusted basis to give effect to:
. Conversion of all outstanding shares of Series A and Series B preferred
stock into shares of common stock upon the consummation of this offering;
. Redemption of all outstanding shares of Series C redeemable preferred
stock upon the consummation of this offering; and
. The sale of shares of common stock by bamboo.com in this offering at an
assumed initial public offering price of $7.00 per share, after deducting
the underwriting discounts and commissions and estimated offering
expenses and application of the net proceeds.
7
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors, in addition to the
other information in this prospectus, before purchasing shares of bamboo.com
common stock. Each of these risk factors could adversely affect our business,
operating results and financial condition as well as adversely affect the value
of an investment in our common stock and could cause you to lose some or all of
your investment. This offering involves a high degree of risk.
Risks Related To Our Business
Our business and prospects are difficult to evaluate because we have a
limited operating history.
Because we were incorporated in 1995 and did not focus our virtual tour
business on the real estate industry until January 1998, we have only a limited
operating history upon which you can evaluate us and our potential. Our
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in an early stage of development,
including:
. the uncertainty of market acceptance of our virtual tour service and
brand;
. our need to expand our sales, marketing and customer service operations;
. our ability to successfully market and support our virtual tour service;
and
. our dependence on products and services with only limited market
acceptance to date.
As of June 30, 1999, we had an accumulated deficit of $19.0 million. We
expect to continue to incur substantial losses for the foreseeable future and
we cannot assure you that we will achieve significant revenues or profitability
or, if we do, that they can be sustained or increased on a quarterly or annual
basis.
We expect to continue to incur net losses.
We expect to have increasing net losses and negative cash flows for the
foreseeable future. The size of these losses will depend in part on the rate of
growth of our revenues from the sale of our virtual tour service. We intend to
continue to expend financial resources to promote the bamboo.com brand through
marketing and promotion and enhancement of our virtual tours. As a result, we
expect that our operating expenses will increase significantly for the
foreseeable future. Consequently, we may never achieve profitability, and if we
do achieve profitability, we may not sustain or increase profitability on a
quarterly or annual basis in the future.
Fluctuations in our quarterly revenues and operating results may lead to
reduced prices for our stock.
We believe that period-to-period comparisons of our operating results should
not be relied upon as indications of future performance. In future periods our
operating results may fall below the expectations of investors, which could
significantly harm or depress the trading price of our common stock. Among the
factors that may influence our operating results are:
. the number of virtual tours we sell, process and deliver;
. the termination of any significant distribution relationship or loss of a
service provider;
. the introduction of new or enhanced imaging products and services by us
or our competitors;
. the rate at which we can recruit, train and integrate employees into our
processing center, call center and field operations;
. the amount and timing of capital expenditures and other costs relating to
the expansion of our processing center, call center and field operations;
. changes in our pricing policy relating to virtual tour service or those
of our competitors;
. economic or other conditions that affect the real estate industry; and
. economic conditions specific to the Internet.
8
<PAGE>
We plan to increase our operating expenses to expand our sales and marketing
programs and to hire more employees in the areas of administration and research
and development. We determine our operating expenses partly based on
anticipated revenue trends. In future periods, we may generate lower than
anticipated revenue due to the termination of a significant distribution
relationship or an adverse change in our pricing policy caused by competition.
The generation of lower than anticipated revenue could result in substantial
operating losses.
The loss of one or more distributors of our virtual tours or the
termination of their relationship with an Internet portal could seriously
harm our business.
The ability to distribute our virtual tours widely over the Internet is vital
to our business. Our virtual tours can currently be viewed through real estate
destination Web sites such as REALTOR.com, HomeSeekers.com, Homes.com and
LoopNet. These Web sites provide real estate content to Internet portals. As a
result, our virtual tours may also be currently viewed on America Online, @Home
Network, Excite, GO Network/Infoseek, Netscape Netcenter and Yahoo! We do not
have agreements with any Internet portal providing for the distribution of our
virtual tours. If our relationship with a real estate destination site is
terminated, or their relationship with any major Internet portal is terminated,
we would lose access to significant distribution channels and our revenues
could decline.
If online real estate listings or our virtual tours do not achieve
widespread market acceptance, our business will not grow.
Our success will depend in large part on widespread market acceptance of
virtual tours to display properties online. If the online market for virtual
tours develops more slowly than expected, or if our services do not achieve
widespread market acceptance, our business will grow more slowly than expected.
Our future growth, if any, will depend on the following critical factors:
. the growth of the Internet as a tool used in the process of buying and
selling residential real estate;
. our ability to successfully and cost-effectively market our virtual tours
to a sufficiently large number of real estate agents or other real estate
professionals; and
. our ability to consistently deliver high quality virtual tours and fast
and convenient service at competitive prices.
Our revenues will not grow as much as we anticipate if the market for our
services does not continue to develop, our services do not continue to be
adopted or consumers fail to significantly increase their use of the Internet
as a tool in the process of buying and selling homes.
If we cannot successfully grow our operations our business could suffer.
Because each virtual tour requires several steps to create, a sharp rise in
demand for our products and services could exceed our capacity to carry out the
functions necessary to create virtual tours. In particular, we will need to
rapidly expand the capacity of our processing center and our customer service
center to meet significant increases in demand. In addition, we would need to
rapidly engage many new videographers in one or more regions in order for us to
continue to offer our turnkey virtual tour service in a timely manner. As the
volume of orders for our virtual tours increases, we may not be able to hire
and train qualified personnel in a timely manner, and the shortage of such
personnel could cause a backlog in the processing of orders, which could lead
to dilution of our brand and long term harm to our reputation.
We operate in a highly competitive market with low barriers to entry which
could limit our market share and harm our financial performance.
While the market for online virtual tours is relatively new and rapidly
evolving, it is already competitive and characterized by entrants that may
develop online virtual tour services similar to ours. In addition, there are
9
<PAGE>
relatively low barriers to entry to our business. We do not have patents or
other intellectual property that would preclude or inhibit competitors from
entering the online virtual tours market. Moreover, due to the low cost of
entering the online virtual tours market, competition may intensify and
increase in the future. We compete with traditional methods used by real estate
agents to market properties for sale, including classified ads, brochures and
still photos. We may also compete against companies that have developed virtual
tour technology but are not currently focused on the real estate industry. This
competition may limit our ability to become profitable or result in the loss of
market share.
Most of our employees are not subject to noncompetition agreements. In
addition, our business model does not involve the use of a large amount of
proprietary information. As a result, we are subject to the risk that our
employees may leave us and may start competing businesses. The emergence of
these enterprises will further increase the level of competition in our market
and could harm our growth and financial performance.
Our business will suffer if we are unable to establish and maintain brand
recognition for bamboo.com virtual tours.
Establishing and maintaining our brand is critical to attracting and
expanding our customer base of real estate agents, solidifying our business
relationships with traditional real estate companies and strategic partners and
successfully implementing our business strategy. We may be unable to establish
or maintain a brand that will be positively accepted by the market.
Promotion and enhancement of our brand will also depend, in part, on our
success in providing a high-quality customer experience to real estate agents,
home sellers and home buyers. We may not be successful in achieving this goal.
Low or inconsistent quality of products or services may significantly damage
our reputation and offset the efforts we make in promoting and enhancing our
brand and may harm our business. If home buyers, home sellers or real estate
agents do not perceive our existing services to be of high quality or if we
alter or modify our brand image, introduce new services or enter into new
business ventures that are not favorably received, the value of our brand could
be damaged, thereby decreasing the attractiveness of our service to potential
customers.
System failures on Web sites not controlled by us could harm our business.
In some cases, our virtual tours are hosted and maintained on Web servers
controlled by a real estate destination site or a third party on behalf of a
real estate destination site. We have no control over these servers and our
agreements with these destination sites do not provide that Internet access
will be uninterrupted, error free or secure. Any system failure that causes an
interruption in the delivery of our virtual tours on these sites or a decrease
in the responsiveness of service could result in reduced revenues, and could be
harmful to our reputation and brand.
The performance of our bamboo.com service provider network is critical to
our business and reputation.
We depend on a network of independent contractors, the bamboo.com service
providers, to provide the video content for our virtual tours. This network
consists almost entirely of the companies that provide still photos for the
multiple listing services. If our relationship with one or more of these
companies is terminated, we could experience a delay in servicing our virtual
tour customers in the affected regions and our operating results could be
harmed. In addition, if our service providers do not consistently provide high
quality service for the real estate agents or homeowners, our brand will be
diluted and our reputation will suffer, which would result in reduced revenue.
We may not be able to recruit and retain the personnel we need to succeed.
We may be unable to retain our key employees or attract, assimilate or retain
other highly qualified employees in the future. Our future success depends on
our ability to attract, retain and motivate highly skilled
10
<PAGE>
employees, particularly with respect to our direct sales function, our call
center and processing center operations. If we do not succeed in attracting new
personnel or retaining and motivating our current personnel, it may be
difficult for us to manage our business and meet our objectives.
We may not be able to successfully manage the expansion in our employee
base.
Over the last twelve months our employee base has grown significantly and we
expect that the number of our employees will continue to increase in the
future. This growth has placed, and our anticipated future growth combined with
the requirements we will face as a public company will continue to place, a
significant strain on our management systems and resources. To manage the
expected growth of our operations and personnel, we must continue improving or
replacing existing operational, accounting and information systems, procedures
and controls. We also need to rapidly expand, train, integrate and manage our
growing employee base, particularly our technical, accounting, financial and
sales and marketing organizations. If we are unable to manage growth
effectively, our business will suffer.
We are dependent on our key management personnel for our future success.
Our future success depends to a significant extent on the continued service
and coordination of our management team, particularly Leonard McCurdy, our
Chief Executive Officer and Kevin McCurdy, our founder and Executive Vice
President. The departure of any of our officers or key employees could harm our
ability to implement our business plan. In addition, key members of our
management team, including our Chief Financial Officer, Chief Operating
Officer, Senior Vice President, Business Development and Senior Vice President,
Sales, have joined us within the last six months. These individuals have not
previously worked together and may not be able to work together effectively or
successfully manage our growth.
We may not develop new commercial relationships and our existing
relationships may not result in increased sales of our virtual tours.
In addition to our relationships with real estate destination sites, we
depend on establishing and maintaining commercial relationships with
traditional real estate brokerage companies, multiple listing services and
multiple listing services technology providers. We expect to continue to
encounter competition for these relationships and for other marketing and
endorsement relationships with real estate brokerage companies. We cannot
assure you that we will be able to establish new relationships or maintain
existing relationships. In addition, we cannot assure you that our existing
relationships with real estate companies and multiple listing services
organizations will result in orders of virtual tours. These relationships could
be terminated or fail to generate as many real estate agent customers as we
anticipate, which could cause our revenues to decline.
A failure in the performance of our Web hosting facility systems could harm
our business and reputation.
We depend upon a third party Internet service provider to host and maintain
all of our production servers. As part of our service offering, our Web servers
host our virtual tours for some of the sites where our tours can be viewed. Any
system failure, including network, software or hardware failure, that causes an
interruption in the delivery of our virtual tours or a decrease in
responsiveness of our Web site service could result in reduced revenue, and
could be harmful to our reputation and brand. Our Internet service provider
does not guarantee that our Internet access will be uninterrupted, error free
or secure. Any disruption in the Internet access provided by such provider
could significantly harm our business. In the future, we may experience
interruptions from time to time. Our insurance may not adequately compensate us
for any losses that may occur due to any failures in our system or
interruptions in our service. Our Web servers must be able to accommodate a
high volume of traffic and we may in the future experience slower response
times for a variety of reasons. If we were unable to add additional software
and hardware to accommodate increased demand, this could cause unanticipated
system disruptions and result in slower response times. Real estate agents,
home sellers and home buyers may become dissatisfied by any system failure that
interrupts our ability to provide our virtual tours to them or results in
slower response time.
11
<PAGE>
We are dependent on the widespread use of Java-enabled Web browsers.
Our Web-based virtual tour product requires a Java-enabled Web browser. If a
user's Web browser is not Java-enabled, still images will be displayed instead
of a virtual tour. We depend on the widespread use of Java-enabled Web browsers
to market our virtual tours to real estate agents. If real estate agents
believe that the percentage of online viewers unable to view our tours is
significant, they may decide not to purchase our tours, which may cause a
decline in the sales of our virtual tours and harm our business.
If we are not successful in enhancing our virtual tours, our results may
suffer.
A component of our strategy is to develop, acquire and utilize new technology
that will continually enhance our virtual tours by providing features such as
high-resolution zooming functionality, larger image sizes, audio and additional
compression techniques. We may not be successful in our efforts to enhance our
virtual tours or develop new products and services which may harm our operating
results.
We may develop and implement strategies enabling us to participate in e-
commerce opportunities by making value-added products and services available
online. We may decide not to engage or we may not be successful in these e-
commerce opportunities. Any new product or service we introduce that is not
favorably received could damage our reputation and the perception of our brand
name.
The location of our call center and processing center outside the United
States could result in delays and increased operating expenses and taxes.
Our call center and processing center are currently located in Toronto,
Canada. There are risks associated with our operations in Canada, including the
following:
. videotapes could be delayed in customs and cause a backlog of processing;
. our overnight courier service could have problems delivering our
videotapes from the United States to Canada in a consistently timely
fashion;
. future government regulations in the United States or Canada could limit
or increase expenses related to cross-border transactions; and
. tarrifs, or currency exchange rates may increase our operating costs.
We are currently studying the extent to which our income may be subject to
Canadian income taxes. Because Canadian income tax rates are generally higher
than U.S. tax rates on corporate income, to the extent our future income is
subject to such Canadian taxes, we may incur higher tax costs than a comparable
company subject only to U.S. taxes.
Key personnel may not remain with bamboo.com in the future.
Our success will depend in part on the continued service of key employees,
including John Assaraf, our Senior Vice President of Sales and Mark Searle, our
Chief Operating Officer. If we lost the services of one or more of our key
employees who decided to join a competitor or start a company to compete
directly with bamboo.com, this could result in decreased sales and a lower
level of customer satisfaction. The employment of all of our key employees is
at will.
We may be liable for infringing the intellectual property rights of others.
We have received and may receive in the future, notice of claims of
infringement of other parties' proprietary rights. Infringement or other claims
could be asserted or prosecuted against us in the future and it is possible
that past or future assertions or prosecutions could harm our business. Any
such claims, with or without merit, could be time consuming, resulting in
costly litigation and diversion of technical and management personnel, cause
delays in the development and release of new products or services, or require
us to develop non-infringing technology or enter into royalty or licensing
arrangements. Such royalty or licensing arrangements, if required, may not be
available on terms acceptable to us, or at all. For these reasons, infringement
claims could harm our business.
12
<PAGE>
We rely heavily on our intellectual property rights which offer only limited
protection against potential infringers.
Our success will be dependent in part upon our proprietary technology. We
cannot be sure that the measures that we undertake will be adequate to protect
our proprietary technology, or that they would preclude competitors from
independently developing products with functionality or features similar to our
virtual tours. We cannot be sure that the precautions we take will prevent
misappropriation or infringement of our technology. It is possible that
litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or to determine the validity and scope of
the proprietary rights of others. Litigation could result in substantial costs
and diversion of our resources.
Cyclical economic swings in the real estate market could decrease demand for
our services and products.
Changes in the real estate market may affect demand for our services and
products. The real estate industry traditionally has been subject to cyclical
economic swings which could harm our business. These cyclical economic swings
may be caused by various factors, such as changes in interest rates, changes in
economic conditions and seasonal changes in various geographic regions. These
cyclical economic swings could hurt our business.
We may not be successful in establishing additional international operations.
A part of our long-term strategy is to establish bamboo.com in international
markets. However, the Internet, or our virtual tour services model, may not
become widely accepted in international markets. In addition, we expect that
the success of any additional foreign operations we initiate will be
substantially dependent upon the real estate destination sites that we have
relationships with entering and succeeding in such markets. We may not be
successful in establishing and managing additional international operations.
We may require additional capital in the future which may not be available to
us.
We believe existing cash balances, cash equivalents and cash generated from
operations, together with the net proceeds from this offering, will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for a period in excess of 12 months. However, we may need to raise
additional funds through public or private debt or equity financing prior to
this time. Adequate funds may not be available when needed or may not be
available on favorable terms. If we raise additional funds by issuing equity
securities, dilution to existing stockholders may result. If funding is
insufficient at any time in the future, we may be unable to develop or enhance
our products or services, take advantage of business opportunities or respond
to competitive pressures, any of which could harm our business. Our future
capital requirements depend upon many factors, including, but not limited to:
. the rate at which we expand our sales and marketing operations;
. the extent to which we develop and upgrade our technology;
. the occurrence, timing, size and success of acquisitions;
. the rate at which we expand our operations; and
. the response of competitors to our service offerings.
Risks Related To The Internet Industry
Our revenues may not grow if home buyers do not increase their use of the
Internet.
Our future success and revenue growth depends substantially upon continued
growth in the use of the Internet by home buyers. In addition, the purchase of
virtual tours for posting on the Internet in the home buying process
specifically must become widespread. If use of the Internet by home buyers does
not continue to increase, sales of our virtual tours would be negatively
impacted.
13
<PAGE>
Our business will suffer if we fail to adapt to evolving standards and
technologies.
The standards and technologies that make up the Internet will evolve and
change over time. We must adapt our products and services to maintain
compatibility in the future to assure that we can continue to deliver high
quality virtual tours on the Web. Our inability to deliver high quality virtual
tours would lead to a decline in the demand for our products and services.
Breaches of online commerce security could expose us to litigation and harm
our reputation.
As part of our service offering, real estate agents can purchase virtual
tours directly from our Web site using a credit card. Online commerce on our
Web site relies on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure
transmission of credit card numbers and other proprietary information. The
misappropriation of credit card numbers or other proprietary personal
information or the purchase of products through the fraudulent use of credit
cards could expose us to a risk of loss or litigation and possible liability
from the vendors of our products or from cardholders themselves. In addition,
our reputation could suffer irreparable harm.
Third party breaches of database security could disrupt our operations and
increase our capital expenditures.
A party who is able to circumvent our security measures could misappropriate
proprietary database information or cause interruptions in our operations. As a
result we may be required to expend significant capital and other resources to
protect against such security breaches or to alleviate problems caused by such
breaches, which could harm our business.
We would lose revenues and incur significant costs if our systems or material
third-party systems are not Year 2000 compliant.
The Year 2000 issue is the potential for system and processing failures of
date-related data and is the result of the computer-controlled systems using
two digits rather than four to define the applicable year. For example,
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.
We do not have formal contingency plans to address Year 2000 issues. We use
multiple software systems for internal business purposes, including accounting,
email, human resources, sales tracking and customer service. We have not done
any operational testing to confirm that these applications are Year 2000
compliant. We depend on third party providers for Web hosting and payroll
services. We generally do not have any specific contractual rights with third
party providers should their equipment or software fail due to Year 2000
issues. If this third party equipment or software does not operate properly
with regard to Year 2000, we may incur unexpected expenses to remedy any
problems.
We are unable to predict to what extent our business may be affected if our
systems or the systems that operate in conjunction with them experience a
material Year 2000 failure. Known or unknown errors or defects that affect the
operation of our software and systems could result in delay or loss of revenue,
interruption of services, cancellation of customer contracts, diversion of
development resources, damage to our reputation, increased service or warranty
costs, and litigation costs, any of which could harm our business. The worst
case scenario is that the Internet fails and we are unable to deliver our
products and services.
Internet related regulatory and legal uncertainties could harm our business.
There are an increasing number of laws and regulations pertaining to the
Internet. In addition, a number of legislative and regulatory proposals are
under consideration by federal, state, local and foreign governments and
agencies. Laws or regulations may be adopted with respect to the Internet
relating to liability for information retrieved from or transmitted over the
Internet, domain name registration, online content regulation, user
14
<PAGE>
privacy, taxation and quality of products and services. Moreover, the
applicability to the Internet of existing laws governing issues including
intellectual property ownership and infringement, copyright, patent, trademark,
trade secret, obscenity, libel, employment and personal privacy is uncertain
and developing.
Risks Related To This Offering
Our existing stockholders will exercise significant control and could make
decisions that adversely affect new investors.
Our directors, executive officers and stockholders holding greater than five
percent (5%) of our outstanding common stock prior to this offering and their
affiliates will, in the aggregate, own approximately 67.4% of the outstanding
shares of our common stock upon the closing of this offering, or 64.7% if the
underwriters exercise their over-allotment option in full. As a result of their
share of ownership, these stockholders will have a significant influence on all
matters requiring stockholder approval, including the election of directors.
This concentration of ownership could delay or prevent another person from
acquiring control or causing a change in control of bamboo.com, which may
affect your ability to resell your shares at a favorable price.
Our shares have never been publicly traded and a market may not develop or be
liquid.
Prior to this offering, there has been no public market for our common stock.
We cannot predict the extent to which a trading market will develop or how
liquid that market might become. The initial public offering price for the
shares will be determined by negotiations between us and the representatives of
the underwriters and may not be indicative of prices that will prevail in the
trading market following this offering.
Our stock may not receive analyst coverage and our stock price is likely to
be volatile; this volatility could affect your ability to resell your shares
at a profit.
The trading price of our common stock is likely to be volatile. The stock
market has experienced significant price and volume fluctuations, and the
market prices of technology company stocks, particularly those of Internet-
related companies, have been highly volatile. As a result, you may not be able
to resell your shares at a price equal to or greater than the initial public
offering price.
The market price of our common stock may fluctuate significantly in response
to factors, some of which are beyond our control, including the following:
. actual or anticipated fluctuations in our operating results;
. changes in market valuations of other technology companies;
. announcements by us or our competitors of significant technical
innovations, contracts, acquisitions, strategic relationships, joint
ventures or capital commitments;
. lack of any analysts covering our stock;
. publication by analysts covering our stock, if we receive such analyst
coverage;
. termination of a strategic relationship;
. additions or departures of key personnel; and
. sales of common stock in the future.
Shares eligible for future sale by our existing stockholders may adversely
affect our stock price.
The market price of our common stock could drop due to the sales of a large
number of shares of our common stock or the perception that such sales could
occur. These factors could also make it more difficult to raise funds through
future offerings of common stock.
15
<PAGE>
After this offering, 20,383,650 shares of common stock will be outstanding,
20,759,650 shares if the underwriters' over-allotment option is exercised in
full. The 4,000,000 shares sold in this offering, 4,600,000 shares if the
underwriters' over-allotment option is exercised in full, will be freely
tradable without restrictions under the Securities Act of 1933, except for any
shares of common stock held by our "affiliates," as defined in Rule 144 under
the Securities Act. Our officers, directors and stockholders have entered into
lock-up agreements under which they have agreed not to offer or sell any shares
of common stock for a period of 180 days after the date of this prospectus
without the prior written consent of Prudential Securities, on behalf of the
underwriters. Also, Prudential Securities may, at any time and without notice,
waive the terms of these lock-up agreements specified in the underwriting
agreement. Upon expiration of this lock-up period, the shares owned by these
persons prior to completion of this offering may be sold into the public market
without registration under the Securities Act in compliance with the volume
limitations and other applicable restrictions of Rule 144 under the Securities
Act. After the date of this prospectus, we intend to file one or more
registration statements under the Securities Act to register all shares of
common stock issuable upon the exercise of outstanding stock options or
reserved for issuance under our 1998 Employee, Director and Consultant Stock
Plan, of which 1,780,184 shares will be immediately exercisable upon the
completion of this offering and an additional 1,689,926 shares will be
exercisable within 60 days of June 30, 1999. Those registration statements are
expected to become effective immediately upon filing, and subject to the
vesting requirements and exercise of the related options and the grant of stock
awards as well as the terms of the lock-up agreements, shares covered by those
registrations statements will be eligible for sale in the public markets,
except for any shares held by our "affiliates."
Future sales of recently issued common stock by existing stockholders may
decrease our stock price.
On June 11, 1999, we sold 1,250,830 shares of common stock for a nominal
price in connection with the sale of Series C redeemable preferred stock. When
these previously issued shares are eligible to be sold following the expiration
of the 180 day lock-up period, or the market perceives that they may be sold,
the market price of our common stock could drop.
Investors will experience immediate and substantial dilution and may
experience further dilution.
You will incur immediate and substantial dilution of $5.46 per share in the
net tangible book value per share of common stock from the price you paid,
assuming an initial public offering price of $7.00 per share.
We have recently granted low priced stock options which may cause investors
to experience additional dilution.
As of June 30, 1999, there were options outstanding to purchase 6,027,386
shares of our common stock at a weighted average exercise price of $0.28. To
the extent any of these options are exercised, you will suffer dilution greater
than the $5.46 per share described above.
We sold shares of common stock in June 1999 for a nominal amount.
In June 1999, we sold 1,250,830 shares of common stock for a nominal amount.
We may sell shares in the future for a nominal amount. In the event we sell
shares for a nominal amount in the future, stockholders will be subject to
additional dilution.
Our management will have broad discretion in use of proceeds and it may not
effectively utilize those funds.
Our management will have broad discretion in how we use the net proceeds of
this offering. Investors will be relying on the judgment of our management
regarding the application of the net proceeds of this offering. Our
management's decision regarding use of the net proceeds may not be the most
effective utilization of those funds.
16
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends affecting the financial condition of
our business. These forward-looking statements are subject to a number of
risks, uncertainties and assumptions about bamboo.com, including among other
things:
. implementing our business strategy;
. obtaining and expanding market acceptance of the services we offer;
. forecasts of Internet and our market size and growth;
. the continued listing of real estate on the Internet; and
. competition in our market.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions. These statements are based on our current beliefs, expectations
and assumptions and are subject to a number of risks and uncertainties. Actual
results and events may vary significantly from those discussed in the forward-
looking statements.
17
<PAGE>
USE OF PROCEEDS
The net proceeds to bamboo.com from the sale of common stock in this
offering, assuming an initial public offering price of $7.00 per share, are
estimated to be $24,985,000, and $27,433,000 if the underwriters exercise their
over-allotment option in full, after deducting the underwriting discounts and
commissions and estimated offering expenses.
We will use $11.0 million of the net proceeds to redeem all outstanding
shares of Series C redeemable preferred stock. We expect to use the remaining
net proceeds for working capital and general corporate purposes, including
expansion of sales and marketing activities and enhancement of our virtual tour
technology. In addition, we may use a portion of the net proceeds to acquire
complementary products, technologies or businesses; however, we currently have
no commitments or agreements and are not involved in any negotiations to do so.
We intend to invest the net proceeds of this offering in short-term interest-
bearing, investment-grade securities or guaranteed obligations of the U.S.
government pending their use.
We will have significant discretion in the use of the net proceeds of this
offering. Investors will be relying on the judgment of our management regarding
the application of the proceeds of this offering.
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation
and expansion of our business and do not anticipate declaring or paying any
cash dividends in the near future.
18
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1999:
. Our actual capitalization;
. Our pro forma capitalization after giving effect to the conversion of
outstanding shares of our Series A and Series B preferred stock into a
total of 7,156,884 shares of common stock; and
. Our pro forma as adjusted capitalization, gives effect to the sale of the
shares of common stock offered in this offering at the assumed initial
public offering price of $7.00 per share, after deducting the
underwriting discounts and commissions and the estimated offering
expenses and the application of the estimated net proceeds by us from the
offering, including the redemption of all outstanding shares of the
Series C redeemable preferred stock. The redemption will result in an
additional interest charge of approximately $6.5 million to accrete the
preferred stock to its redemption value. The pro forma as adjusted
capitalization also includes an additional charge for stock based
compensation of approximately $1.8 million which will accrue from the
acceleration of certain options granted by bamboo.com.
<TABLE>
<CAPTION>
As of June 30, 1999
----------------------------------------
(unaudited)
------------
Pro Forma
Actual Pro Forma As Adjusted
------------ ------------ ------------
<S> <C> <C> <C>
Series C redeemable preferred
stock.............................. $ 4,452,398 $ 4,452,398 $ --
------------ ------------ ------------
Stockholder's equity:
Convertible preferred stock:
Series A, $0.001 par value,
500,000 authorized shares
231,250 shares outstanding,
actual, none pro forma and pro
forma as adjusted.............. 231 -- --
Series B, $0.001 par value,
2,324,774 authorized shares,
outstanding: 2,324,774 shares
actual, none pro forma and pro
forma adjusted................. 2,325 -- --
Common stock, $0.001 par value,
28,000,000 authorized shares actual
and pro-forma, 70,000,000
authorized pro-forma as adjusted;
1,805,230 shares outstanding
actual, 8,962,114 shares
outstanding pro forma and
12,962,114 pro forma as
adjusted....................... 1,805 8,962 12,962
Class B common stock:
7,421,536 authorized shares
$0.0001 par value
7,421,536 shares outstanding
actual, pro forma and pro forma
as adjusted.................... 520 520 520
Additional paid in capital......... 40,946,651 40,942,050 65,923,050
Notes receivable from
stockholders...................... (127,556) (127,556) (127,556)
Unearned stock-based compensation.. (8,838,128) (8,838,128) (7,031,188)
Accumulated other comprehensive
income............................ 8,144 8,144 8,144
Deficit accumulated during the
development stage................. (18,967,366) (18,967,366) (27,321,908)
------------ ------------ ------------
Total stockholders' equity ..... $ 13,026,626 $ 13,026,626 $ 31,464,024
------------ ------------ ------------
Total capitalization ........... $ 17,479,024 $ 17,479,024 $ 31,464,024
============ ============ ============
</TABLE>
The shares of common stock outstanding in the actual, pro forma and pro forma
as adjusted columns exclude:
. 6,027,386 shares of common stock issuable as of June 30, 1999 upon the
exercise of outstanding stock options issued at a weighted average
exercise price of $0.28 per share under our stock option plan;
. 280,000 shares of common stock issuable upon the exercise of an
outstanding warrant;
. 197,608 shares of common stock reserved for issuance under our stock
option plan; and
. 700,000 shares of common stock reserved for issuance under our employee
stock purchase plan.
19
<PAGE>
DILUTION
Purchasers of the common stock in this offering will experience immediate and
substantial dilution in the pro forma net tangible book value of their common
stock from the initial public offering price. The pro forma net tangible book
value of our common stock on June 30, 1999 was $13,026,626, or approximately
$0.80 per share. Pro forma net tangible book value per share represents the
amount of our total tangible assets less total liabilities, divided by the
number of shares of common stock outstanding on a pro forma basis after giving
effect to the conversion of all outstanding shares of convertible preferred
stock. Dilution in pro forma net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of our
common stock in this offering and the net tangible book value per share of our
common stock immediately afterwards. After giving effect to the sale of
4,000,000 shares of common stock by us in this offering at an assumed initial
public offering price of $7.00 and after deducting the underwriting discounts
and commissions and estimated offering expenses, our pro forma net tangible
book value would have been $1.54 per share. This represents an immediate
increase in pro forma net tangible book value of $0.74 per share to existing
stockholders and an immediate and substantial dilution of $5.46 per share to
new investors. The following table illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price.......................... $7.00
-----
Pro forma net tangible book value as of June 30, 1999......... $0.80
Increase attributable to new investors........................ $0.74
-----
Pro forma net tangible book value after this offering.......... $1.54
-----
Dilution in pro forma net tangible book value to new
investors..................................................... $5.46
=====
</TABLE>
The following table sets forth, as of June 30, 1999, on the same pro forma
basis, the number of shares of common stock purchased from us by existing
stockholders and by the new investors at the assumed initial public offering
price together with the total price and average price per share paid by each of
these groups, before deducting underwriting discounts and commissions and
offering expenses.
<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
--------------------- ---------------------- Per
Number Percentage Amount Percentage Share
---------- ---------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders.. 16,383,650 80.4% $21,260,017 43.2% $1.30
New investors.......... 4,000,000 19.6% 28,000,000 56.8% 7.00
---------- ----- ----------- -----
Total................ 20,383,650 100.0% $49,260,017 100.0%
========== ===== =========== =====
</TABLE>
Except as noted above, the foregoing discussions and tables assume no
exercise of any outstanding stock options or warrants. As of June 30, 1999,
there were options outstanding to purchase 6,027,386 shares of common stock at
a weighted average exercise price of $0.28 per share. To the extent that any of
these options are exercised, there will be further dilution to the new
investors.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with our consolidated financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The statement of operations
for each of the years in the three-year period ended December 31, 1998 and the
balance sheet data at December 31, 1997 and 1998, are derived from the
consolidated financial statements of bamboo.com, Inc., that have been audited
by PricewaterhouseCoopers, LLP, independent accountants, included elsewhere in
this prospectus. The balance sheet data at December 31, 1996 is derived from
the audited financial statements of bamboo.com, Inc. that are not included in
this prospectus. The statement of operations data for the six months ended June
30, 1998 and 1999, and the balance sheet data at June 30, 1999, are derived
from our unaudited consolidated financial statements included elsewhere in this
prospectus. In management's opinion, the unaudited financial statements have
been prepared on substantially the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the results of operations for
such periods.
<TABLE>
<CAPTION>
Six Months Ended
Years ended December 31, June 30,
----------------------------------- -------------------------
1996 1997 1998 1998 1999
---------------------- ----------- ----------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Revenues................. $ -- $ 45,553 $ 77,410 $ 39,391 $ 536,074
Cost of revenues......... -- 15,204 67,710 34,155 449,035
----------- --------- ----------- ----------- ------------
Gross profit............. -- 30,349 9,700 5,236 87,039
Operating expenses:
Sales and marketing.... 4,784 9,672 883,469 417,485 5,768,969
General and administra-
tive.................. 61,804 122,034 723,607 406,208 3,002,080
Research and develop-
ment.................. 23,829 41,567 242,917 252,954 296,480
Stock-based compensa-
tion.................. -- -- -- -- 6,955,478
----------- --------- ----------- ----------- ------------
90,417 173,273 1,849,993 1,076,647 16,023,007
----------- --------- ----------- ----------- ------------
Loss from operations..... (90,417) (142,924) (1,840,293) (1,071,411) (15,935,968)
Interest income.......... -- -- -- -- 123,534
Interest expense......... -- -- -- -- (81,298)
----------- --------- ----------- ----------- ------------
Net loss................. (90,417) (142,924) (1,840,293) (1,071,411) (15,893,732)
Beneficial conversion
feature of Series B
convertible preferred
stock................... -- -- -- -- (1,000,000)
----------- --------- ----------- ----------- ------------
Net loss attributable to
common stockholders..... (90,417) (142,924) (1,840,293) (1,071,411) (16,893,732)
=========== ========= =========== =========== ============
Net loss per common
share--basic and
diluted................. $ (0.04) $ (0.05) $ (0.31) $ (0.22) $ (2.14)
=========== ========= =========== =========== ============
Weighted average common
shares--basic and
diluted................. 2,284,493 2,818,873 5,953,169 4,855,128 7,894,274
=========== ========= =========== =========== ============
<CAPTION>
As of December 31, As of
----------------------------------- June 30,
1996 1997 1998 1999
--------- ----------- ----------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents............ $130,839 $ 3,955 $430,097 $ 18,157,878
Working capital (deficit)............ 36,680 (86,433) 265,405 16,064,367
Total assets ........................ 150,075 25,369 780,118 20,627,506
Debt: Series C redeemable preferred
stock............................... -- -- -- 4,452,398
Total stockholders' equity (deficit)
.................................... 55,917 (72,170) 517,068 13,026,626
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and the notes to those statements included elsewhere in
this prospectus. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed below and elsewhere in this prospectus, particularly in
"Risk Factors."
Overview
We are a provider of 360-degree virtual tours of real estate properties on
the Internet. We provide a comprehensive service to real estate agents that
includes videotaping the inside and outside of the home or other property,
processing the videotape into a complete virtual tour, and distributing the
virtual tour to sites on the Internet. Our virtual tours allow home buyers to
look around a room or specific area of a home or other property as if they were
actually present. Our virtual tours provide enhanced visual content and are
integrated with multiple listing service information by real estate Web sites,
thereby adding significant value to home buyers, home sellers and real estate
agents. Users are able to quickly view our virtual tours over a basic dial up
connection to the Internet using a standard Java-enabled Web browser and
without special plug-in software to download or install. If a user's Web
browser is unable to view Java applets, our bamboo.com View-Anywhere system
will automatically display still images in HTML. We also distribute our virtual
tours via email in one convenient self-contained file.
In November 1995, we incorporated in Ontario, Canada as Visual Dynamics
Software Corporation. From inception through December 1996, we focused on the
development of our proprietary hardware and software technology. We changed our
name to Visdyn Software Corporation in December 1996. During 1997, we continued
our product development efforts and began deriving initial revenues from the
sale of virtual tours, primarily of city locations in Toronto, Canada. During
1998, we began providing a comprehensive virtual tour service for the
residential real estate market in Canada. In September 1998, we changed our
name to Jutvision Corporation, moved our headquarters from Toronto to Palo
Alto, California and began implementing a service provider network of
videographers throughout the United States. On January 1, 1999, Jutvision
Corporation reorganized its business as a Delaware corporation and began
deriving revenues from the sale of virtual tours to the real estate industry in
the United States. We changed our name from Jutvision Corporation to
bamboo.com, Inc. in April 1999.
All of our revenues are derived from the sale of our virtual tours. Revenues
are recognized at the time a virtual tour is delivered. We calculate a
provision for returns based on historical experience and make appropriate
reserves at the time revenues are recognized. To date, returns have been
insignificant.
In the existing home resale market we sell our comprehensive virtual tour
service to real estate agents, which includes videotaping the property,
processing the videotape into a virtual tour, distributing the virtual tour to
Web sites on the Internet and delivering it by e-mail to the real estate agent.
Our virtual tours can then be viewed for free by consumers, including home
buyers and home sellers.
We have a limited operating history. As of June 30, 1999 we had an
accumulated deficit of $19.0 million. We have yet to achieve significant
revenues and our ability to generate significant revenues is uncertain.
Therefore, we believe that period-to-period comparisons of our financial
results are not necessarily meaningful and you should not rely upon them as an
indication of our future performance. We have incurred substantial costs to
create, introduce and enhance our virtual tour service infrastructure, to build
brand awareness and to establish our strategic relationships. We expect
operating losses and negative cash flows to continue for the foreseeable future
as we intend to significantly increase our operating expenses to grow our
business. We may also incur additional costs and expenses related to entrance
into new markets, future marketing, branding, acquisition of new businesses or
technology to respond to our rapidly changing industry. These costs could
adversely affect our future financial condition or operating results.
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During the six months ended June 30, 1999 we recorded aggregate unearned
employee stock-based compensation of $15.0 million in connection with the grant
of options to employees and directors. This amount is being amortized over the
vesting period, generally two or three years, of the underlying options.
Amortization of the amount during the six months ended June 30, 1999 amounted
to $6.6 million. The remaining charge as at June 30, 1999 will be amortized as
follows: $3.5 million for the remainder of 1999; $3.4 million in 2000; $1.2
million in 2001; $280,000 in 2002 and $20,000 in 2003. 1,780,184 shares of
common stock subject to options shall become fully vested as a result of the
completion of this public offering and will result in additional amortization
of employee stock-based compensation expense of approximately $1.8 million in
the quarter in which this offering is completed.
Additionally, during the six months ended June 30, 1999, we recorded unearned
stock-based compensation for restricted common stock granted to a service
provider of approximately $819,000, which is being amortized over two years as
the Company's option to repurchase lapses ratably. Amortization of the fair
value of this restricted common stock resulted in stock-based compensation of
approximately $308,000 during the six months ended June 30, 1999. Quarterly
amortization associated with the restricted common stock is subject to
significant increase or decrease in future quarters based upon future changes
in the fair value of our common stock. The Company's option to repurchase
lapses upon completion of this public offering if this occurs prior to the end
of the two years.
On June 11, 1999, the Company entered into an agreement to sell 1,100 shares
of its Series C redeemable preferred stock and 1,250,830 shares of its common
stock for total gross proceeds of $11.0 million. The $11.0 million of proceeds
has been allocated to the Series C redeemable preferred stock and the common
stock based on their relative fair values. Accordingly, $4.4 million has been
allocated to the Series C redeemable preferred stock and $6.6 million has been
allocated to the common stock at June 11, 1999.
The shares of the Series C redeemable preferred stock may be redeemed at any
time at the option of the Company by payment of an amount of $10,000 per share
plus any accrued and unpaid dividends. At the option of the holders, we are
required to redeem the stock upon the occurrence of a redemption event. Under
the terms of the Series C redeemable preferred stock agreement, such redemption
would first become available upon completion of an initial public offering by
the Company. Therefore in the quarter in which the initial public offering
becomes effective and the Series C redeemable preferred stock may be redeemed,
an additional interest charge of up to $6.5 million will be expensed to record
the preferred stock to its face value of $11.0 million.
Results of Operations
Six Months Ended June 30, 1999 and 1998
Revenues
Our revenues increased to $536,000 for the six months ended June 30, 1999
from $39,000 for the six months ended June 30, 1998. This increase was
primarily due to the implementation of a direct sales force as well as
execution of expanded marketing programs designed to create awareness of our
product offering.
Cost of Revenues
Cost of revenues consists of our direct expenses associated with the
videotaping, image processing and delivery of the virtual tour. In addition,
cost of revenues include transaction fees paid to distribution partners which
host our virtual tours on their Web sites as well as fees paid to resellers of
our virtual tours. Our cost of revenues increased to $449,000 for the six
months ended June 30, 1999 from $34,000 for the six months ended June 30, 1998
as a result of increased volume as well as expansion of capacity in our
processing center located in Toronto, Canada. For the six months ended June 30,
1999, direct expenses for videotaping, image processing and delivery were
approximately $228,000, $169,000 and $52,000, respectively.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of salaries for marketing,
sales, business development and field operations personnel. Sales and marketing
expenses also include commissions and related benefits for
23
<PAGE>
sales personnel and consultants, traditional advertising and promotional
expenses, trademark licensing and sponsorship or carriage fees paid to
affiliates to facilitate availability of our tours on their Web sites. Our
sales and marketing expenses increased to $5.8 million for the six months ended
June 30, 1999 from $417,000 for the six months ended June 30, 1998. This
increase was primarily a result of the implementation of a direct sales force,
the expansion of our marketing programs, the addition of distribution partners
to which carriage and sponsorship fees were paid, and expenses associated with
the issuance of equity to consultants. We expect our sales and marketing
expenses to increase as we continue to add to our direct sales force and expand
our marketing programs.
General and Administrative Expenses
General and administrative expenses consist primarily of fees for
professional services, general office expenses, salaries and related benefits
for administrative and executive staff, as well as occupancy expenses. General
and administrative expenses increased to $3.0 million for the six months ended
June 30, 1999 from $406,000 for the six months ended June 30, 1998, primarily
due to increased staffing in executive management, finance and administrative
positions necessary to support our expanding operations. In addition, we
incurred expenses associated with the issuance of equity to consultants. We
expect general and administrative expenses to increase as we increase our
staffing levels to support our expanding operations and as a result of becoming
a public company.
Research and Development Expenses
Research and development expenses consist primarily of personnel costs,
contracted product development, and Internet service provider fees. Our
research and development expenses increased to $296,000 for the six months
ended June 30, 1999 from $253,000 for the six months ended June 30, 1998 due to
an increase in staffing for product development. We expect research and
development expenses to increase as we increase our full time staff.
Years Ended December 31, 1998 and 1997
Total revenues increased as we expanded our virtual tour service offering
across Canada. Our cost of revenues increased from the year ended December 31,
1997 as the result of increased volume as well as expanded capacity in our
processing center in Toronto, Canada. We also had an increase in sales and
marketing expenses from the prior year as we expanded sales activity in
additional regions in Canada. General and administrative expenses increased
from the prior year primarily due to increased staffing levels necessary to
support our expanding operations. Our research and development expenses
increased from the prior year due to the use of additional contracted
development support personnel.
Years Ended December 31, 1997 and 1996
We did not begin generating revenues until the introduction of our first
product in the quarter ended March 31, 1997 and therefore did not have revenues
in fiscal year 1996. Our sales and marketing, general and administrative and
research and development expenses all increased from the year ended December
31, 1996 primarily due to increased staffing levels and the use of additional
contracted personnel necessary to support our expanding operations and the
initial launch of our virtual tour product.
Income Taxes
We recorded net losses of $90,000, $143,000 and $1.8 million in 1996, 1997
and 1998, respectively. Accordingly, no provision for income taxes was recorded
in any of these years. The resulting deferred tax asset, representing such net
operating loss carry-forwards, has been reduced in full by a valuation
allowance as it is more likely than not that the deferred tax asset will not be
realized. At December 31, 1998, the Company had accumulated income tax losses
of $1.9 million available in Canada for carry-forward to reduce taxable income
of future years.
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Liquidity and Capital Resources
Since inception, we have financed our operations primarily through the
issuance of equity securities. From inception through December 31, 1998,
financing was provided primarily through periodic private sales of equity which
generated aggregate net proceeds of $1.5 million. On March 12, 1999, we sold
Series B preferred stock generating net proceeds of $12.5 million including the
conversion of $1.8 million of convertible promissory notes. On May 5, 1999, we
sold additional shares of Series B preferred stock generating net proceeds of
approximately $1.0 million. In June 1999, we sold 1,100 shares of Series C
redeemable preferred stock and 1,250,830 shares of common stock generating net
proceeds of approximately $11.0 million. We have recently increased our capital
resources to support the implementation of our 60 person direct sales force,
increased investments in advertising and related marketing activities and the
expansion of our processing center and call center. We will also use these
recently increased capital resources to support our direct sales force and we
anticipate increased advertising activities and continued expansion of our
processing center and call center. The Company recently has raised capital at a
rapid and increasing rate. With the significant amount of capital raised in the
first six months of 1999 and the net proceeds from this offering, the Company
does not believe it will be required to raise additional capital at comparable
rates in the near future. However, the Company could be required to do so based
on unknown future events, including its operating results or competition, or
the Company may elect to do so in any event, particularly if market conditions
are appropriate.
Net cash used in operating activities was $5.6 million for the six months
ended June 30, 1999. This was primarily as a result of the loss for the period,
net of stock based compensation charges and an increase in accounts payable.
Investment in capital assets was $1.2 million, substantially all of which was
used to acquire property and equipment, primarily videography and computer
equipment and software. Financing activities during the first six months of
1999 generated $24.5 million in additional capital. The sale of Series B
preferred stock and notes provided $13.4 million and $11.0 million was raised
from the placement of Series C redeemable preferred stock and common stock. As
of June 30,1999 we had $18.2 million in cash and cash equivalents.
Net cash used in operating activities was $62,000 in 1996, $124,000 in 1997
and $649,000 in 1998. In 1996 and 1997, our net losses of $90,000 and $143,000,
respectively, were partially offset by depreciation of $12,000 and $11,000
respectively and increases in accounts payable of $16,000 between 1995 and 1996
and increases of $8,000 each in accounts payable and accrued liabilities
between 1996 and 1997, respectively. In 1998, our $1.8 million net loss
included non-cash charges as a result of depreciation, issuance of common stock
and options in exchange for services rendered and warrant commitment of
$32,000, $907,000 and $168,000, respectively. The loss was also partially
offset by net changes in assets and liabilities totaling $84,000. The main
components of this net change were increases in accounts payable, accrued
liabilities and prepaid and other current assets of $127,000, $94,000 and
$83,000, respectively. Investments in capital assets were $30,000, $6,000 and
$219,000 in the years ended December 31, 1996, 1997 and 1998, respectively,
substantially all of which was used to acquire property and equipment. Cash and
cash equivalents were $430,000 at December 31, 1998.
We have $1.9 million available under our existing credit facilities.
As of June 30, 1999 we had lease commitments due over the next three years of
approximately $1.1 million due under the terms of leases for premises in
Toronto, Canada and Palo Alto, California.
As of June 30, 1999 we had no material commitments for capital expenditures.
Through our agreements with a number of our strategic partners, we are
obligated to pay sponsorship, and other marketing and technology access fees of
approximately $14.1 million due over the next four-year period.
We believe existing cash balances, cash equivalents and cash generated from
operations, together with the net proceeds to us from this offering, will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for a period in excess of 12 months. However, the underlying
assumed levels of revenues and expenses may not prove to be accurate. We may
seek additional funding through public or private
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financing or other arrangements prior to such time. Adequate funds may not be
available when needed or may not be available on favorable terms. If we raise
additional funds by issuing equity securities, dilution to existing
stockholders may result. If funding is insufficient at any time in the future,
we may be unable to develop or enhance our products or services, take advantage
of business opportunities or respond to competitive pressures, any of which
could harm our business.
Year 2000 Issue
The Year 2000 issue is the potential for system and processing failures of
date-related data and is the result of the computer-controlled systems using
two digits rather than four to define the applicable year. For example,
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.
Although we do not have formal contingency plans to address Year 2000 issues,
we are assessing our internal readiness for Year 2000. We use multiple software
systems for internal business purposes, including accounting, email, human
resources, sales tracking and customer service. All of these applications have
been purchased within the preceding 12 months and we have made inquiries
concerning Year 2000 compliance with the vendors of these systems. Each of
these vendors has assured us that its applications are Year 2000 compliant but
we have not done any operational testing to confirm compliance. We depend on
third party providers for Web hosting and payroll services. While we have
received verbal assurance that these third parties are Year 2000 compliant, we
generally do not have any specific contractual rights with third party
providers should their equipment or software fail due to Year 2000 issues. If
this third party equipment or software does not operate properly with regard to
Year 2000, we may incur unexpected expenses to remedy any problems.
We are unable to predict to what extent our business may be affected if our
systems or the systems that operate in conjunction with them experience a
material Year 2000 failure. Known or unknown errors or defects that affect the
operation of our software and systems could result in delay or loss of revenue,
interruption of services, cancellation of distribution contracts, diversion of
development resources, damage to our reputation, increased service or warranty
costs, and litigation costs, any of which could harm our business. The worst
case scenario is that we are unable to deliver our product and services.
Recent Accounting Pronouncements
In March, 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-1 "Accounting for the Costs Computer Software Developed or
Obtained for Internal Use," which provides guidance on accounting for the cost
of computer software developed or obtained for internal use. Statement of
Position 98-1 is effective for financial statements for fiscal years beginning
after December 15, 1998. We are currently evaluating the impact of Statement of
Position 98-1 on our financial statements and related disclosures.
In April 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-5, "Reporting on the Costs of Start-up Activities." This
standard requires companies to expense the costs of start-up activities and
organization costs as incurred. In general, Statement of Position 98-5 is
effective for fiscal years beginning after December 15, 1998. We believe the
adoption of Statement of Position 98-5 will not have a material impact on our
results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. Statement of Financial Accounting Standards No. 133
establishes new standards of accounting and reporting for derivative
instruments and hedging activities. Statement of Financial Accounting Standards
No. 133 requires that all derivatives be recognized at fair value in the
statement of financial position, and that the corresponding gains or losses be
reported either in the statement of operations or as a component of
comprehensive income, depending on the
26
<PAGE>
type of hedging relationship that exists. Statement of Financial Accounting
Standards No. 133 will be effective for fiscal years beginning after June 15,
2000. We do not currently hold derivative instruments or engage in hedging
activities.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to financial market risks, including changes in foreign
currency exchange rates and interest rates. Most of our revenue and capital
spending is transacted in U.S. dollars. However, the expenses and capital
spending of our Canadian subsidiary are transacted in Canadian dollars. Results
of operations from our Canadian subsidiary are not material to the results of
our operations, therefore, we believe that foreign currency exchange rates
should not materially affect our overall financial position, results of
operations or cash flows. Our exposure to market risk for changes in interest
rates relates primarily to our cash and cash equivalent balances and our bank
line of credit. We do not use derivative financial instruments in our
investment portfolio, and our investment portfolio only includes highly liquid
instruments with an original maturity of generally less than three months. We
are subject to fluctuating interest rates that may impact, adversely or
otherwise, our results of operations or cash flows for cash and cash
equivalents. The table below presents principal amounts, related weighted
average interest rates and expected cash flows from market risk sensitive
instruments.
Balances as of June 30, 1999:
<TABLE>
<CAPTION>
Average
Interest
Amount Rate
----------- --------
<S> <C> <C>
Assets
Cash and cash equivalents............................ $18,158,000 4.5%
===========
All highly liquid investments with a maturity of three months or less at the
date of purchase are considered to be cash equivalents. The Company does not
invest in instruments with total maturities or remaining maturities at date of
purchase in excess of 90 days. For the six months ended June 30, 1999, the
weighted average interest rate on our investment portfolio was approximately
4.5%.
<CAPTION>
Average
Interest
Amount Rate
----------- --------
<S> <C> <C>
Liabilities
Bank line of credit (variable; at prime) ............ $ -- 7.75%
Capital lease obligations............................ 640,000 15.5%
At June 30, 1999, we had not drawn on our $1 million variable rate bank line of
credit.
Our capital lease obligations are fixed interest obligations. The future
minimum payments under these and other capital lease agreements are as follows:
<CAPTION>
Amount
-----------
<S> <C> <C>
1999................................................. $ 263,000
2000................................................. 264,000
2001................................................. 277,000
-----------
Minimum lease payments............................... 804,000
Less amount representing interest.................... (164,000)
-----------
Principal amount of minimum lease payments........... $ 640,000
===========
</TABLE>
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BUSINESS
Overview
We are a provider of 360-degree virtual tours of real estate properties on
the Internet. Bamboo.com virtual tours provide a more complete visual
representation of a property than traditional still photographs, allowing
viewers to easily pan left or right or zoom in for a closer view. We provide a
comprehensive virtual tour service to real estate agents that includes
videotaping the inside and outside of a home or other property, processing the
videotape into a complete virtual tour and distributing the virtual tour. We
distribute our virtual tours to a variety of Web sites, including real estate
destination sites and Internet portals. We also distribute our virtual tours by
email to real estate agents for easy redistribution to their clients and
prospective home buyers. Utilizing our extensive service provider network of
videographers, we offer our virtual tour service in over 200 cities, towns,
boroughs and counties across the United States and Canada. As the real estate
industry increasingly leverages the geographic reach and rich media potential
of the Internet, we believe virtual tours will become a standard method to
market real estate, the way still photographs are a standard method today.
Industry Overview
The Real Estate Industry
According to the United States Department of Commerce, the market for all
housing and related products and services was in the aggregate over $900
billion in 1997, representing 11.5% of the United States gross domestic product
and is one of the largest sectors of the economy. The real estate industry in
the United States is large and diverse, consisting of a variety of segments
including:
. existing home sales;
. new home sales;
. apartment rentals;
. commercial property sales and leases; and
. hotels and other hospitality or specialty properties.
The largest segment of the U.S. real estate industry is the market for
existing home sales. According to the National Association of Realtors, which
is comprised of approximately 720,000 residential and commercial real estate
agents, there were approximately 5 million existing home sales in the United
States in 1998, representing $625 billion in transaction value. In addition to
existing home sales, new U.S. housing starts totaled over 1.6 million units,
and 888,000 new homes representing $130 billion in transaction value were sold
in 1998, according to the National Association of Home Builders.
The Process of Buying And Selling A Home
Buying or selling a home is the most significant financial transaction most
people undertake in their lifetime. The process is often stressful, complicated
and time-consuming. Consequently, most individuals seeking to buy or sell a
home hire a real estate agent to assist them with the process. To facilitate
the purchase or sale of an existing home, real estate agents generally use a
regional multiple listing service, a proprietary network of property listing
information which traditionally has only been available to real estate agents.
The real estate agent typically pays a fee to access a multiple listing
service, which enables the real estate agent to list properties that are for
sale and view properties that are listed by other agents.
When commencing a search for a home, buyers have traditionally sought
information from newspaper classifieds and multiple listing service printouts
provided by real estate agents. The information for a particular home usually
consists of a brief text description of the property and a small exterior
photograph. This limited information requires buyers to engage in the time-
consuming and often frustrating process of scheduling appointments, traveling
to and visiting a property. This inefficient process also forces home sellers
and real
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estate agents to spend time showing homes to all visitors, including those who
after physically visiting the home are not interested. The inconvenience and
cost associated with the home buying process are compounded for home buyers who
are relocating.
Convergence of the Internet and the Process of Buying and Selling a Home
The Internet has emerged as a global medium for communication, information
exchange and commerce. According to the International Data Corporation, there
were 69 million Internet users worldwide at the end of 1997 and this number is
anticipated to grow to approximately 320 million users by the end of 2002. As a
result of this explosive growth, businesses will have a tremendous opportunity
to conduct commerce over the Internet. International Data Corporation estimates
that commerce over the Internet will increase to more than $400 billion by
2002.
Recognizing the commercial potential of the Internet, a number of residential
real estate-related Web businesses have been established, including Web sites
that aggregate multiple listing service data from different regions. These real
estate destination sites enable users to quickly access a wide range of real
estate listings to search for a home using specific criteria, including
location, size and price. As a result, these sites are increasingly becoming an
important part of the home buying process for many consumers. Based on a 1999
study by the U.C. Berkeley Fisher Center for Real Estate and Urban Economics,
we believe that a significant portion of existing homes listed for sale in the
United States are listed online and that the number of home buyers using the
Internet to shop for a home is increasing.
The Need For Richer Online Visual Content
While the Internet has improved the process of researching real estate
listings, the information currently available online is typically limited to a
brief text description and a small still photograph of the property. Though the
availability of this information online enhances the efficiency of searching
for a home, it does not utilize the capability of the Web to more fully
visualize the experience of visiting a home. As a result, buyers must still
engage in the time-consuming and often frustrating process of scheduling
appointments, traveling to and visiting homes at an early stage of the home
buying process before they can confirm their interest in a particular property.
The Bamboo.com Solution
We are a provider of 360-degree virtual tours of real estate properties on
the Internet. We believe virtual tours will become a standard method to market
real estate online, the way still photographs are a standard method today. Our
virtual tours provide enhanced visual content that allows a buyer to look
around a room or specific area of a home or other property as if they were
actually standing inside or outside the property. Our virtual tours are
integrated with property listing information by real estate Web sites and
multiple listing services, thereby providing a complete package of information
and adding significant value to the home buyer, home seller and real estate
agent. Users are able to quickly view our virtual tours over a basic dial-up
connection to the Internet using a standard Web browser, on almost all computer
platforms, and without special plug-in software to download or install. We also
distribute our virtual tours by email to real estate agents in one convenient,
self contained file. Real estate agents can easily forward our email virtual
tours to prospective home buyers, home sellers and real estate agents. Key
elements of the bamboo.com solution are:
Affordable, Comprehensive Service. We deliver an affordable comprehensive
service to real estate agents that includes videotaping the inside and outside
of a home or other property, processing the videotape into a complete virtual
tour and distributing our virtual tours to a variety of Web sites. We also
distribute our virtual tours to real estate agents as an attachment to a
standard email message, which they can then forward to home buyers, other real
estate agents and home sellers. For our basic virtual tour service for existing
home sales, real estate agents pay a one time fee of $99.95 per home. The
virtual tour is then accessible free-of-charge on the Internet for the life of
the listing. Utilizing our extensive network of videographers, we currently
offer our
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virtual tour service in over 200 cities, towns, boroughs and counties across
the United States and Canada.
Extensive Network of Internet Affiliates. Users can access our virtual tours
through major destination sites on the Internet. We have agreements to provide
our virtual tours to the following major real estate destination sites:
. REALTOR.com;
. HomeSeekers.com;
. Microsoft HomeAdvisor;
. Homes.com;
. HomeBuilder.com; and
. LoopNet.
These real estate destination Web sites provide a broad distribution network
for our virtual tours but we do not currently receive any significant revenue
from these Web sites. These Web sites also provide real estate content to
Internet portals. As a result, our virtual tours can currently be viewed on
America Online, @Home Network, Excite, GO Network/Infoseek, Netscape Netcenter
and Yahoo! We are not a party to any agreements with these Internet portals and
there is no guarantee that the Web sites we have agreements with will continue
to provide content to these Internet portals.
Benefits to Home Buyers. Our virtual tours provide home buyers with rich
visual information enabling them to view and screen a property, at no cost,
without requiring a visit to the home. This enables buyers to save the time,
expense and inconvenience of scheduling appointments, traveling to and visiting
properties in person. Our virtual tours also add new dimensions to the home
buying process by enabling home buyers to show a potential home to family and
friends and revisit the virtual tour.
Benefits to Home Sellers. Our solution enables home sellers to use the
Internet to provide more visual information about their homes and surrounding
property to prospective buyers. Unlike traditional marketing methods such as
local classified ads and multiple listing service printouts, our visually rich
virtual tours allow sellers to take advantage of the multimedia capabilities of
the Web. In addition, we believe our virtual tours will reduce the amount of
time required by sellers in showing their homes because buyers are able to view
homes before deciding to actually visit the property.
Benefits to Real Estate Agents. Our virtual tours provide real estate agents
with an Internet based tool that allows them to cost-effectively market
properties to a wide audience, thereby providing a value-added service to both
home buyers and home sellers. This enhanced marketing tool also enables real
estate agents to differentiate themselves to potential home sellers and thereby
gain new listings. As home buyers increasingly use the Internet and virtual
tours to screen homes, real estate agents may save time by showing homes to
more qualified buyers. Real estate agents can also more effectively help home
buyers find properties by identifying and emailing to a home buyer our virtual
tours that match a buyer's criteria. Alternatively, real estate agents can also
store our email virtual tours on their laptop computers and display these
virtual tours directly to their clients.
Benefits to Affiliates. Our virtual tours provide real estate destination
sites, Internet portals and multiple listing services with rich visual content
which helps to increase the convenience, usefulness and enjoyment of their
users' visits. We believe that these benefits promote increased traffic and
repeat usage on our affiliates' Web sites.
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The Bamboo.com Strategy
Our objective is to be the leading global provider of online virtual tours to
the real estate industry. We plan to achieve this goal by pursuing the
following key strategies:
Aggressively Grow Our Virtual Tour Business. We intend to establish a
significant market presence for our 360-degree virtual tours by continuing to
provide comprehensive services at competitive prices to the existing home sales
market. We plan to continue to drive market share of our virtual tours by
utilizing our 60 direct sales professionals to aggressively market our virtual
tours to real estate agents at the local and regional levels. We have recently
expanded our service provider network to include 188 videographers that provide
us with broad national coverage in over 200 cities, towns, boroughs and
counties across the United States and Canada.
Establish Bamboo.com as the Dominant Brand for Online Virtual Tours. We seek
to establish bamboo.com as the leading brand for online virtual tours in all
segments of the real estate industry. To achieve this objective, we intend to
expand our use of mass market and targeted advertising, public relations and
other marketing activities designed to promote bamboo.com as a global brand
among consumers, real estate agents and other real estate professionals.
Develop New Relationships. We have entered into relationships which help us
sell and distribute our virtual tours and promote the bamboo.com brand. These
relationships include agreements with HomeStore.com, REALTOR.com,
HomeSeekers.com, Microsoft HomeAdvisor, Homes.com, HomeBuilder.com and LoopNet.
These relationships provide us with significant benefits including access to
real estate agents and marketing activities such as banner ads, buttons, logos,
online order pages and direct sales force activities. We intend to enter into
additional agreements with real estate destination sites, real estate brokerage
firms, multiple listing services and technology providers that will provide us
with similar benefits.
Continue to Enhance Our Virtual Tour Experience. We intend to continually
develop, acquire and utilize new technologies that will enhance our virtual
tours. Examples of such technological enhancements include high-resolution
zooming functionality, larger image sizes, audio and additional compression
techniques. We believe such enhancements will benefit our constituents by
providing an even richer, more informative experience. Recently, Intel and
bamboo.com entered into a product development agreement, where Intel will
provide guidance on future product definition, technology enhancements and
optimizations of the bamboo.com virtual tour product for Intel architecture.
Expand Our Virtual Tour Business to Other Real Estate Segments. We intend to
expand into other real estate markets that will benefit from our virtual tour
products and services, such as new home sales, apartment rentals, commercial
property sales and leases, as well as hotels and other hospitality or specialty
properties. We recently entered into an agreement to provide our virtual tours
to LoopNet, a commercial real estate Web site.
Pursue E-Commerce Opportunities. As consumers increasingly use the Internet
to research all aspects of the home buying process, we believe that there will
continue to be more real estate related products and services offered online,
creating e-commerce opportunities. We may develop relationships with companies
that offer real estate related products and services online, including mortgage
organization services, furniture, home improvement products and insurance.
Because home buyers can use our virtual tours throughout the home buying
process, we believe we will be well positioned to take advantage of these
opportunities.
Pursue International Expansion Opportunities. We believe there will be a
significant opportunity for bamboo.com virtual tours as online real estate
marketplaces develop and mature in international markets. We intend to address
this opportunity by directly marketing our services, developing new
partnerships and expanding our relationships with existing partners as they
grow internationally.
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Products and Services
The Virtual Tour
Bamboo.com virtual tours capture 360-degree images of the interior and
exterior of homes or other real estate. Our virtual tours provide more complete
visual representations of multiple rooms and outdoor areas than traditional
still photographs allowing viewers to easily pan left or right or zoom in for a
closer look.
We deliver a comprehensive service to real estate agents that includes
videotaping the inside and outside of a home or other property, processing the
videotape into a complete virtual tour, distributing the virtual tour to sites
on the Internet and delivering it by email. Our basic virtual tour for existing
homes is priced at $99.95, and includes four 360-degree scenes delivered to one
Web site selected by the real estate agent. Each additional scene and each
additional Web site posting costs the real estate agent $20.00. Our service
involves the following six steps:
(1) a real estate agent orders a virtual tour from us by phone, fax, email
or online and selects the Web sites that the tour is to be posted on;
(2) our customer service representative receives this order and dispatches
the request to an independent videographer who is part of the
bamboo.com service provider network;
(3) the videographer contacts the real estate agent to schedule the video
shoot of the property;
(4) once the video has been shot, the captured content is sent via
overnight courier to our processing center in Toronto;
(5) our processing center inspects all scenes included in the video and
converts the video into a virtual tour using our proprietary
technology; and
(6) our processing center then posts the virtual tour on the Web to the
sites selected by the ordering real estate agent. We also deliver the
virtual tour by email to the ordering real estate agent.
Virtual Tours on the Internet
Our Web-based virtual tour product is viewable using a standard Web browser,
without the need for additional software, over a basic dial-up connection to
the Internet. Our virtual tours are available on real estate company Web sites,
individual real estate agent Web sites or on our broad network of affiliates,
which include real estate destination sites, Internet portals and multiple
listing services.
We have developed proprietary software which enables our virtual tours to be
viewed on the Web. The bamboo.com Java applet enables our virtual tours to be
viewed within Web pages. If the users Web browser is unable to view Java
applets, our bamboo.com View-Anywhere system will automatically display still
images in HTML.
Email Virtual Tours
In addition to our Web-based virtual tour, we offer a self contained virtual
tour which can be distributed by email. The email virtual tour offers all of
the features of our Web-based virtual tours and can be customized to include
contact information for the real estate agent representing the seller.
The listing real estate agent receives the email virtual tour from bamboo.com
and is able to widely disseminate the email virtual tour by sending it directly
to potential home buyers, other real estate agents and the home seller. The
real estate agent can also use the email tour as a promotional tool by
including his or her name and contact information. The buyer's real estate
agent can easily forward email virtual tours received from sellers' agents to
clients, providing a simple and efficient method for potential buyers to screen
numerous homes.
Our email virtual tour can be viewed on computers running Microsoft's Windows
95, Windows 98 or Windows NT operating systems. The manageable file size of our
virtual tour enables a real estate agent or
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potential buyer to store virtual tours on a computer and show or view the tours
anytime, without the need for an Internet connection.
Key Relationships
In order to accelerate the adoption of our bamboo.com virtual tours, we have
entered into agreements with real estate destination sites, real estate
brokerage firms and real estate multiple listing services.
Real Estate Destination Sites
We have entered into agreements to provide our virtual tours to the major
real estate destination Web sites described below. We believe these
relationships benefit home buyers, home sellers and real estate agents by
providing broad exposure of homes and other properties on a variety of real
estate destination sites and Internet portals.
Through our agreements with these real estate destination Web sites, we are
obligated to pay sponsorship and other marketing and technology access fees in
an aggregate amount of approximately $14.1 million due over the three year
period ending December 31, 2002. In addition, we also pay transaction fees to
some of these real estate destination Web sites. These fees generally range
from 3% to 25% of revenues generated from the sale of our virtual tours. For
the six months ended June 30, 1999, the average transaction fee paid to these
real estate destination Web sites was approximately 9%.
RealSelect, a Subsidiary of HomeStore.com. RealSelect operates REALTOR.com
and HomeBuilder.com. REALTOR.com, the official Web site of the National
Association of Realtors, is a leading real estate destination Web site that
enables potential home buyers to browse, free of charge, from a searchable
database of existing home listings. REALTOR.com's listings can also be viewed
on America Online, @Home Network, Excite, GO Network/Infoseek, and Netscape
Netcenter. We have a multi-year agreement with HomeStore.com and RealSelect
through which we are exclusively marketed, promoted and endorsed on the
HomeStore.com, REALTOR.com and HomeBuilder.com Web sites. We are required to
pay RealSelect monthly fees and fees associated with sales of our virtual
tours.
Cendant Corporation. Cendant is planning to introduce a real estate Internet
portal that will include property listings from the Coldwell Banker(R), CENTURY
21(R), ERA(R) real estate brokerage systems. We have entered into a multi-year,
non-exclusive, agreement with Cendant under which bamboo.com virtual tours may
be displayed on such portal. We are required to pay Cendant monthly fees and
fixed fees, at specified times during the term of the agreement.
HomeSeekers.com. HomeSeekers.com is a provider of online residential listing
information. We have a multi-year agreement with HomeSeekers.com through which
we are the exclusive provider of virtual tours on the HomeSeekers.com Web site.
HomeSeekers.com markets, promotes and facilitates sales of our virtual tours on
the HomeSeekers sites, at seminars and tradeshows, on CD-ROM products and
through e-mail and direct marketing. We pay HomeSeekers transaction fees for
sales generated by HomeSeekers as well as for virtual tours posted to the
HomeSeekers Web site.
Microsoft HomeAdvisor. Microsoft HomeAdvisor is a real estate destination
site which aggregates existing home listings. We recently entered into a short
term agreement with Microsoft to provide virtual tours to the HomeAdvisor site.
Under the agreement, we are required to pay Microsoft quarterly sponsorship
fees.
Homes.com. Homes.com is a real estate destination site which aggregates
existing home listings and a variety of other real estate listings such as
apartments. Homes.com listings can also be viewed on Yahoo! We have a short
term agreement with Homes.com to provide our virtual tours of existing homes on
the Homes.com Web site. We are also the preferred provider of virtual tour
images for rental property listings on Homes.com. We pay Homes.com a quarterly
transaction fee on net revenues collected from sales originated by Homes.com.
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LoopNet. LoopNet is an aggregator of commercial property listings. We have an
agreement with LoopNet to provide virtual tours of commercial properties on the
LoopNet.com Web site. We pay LoopNet monthly sponsorship fees.
These real estate destination Web sites provide a broad distribution network
for our virtual tours, but we do not currently receive any significant revenue
from these Web sites. In addition, we are not a party to any agreements with
any Internet portals. There is no guarantee that the real estate destination
Web sites we have agreements with will continue to provide content to Internet
portals.
Real Estate Brokerage Firms
We have entered into distribution and marketing agreements with major real
estate brokerage firms. These agreements assist in providing our sales force
with access to their agents and enable us to feature our virtual tours on their
brokerage firms' Web sites.
Multiple Listing Service Infrastructure
Multiple listing services aggregate residential real estate listings on a
local or regional basis and are typically controlled by local real estate
boards. These boards are primarily organized as co-operatives whose members
typically are affiliated with local real estate firms. In addition to managing
the listings within a region, multiple listing services also select and control
the software used in uploading, storing and viewing the listings. These
relationships have traditionally allowed multiple listing services to secure
their position as the primary aggregator of all data relating to properties
within their jurisdiction.
We have entered into and continue to enter into agreements directly with
multiple listing services as well as companies that develop technology for the
real estate industry. Through these relationships, we seek to integrate our
virtual tours into the existing MLS infrastructure to benefit us, the multiple
listing services and real estate agents. This integration enables us to
directly market our virtual tour service to real estate agents associated with
these multiple listing services through marketing and promotion agreements. We
pay these multiple listing service companies transaction fees for sales
generated by them. In addition, these relationships provide significant
exposure for our virtual tours within the multiple listing services intranet
systems. Below is a list of all multiple listing services and companies that
develop technology for the real estate industry with which we have agreements.
Multiple Listing Service
Multiple Listing Service of .Largest multiple listing service in North
Northern Illinois--MLSNI America
.Average of 72,000 active listings
.27,000 members
Metropolitan Regional .Second largest multiple listing service in
Information Systems Inc.-- North America
MRIS .Average of 54,000 active listings
.22,000 members
Toronto Real Estate Board-- .Third largest multiple listing service in
TREB North America
.Average of 25,000 active listings
.20,000 members
Metrolist, Inc. .Multiple listing service
State-Wide Multiple Listing .Multiple listing service
Service, Inc.
GTE Enterprise Solutions .Full service provider of technology to the
real estate industry
Moore Data Management .Full service provider of technology to the
Services real estate industry
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MLSNI. MLSNI covers the Chicago metropolitan area. We have an agreement with
MLSNI to provide virtual tours to its subscribers. Under the terms of the
agreement, MLSNI agrees to promote and assist in facilitating the sales of our
virtual tours on the MLSNI.com Web site, in its multiple listing services
system and in its marketing collateral.
MRIS. MRIS operates an online real estate network for licensed real estate
agents in the Maryland, Northern and Central Virginia, Washington D.C. and
parts of West Virginia and Pennsylvania. We have a sales and co-marketing
agreement to be the preferred vendor of virtual tours to its subscribers. Under
the terms of the agreement, MRIS is responsible for facilitating the sales of
our virtual tours to its subscribers, and agrees to market and promote our
virtual tours on its Web site, print collateral and through its call center.
TREB. TREB covers the Toronto metropolitan area. We have an agreement with
the TREB through which we provide virtual tours to its subscribers. TREB has
agreed to exclusively market and promote our virtual tours in its online and
print collateral as well as within its multiple listing services system.
Metrolist. Metrolist covers the Denver metropolitan area. We have an
agreement with Metrolist through which we provide virtual tours to its
subscribers.
State-wide. State-wide covers the state of Rhode Island. We have an agreement
with State-wide through which we provide virtual tours to its subscribers.
GTE Enterprise Solutions. GTE Enterprise Solutions is a full service provider
of technology to the real estate industry. The GTE Enterprise Solutions System
4 is an information database and communications network which integrates
multiple listing services functions. We have an agreement with GTE Enterprise
Solutions through which they market, promote and facilitate the ordering of our
virtual tours on their System 4 MLS software. Also, under the terms of the
agreement, GTE Enterprise Solutions integrates the viewing of our virtual tours
through its System 4 MLS software.
Moore Data Management Services. Moore Data Management Services is a full
service provider of technology to real estate industry. We have an agreement
with Moore Data Management Services through which they will market, promote and
facilitate the ordering of our virtual tours.
Sales and Marketing
We are engaged in a number of marketing activities to promote the bamboo.com
brand, develop name recognition and visibility and build our customer base.
These marketing activities include targeting real estate agents, home sellers
and home buyers through print and online advertising, trade shows, seminars,
direct mail and product promotions. We sell our virtual tours to real estate
agents through our direct sales force and through our partners.
Direct Sales Organization
Our direct sales force covers the United States and Canada. As of June 30,
1999, we employed 60 field sales personnel, including 7 regional directors and
53 account executives. The direct sales force focuses its efforts on real
estate agents. Below is a list of real estate brokerage firms whose agents have
purchased our virtual tours:
Alain Pinel Fred Sands Realtors Prudential Real Estate
Arvida Realty Services John L. Scott Real Estate Affiliates
Better Homes & Gardens Keller Williams RE/MAX International
Century 21 Koenig & Strey Royal LePage
Coldwell Banker Pacific Union Towne and Country
ERA Realtor
Windermere Real Estate
Revenues from Royal LePage represented 25%, 77% and 9% (unaudited) of total
revenue for the years ended December 31, 1997 and 1998 and the six months ended
June 30, 1999 (unaudited), respectively.
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Our direct sales force is employing the following strategies to market
bamboo.com virtual tours to real estate agents:
. Real Estate Brokerage Workshops. We organize and present sales workshops
at regional and local real estate brokerage offices. Our direct sales
force uses these presentations to educate and inform the real estate
agents about our virtual tours and the Internet to enhance their ability
to win listings and market properties.
. Internet Marketing Advisory Board. We have engaged eleven experienced
real estate agents from different brokerage firms and an Internet
consultant to serve on our Internet Marketing Advisory Board. These
individuals help promote bamboo.com, provide input on our products and
services and assist in our approach to the market. Upon joining the
Marketing Advisory Board members are granted options to purchase our
common stock in consideration for their services.
. Trade Shows and Conferences. We attend trade shows and conferences across
North America. We believe these forums serve as an excellent selling,
networking and branding opportunity.
Additional Marketing and Sales Channels
In addition to our direct sales force, we also have and continue to develop
relationships with real estate destination sites, real estate brokerage firms
and multiple listing services to provide marketing support in our efforts to
sell directly to real estate agents associated with these companies.
Service Provider Network
Our service provider network consists of contract videographers throughout
the United States and Canada. As of June 30, 1999, we had 188 trained
videographers. The videographers are responsible for capturing our images using
a video camera attached to a proprietary tripod and turntable system. The
videographers are generally subject to noncompetition agreements.
Technology
We have developed innovative and proprietary technology to support the
creation and delivery of our virtual tours, including a scene image capture
system, processing system and virtual tour viewing technology.
Virtual Tour Scene Capture Device
We developed a microprocessor controlled turntable system that facilitates
the creation of our virtual tours. In conjunction with a standard photographic
tripod and a commercially available video camera, a bamboo.com service provider
uses this system to quickly and easily film 360-degree virtual scenes.
Virtual Tour Video Processing System
We have developed a proprietary software system which converts standard video
into a digital file format. Our processing software takes advantage of the
adaptive exposure and focus mechanisms in the video camera to compress the
dynamic range of the scene while maintaining center-of-field focus. This
results in a single well-exposed image with effective depth-of-field. This
image is then enhanced for clarity and color range using commercially available
image processing tools. Finally, the image is coded for final display with JPEG
compression.
Virtual Tour Viewing Technology
We have developed proprietary software which enables our virtual tours to be
viewed on the Web as well as distributed via email. For Web-based virtual
tours, our View-Anywhere system automatically identifies the user's browser and
selects either a Java or HTML virtual tour depending on the browser's ability
to view Java applets. If the browser cannot view Java applets, the property is
displayed using HTML and still images. Our
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View-Anywhere technology enables images to be viewed on almost all computer
platforms using a standard Web browser. Our email virtual tour is based upon
our proprietary standalone viewer platform which was developed using a
combination of Windows and Java software. Our email virtual tour can be viewed
on any computer running Microsoft's Windows 95, Windows 98 or Windows NT
operating systems.
Competition
While the market for online virtual tours for real estate is relatively new,
it is already competitive and characterized by entrants that may have or may
develop online virtual tours similar to ours. In addition, there are relatively
low barriers to entry to our business. Moreover, due to the low cost of
entering the online virtual tours market, competition may intensify and
increase in the future. We currently compete with traditional methods used by
real estate agents to market properties for sale, including classified ads,
brochures and still photos. We also face competition from companies that have
developed virtual tour technology including Be Here Corporation, Cyclovision,
Inc. and Interactive Pictures Corporation. This competition may limit our
ability to become profitable or result in the loss of market share. We compete
on the basis of certain factors, including: quality and breadth of service,
price, brand recognition and distribution. We believe that we compete favorably
with respect to each of these factors.
Most of our employees are not subject to noncompetition agreements. In
addition, even though most of our key and technical employees are covered by
proprietary rights agreements, our business model does not involve the use of a
large amount of proprietary information. As a result, we are subject to the
risk that our employees may leave us and may start competing businesses. The
emergence of these enterprises will further increase the level of competition
in our market and could harm our financial performance.
Intellectual Property
We rely on trademarks and trade secrets, as well as confidentiality
agreements and other contractual restrictions with employees and third parties,
to establish and protect our proprietary rights. Despite these precautions, we
cannot be sure that the measures we undertake will be adequate to protect our
proprietary technology, or that they will preclude competitors from
independently developing products with functionality or features similar to our
products. We cannot be sure that the precautions we take will prevent
misappropriation or infringement of our technology. We have filed two patent
applications in the United States with respect to our video image processing
system technology and with respect to virtual tour display technology. However,
it is possible that a patent may not be issued for this application. An issued
patent may not adequately protect our technology from infringement or prevent
others from claiming that our technology infringes that of third parties.
Failure to protect our intellectual property could materially harm our
business. In addition, our competitors may independently develop similar or
superior technology. It is possible that litigation may be necessary in the
future to enforce our intellectual property rights, to protect our trade
secrets or to determine the validity and scope of the proprietary right of
others. Litigation could result in substantial costs and diversion of our
resources and could materially harm our business.
We may receive in the future, notice of claims of infringement of other
parties' proprietary rights. Infringement or other claims could be asserted or
prosecuted against us in the future, and it is possible that past or future
assertions or prosecutions could harm our business. Any such claims, with or
without merit, could be time-consuming, result in costly litigation and
diversion of technical and management personnel, cause delays in the
development and release of our products, or require us to develop non-
infringing technology or enter into royalty or licensing arrangements. Such
royalty or licensing arrangements, if required, may not be available on terms
acceptable to us, or at all. For these reasons, infringement claims could
materially harm our business.
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Research and Development
As of July 15, 1999, we had 10 employees engaged in research and development
related to content capture, processing technology and viewer and user
experience enhancements. We expended approximately $23,829, $41,567 and
$242,917 for the years ended December 31, 1996, 1997 and 1998, respectively, on
research and development. We expect to expend resources on research and
development in amounts necessary to continue improvements in content capture
and processing technology and viewer and user enhancements in amounts necessary
to ensure our virtual tour business remains competitive.
Legal Proceedings
Bamboo.com is not a party to any material legal proceedings.
Employees
As of June 30, 1999, we employed 130 full-time employees in the United States
and 28 full-time employees in Canada, and 48 full time equivalent independent
contractors in our video processing and customer service call center in Canada.
Our employees are not covered by any collective bargaining agreements. We
believe that our employee relations are good. There is significant competition
for employees with the managerial, technical, marketing, sales and other skills
required to operate our business. Our success will depend upon our ability to
attract, retain and motivate employees.
Facilities
We lease office space in Palo Alto, California for our corporate
headquarters. The current lease expires on February 2, 2002. We also lease
office space in Toronto for our video processing and customer service call
center. The current leases expire in May 2000 and February 2002, respectively.
We also lease office space for our sales offices in San Diego, California and
Chicago, Illinois.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth the directors and executive officers of
bamboo.com, their ages and the positions held by them with bamboo.com as of
July 20, 1999:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Leonard B. McCurdy...... 52 Chairman of the Board and Chief Executive Officer
Randall I. Bresee....... 51 Chief Financial Officer
Kevin B. McCurdy........ 25 Founder, Executive Vice President and Director
Andrew P. Laszlo........ 40 Senior Vice President, Business Development
Mark R. Searle.......... 36 Chief Operating Officer
John Assaraf............ 37 Senior Vice President, Sales
Howard Field............ 26 Co-Founder and Vice President
Andrew J. Aicklen....... 46 Vice President and General Manager Canadian Operations
Duncan Fortier.......... 55 Director
Philip Sanderson........ 31 Director
John Moragne............ 42 Director
</TABLE>
John Moragne and Philip Sanderson comprise bamboo.com's audit committee. John
Moragne and Duncan Fortier comprise bamboo.com's compensation committee.
Leonard B. McCurdy has served as Chairman and a member of the Board since our
inception. Since January 1999, Mr. McCurdy has served as our Chief Executive
Officer. Since 1991, Mr. McCurdy has served as the President of Lanek Limited,
a private investment holding company. Lanek Limited is a stockholder of
bamboo.com. From 1988 to 1991 Mr. McCurdy served as President and Chief
Executive Officer of ISM Information Systems Management Corporation, a company
that provided large technology solutions. Mr. McCurdy is the father of Kevin B.
McCurdy.
Randall I. Bresee joined bamboo.com as Chief Financial Officer in April 1999.
From January 1997 to April 1999 Mr. Bresee served as Vice President and
Controller for Santa Cruz Operation, Inc., a Unix software provider, and from
May 1996 to January 1997, he served as a Director of Finance and Controller.
From August 1988 to May 1996, Mr. Bresee served as a Director of Finance and
Controller for Silicon Graphics, Inc., a computer manufacturer. Mr. Bresee
holds a B.A. from Humboldt State University.
Kevin B. McCurdy founded bamboo.com in November 1995 and has served as an
executive officer and director since its inception. From September 1991 to June
1995, Mr. McCurdy attended Babson College where he earned a Bachelor of Science
in Business Administration. Mr. McCurdy is the son of Leonard B. McCurdy.
Andrew P. Laszlo joined bamboo.com as Senior Vice President, Business
Development in January 1999. From September 1997 to January 1999, Mr. Laszlo
served as a Business Development Manager at Intel Corporation. From September
1995 to June 1997, Mr. Laszlo attended business school. From December 1989 to
August 1995, Mr. Laszlo practiced corporate law with Cohen, Berke, Bernstein,
Brodie, Kondell & Laszlo, P.A. Mr. Laszlo holds a B.A. in English from Wesleyan
University, a J.D. from George Washington University and an M.B.A. from the
University of California, Berkeley.
Mark R. Searle joined bamboo.com as Chief Operating Officer in January 1999.
From October 1997 to November 1998, Mr. Searle served as the Chief Operating
Officer of Cybergold, Inc., an online incentive marketing company. From
December 1994 to April 1997, Mr. Searle served as the Vice President of
Operations and Chief Operating Officer of Plynetics Express Corporation, a
rapid prototyping company. From August 1994 to December 1994, Mr. Searle served
as a Senior Consultant for Deloitte & Touche, LLP. Mr.
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Searle holds a B.A. in English and Creative Writing from Princeton University
and an M.B.A. from the Harvard Graduate School of Business.
John Assaraf joined bamboo.com as Senior Vice President, Sales in January
1999. From November 1987 to May 1999, Mr. Assaraf served as regional director
and president of RE/MAX of Indiana, a real estate franchising company.
Howard Field is a co-founder of bamboo.com and currently serves as a Vice
President. He also served as a director from February 1996 to February 1998. In
addition, from February 1996 to February 1998, Mr. Field served as our
President and Chief Operating Officer. From September 1991 to June 1995, Mr.
Field attended Babson College where he earned a Bachelor of Science in Business
Administration.
Andrew J. Aicklen joined bamboo.com as Vice President and General Manager,
Canadian Operations in March 1999. From October 1991 to March 1999, Mr. Aicklen
served as President of Information Access Inc., a company he co-founded that
provides software distribution services. From June 1985 to January 1991,
Mr. Aicklen served in various positions with Oracle Corporation, most recently
as a Vice President. Mr. Aicklen holds an M.B.A. from the University of Houston
and a B.A. from the University of Texas at Austin.
Duncan Fortier has served as a director of bamboo.com since March 1999. Mr.
Fortier is the President of Jascan Investments, Inc., an investment holding
company, a position he has held since 1992. Previously he served as Executive
Vice President of ISM Information Systems Management Corporation.
Philip Sanderson has served as a director of bamboo.com since March 1999. Mr.
Sanderson is a Partner with Walden Media, L.L.C., a private equity investment
firm. Mr. Sanderson joined Walden Media, L.L.C. as an associate in July 1997.
From September 1995 to June 1997, Mr. Sanderson attended the Harvard Graduate
School of Business. From April 1993 to August 1995, Mr. Sanderson was an
associate with Robertson Stephens, an investment banking firm. From August 1990
to January 1993, Mr. Sanderson worked in the corporate finance group at Goldman
Sachs & Co., an investment banking firm. Mr. Sanderson holds a B.A. from
Hamilton College and an M.B.A. from the Harvard Graduate School of Business.
John Moragne has served as a director of bamboo.com since March 1999. Since
May 1993, Mr. Moragne has served as Managing Director of Trident Capital, a
private equity investment firm. Mr. Moragne is currently a director of DAOU
Systems, Inc., MapQuest.com, Inc. and Newgen Results Corp. Mr. Moragne holds a
B.A. from Dartmouth College, an M.S. from the Stanford Graduate School of
Applied Earth Sciences and an M.B.A. from the Stanford Graduate School of
Business.
Board Composition
We currently have authorized seven directors, although the number of
authorized directors will be reduced to five approximately 15 days after the
closing of this offering, as described below. In accordance with the terms of
our Amended and Restated Certificate of Incorporation which will be in effect
upon the closing of this offering, the terms of office of the members of the
Board of Directors will be divided into three classes: Class I, whose term will
expire at the annual meeting of stockholders to be held in 2000, Class II,
whose term will expire at the annual meeting of stockholders to be held in
2001, and Class III, whose term will expire at the annual meeting of
stockholders to be held in 2002. The Class I directors are John Moragne, Philip
Sanderson and one vacancy, the Class II director is Duncan Fortier and one
vacancy exists and the Class III directors are Kevin B. McCurdy and Leonard B.
McCurdy. In addition, 15 days after we have redeemed all shares of Series C
redeemable preferred stock, the authorized number of Class I directors shall be
reduced by one and the authorized number of Class II directors shall be reduced
by one, eliminating the current vacancies. At each annual meeting, the
successors to directors whose term will then expire will be elected to serve
until the third annual meeting. In addition, our bylaws provide that the
authorized number of directors may be changed by resolution of the Board of
Directors. Any additional directorships resulting from an increase in the
number of
40
<PAGE>
directors may be filled by resolution of the Board of Directors and will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the total number of directors. This classification
of the Board of Directors may have the effect of delaying or preventing changes
in our control or management.
Each officer is elected by, and serves at the discretion of, the Board of
Directors. Each of our officers and directors, other than nonemployee
directors, devotes full time to the affairs of bamboo.com. Our nonemployee
directors devote such time to our affairs as is necessary to discharge their
duties. There are no close family relationships among any of the directors,
officers or key employees of bamboo.com other than the father-son relationship
between Leonard B. McCurdy and Kevin B. McCurdy.
Board Committees
The Audit Committee of the Board of Directors reviews the internal accounting
procedures of bamboo.com and consults with and reviews the services provided by
our independent accountants. The Audit Committee currently consists of John
Moragne and Philip Sanderson.
The Compensation Committee of the Board of Directors reviews and recommends
to the Board the compensation and benefits of all executive officers of
bamboo.com, administers bamboo.com's stock option plan and establishes and
reviews general policies relating to compensation and benefits of employees of
bamboo.com. The Compensation Committee currently consists of John Moragne and
Duncan Fortier. Except as set forth in "Interests of Management and Others in
Transactions," no interlocking relationships exist between our Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company, nor has any interlocking relationship existed
in the past.
Director Compensation
Our directors do not currently receive cash compensation from bamboo.com for
their service as members of the Board of Directors, although they are
reimbursed for expenses in connection with attendance at Board and Committee
meetings. We do not provide additional compensation for committee participation
or special assignments of the Board of Directors. From time to time, our
directors have received and may continue to receive grants of options to
purchase shares of bamboo.com's common stock pursuant to the 1998 Stock Plan.
41
<PAGE>
Executive Compensation
The following table sets forth the total compensation received for services
rendered to bamboo.com during the fiscal year ended December 31, 1998 by our
Chief Executive Officer and other executive officers who received salary, bonus
and restricted stock for such fiscal year in excess of $100,000 and key
executive personnel for the fiscal year ended December 31, 1998 and key
executive personnel as of June 30, 1999. The titles listed below are the titles
of the named executive officers as of June 30, 1999. In the table below, Other
Annual Compensation for all of the named executive officers is composed
entirely of options granted to the Named Executive Officers that had exercise
prices at the time of issuance below the then current fair market value of the
shares to be acquired upon exercise. Leonard McCurdy will be compensated at an
annual base salary of $150,000 during the fiscal year ending on December 31,
1999. Kevin McCurdy will be compensated at an annual base salary of $136,000
during the fiscal year ending on December 31, 1999. Mr. Bresee joined
bamboo.com in April 1999 as its Chief Financial Officer and will be compensated
at an annual base salary of $135,000 during the fiscal year ending on December
31, 1999. Mr. Laszlo joined bamboo.com in January 1999 as its Senior Vice
President, Business Development and will be compensated at an annual base
salary of $132,000 during the fiscal year ending on December 31, 1999. Mr.
Searle joined bamboo.com in January 1999 as its Chief Operating Officer and
will be compensated at an annual base salary of $120,000 during the fiscal year
ending on December 31, 1999.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
---------------------
Annual Compensation Restricted Securities
---------------------------------- Stock Underlying
Name and Principal Bonus Other Annual Options
Position Salary($)(1) ($) Compensation($) Awards ($) (#)
- ------------------ ------------ ----- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Leonard B. McCurdy(2)
Chairman of the Board
and Chief Executive
Officer................ $10,109 $-- $137,643 $34,758 560,000
Kevin B. McCurdy,
Executive Vice
President.............. 20,962 -- 102,340 34,758 420,000
Howard Field, Vice
President.............. 25,368 -- 96,978 34,758 392,000
Randall I. Bresee, Chief
Financial Officer...... -- -- -- -- --
Andrew P. Laszlo, Senior
Vice President,
Business Development... -- -- -- -- --
Mark R. Searle, Chief
Operating Officer...... -- -- -- -- --
</TABLE>
- --------
(1) Leonard McCurdy, Kevin McCurdy and Howard Field received $10,109, $20,962
and $25,308, respectively, for fees for services rendered to us for fiscal
year ended December 31, 1998.
(2) These options and stock were granted to Lanek Limited, an entity affiliated
with Leonard McCurdy.
42
<PAGE>
Option Grants in Last Fiscal Year and the Six Months Ended June 30, 1999
The following table sets forth information with respect to stock options
granted to each of the named executive officers during the year ended December
31, 1998, including the potential realizable value assuming an initial public
offering price of $7.00 per share over the ten year term of the options based
on assumed rates of stock appreciation of 0%, 5% and 10%, compounded annually
and subtracting from that result the total option exercise price. These assumed
rates of appreciation comply with the rules of the Securities Exchange and
Commission and do not represent our estimate of future stock price. Actual
gains, if any, on stock option exercises will be dependant on the future
performance of our common stock. All the stock options below were fully
exercisable on the date of grant and were exercised during 1998. We have never
granted any stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Potential Realizable Value at
Number of Percent of Assumed Annual Rates of Stock
Securities Total Options Price Appreciation for Option
Underlying Granted to Exercise or Term
Options Employees in Base Price Expiration ---------------------------------
Name Granted Fiscal Year(1) ($/Sh) Date 0% 5% 10%
---- ---------- -------------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Leonard B. McCurdy(2)... 560,000 29.94% $0.002 02/12/08 $3,918,880 $6,384,147 $10,166,350
Kevin B. McCurdy........ 280,000 14.97% 0.002 02/12/08 1,959,440 3,192,073 5,083,175
140,000 7.48% 0.002 05/31/08 979,720 1,596,037 2,541,588
Howard Field............ 280,000 14.97% 0.002 02/12/08 1,959,440 3,192,073 5,083,175
112,000 5.99% 0.002 05/31/08 783,776 1,276,829 2,033,270
Randall I. Bresee....... -- -- -- -- -- -- --
Andrew P. Laszlo........ -- -- -- -- -- -- --
Mark R. Searle.......... -- -- -- -- -- -- --
</TABLE>
- --------
(1) In 1998, we granted options to purchase an aggregate of 1,870,680 shares of
common stock.
(2) These options were granted to Lanek Limited, an entity affiliated with
Leonard McCurdy.
The following table sets forth option grants to the named executive officers
for the time period of January 1, 1999 to June 30, 1999.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------
Number of
Securities
Underlying Exercise
Options Prices Expiration
Name Granted ($/sh) Date
---- ---------- -------- ----------
<S> <C> <C> <C>
Leonard B. McCurdy............................. 42,000(1) $0.18 1/1/09
336,000(2) $0.18 2/2/09
Kevin B. McCurdy............................... 42,000(1) $0.18 1/1/09
268,800(2) $0.18 2/2/09
Howard Field................................... 51,445(1) $0.18 1/1/09
168,000(2) $0.18 2/2/09
Randall I. Bresee.............................. 210,000(3) $0.27 4/6/09
Andrew P. Laszlo............................... 301,000(1) $0.18 1/1/09
336,000(2) $0.18 2/2/09
28,000(1) $0.27 4/6/09
Mark R. Searle................................. 112,000(3) $0.18 2/2/09
56,000(3) $0.27 4/6/09
</TABLE>
- --------
(1) These options were fully exercisable on the date of grant.
(2) These options become fully exercisable upon the completion of this
offering.
(3) 25% of the shares subject to these options become exercisable upon the
completion of this offering.
43
<PAGE>
Option Exercises During the Last Fiscal Year
The following table provides summary information concerning option exercises
for the fiscal year ended December 31, 1998 by each of the named executive
officers. The named executive officers did not hold any options as of December
31, 1998.
<TABLE>
<CAPTION>
Shares
Acquired Value
Name On Exercise (#) Realized ($)
---- --------------- ------------
<S> <C> <C>
Leonard B. McCurdy(1)............................. 560,000 $137,643
Kevin B. McCurdy.................................. 420,000 102,340
Howard Field...................................... 392,000 96,978
Randall I. Bresee................................. -- --
Andrew P. Laszlo.................................. -- --
Mark R. Searle.................................... -- --
</TABLE>
- --------
(1) These options were granted to Lanek Limited, an entity affiliated with
Leonard McCurdy.
Stock Plans
Amended and Restated 1998 Stock Plan
The Board of Directors adopted the 1998 Stock Plan in December 1998 and the
stockholders approved the 1998 Stock Plan in December 1998. In connection with
this offering, the Board of Directors approved the amendment and restatement of
the 1998 Plan in July 1999 and the stockholders approved the amendment and
restatement in July 1999. The 1998 Stock Plan provides for the grant to
employees of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code and for the grant to employees, directors and consultants
of nonstatutory stock options and stock purchase rights.
Number of Shares of Common Stock Available under the 1998 Plan
As of June 30, 1999, a total of 6,779,394 shares of common stock were
reserved for issuance pursuant to the 1998 Stock Plan, of which options to
acquire 6,027,386 shares were issued and outstanding as of that date. As part
of the 1999 amendment and restatement of the 1998 Stock Plan, the Board of
Directors and the stockholders subsequently approved an increase of 1,400,000
shares for issuance under the 1998 Stock Plan, and for annual increases in the
number of shares available for issuance under the 1998 Plan, on the first day
of each new fiscal year of bamboo.com beginning with fiscal 2000, equal to the
lesser of 5% of the outstanding shares of common stock on the first day of the
fiscal year, 2 million shares or such lesser amount as the Board of Directors
may determine.
Administration of the 1998 Stock Plan
The 1998 Stock Plan administrator, which is the Board of Directors or a
committee of the Board, administers the 1998 Stock Plan. In the case of options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code, the committee will consist of two
or more "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code. The administrator has the power to determine the terms
of the options or stock purchase rights granted, including the exercise price,
the number of shares subject to each option or stock purchase right, the
exercisability of the options and the form of consideration payable upon
exercise.
Options
The administrator determines the exercise price of nonstatutory stock options
granted under the 1998 Stock Plan, but with respect to nonstatutory stock
options intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code, the exercise price must
be equal to at least the fair market value of the common stock on the date of
grant. With respect to any participant
44
<PAGE>
who owns stock possessing more than 10% of the voting power of all classes of
our outstanding capital stock, the exercise price of any incentive stock option
granted must equal at least 110% of the fair market value on the grant date and
the term of any incentive stock option may not exceed five years. The term of
all other options granted under the 1998 Stock Plan may not exceed ten years.
After termination of an optionee's status as an employee, director or
consultant of bamboo.com, an optionee generally must exercise an option granted
under the 1998 Stock Plan within the time period set forth in the optionee's
option agreement, or in the absence of a specified time within 3 months or
within 12 months after the optionee's termination by death or disability, but
in no event later than the expiration of the option's ten year term.
Stock Purchase Rights
Stock purchase rights granted under the 1998 Stock Plan are granted at the
fair market value of our common stock at the time of grant as determined by the
administrator of the 1998 Stock Plan. The factors that the administrator
considers include: prices paid by independent third parties in transactions
involving our common stock and preferred stock; our financial condition;
prospects for financing and operating performance; and milestones in the
development of our business. Unless the administrator determines otherwise, the
restricted stock purchase agreement entered into in connection with the
exercise of the stock purchase right shall grant us a repurchase option that
bamboo.com may exercise upon the voluntary or involuntary termination of the
purchaser's service with bamboo.com for any reason, including death or
disability. The purchase price for share repurchases pursuant to restricted
stock purchase agreements shall be the original price paid by the purchaser and
may be paid by cancellation of any indebtedness of the purchaser to bamboo.com.
Any repurchase option shall lapse at the rate that the administrator
determines.
Transferability of Options and Stock Purchase Rights
An optionee generally may not transfer options and stock purchase rights
granted under the 1998 Stock Plan, and only the optionee may exercise an option
or stock purchase right during his or her lifetime.
Adjustments upon Merger or Asset Sale
The 1998 Stock Plan provides that in the event of a merger of bamboo.com with
or into another corporation or a sale of substantially all of our assets, the
successor corporation shall assume or substitute each option or stock purchase
right. If the outstanding options or stock purchase rights are not assumed or
substituted, the administrator shall provide notice to the optionee that he or
she has the right to exercise the option or stock purchase right as to all of
the shares subject to the option or stock purchase right, including shares
which would not otherwise be exercisable, for a period of fifteen days from the
date of the notice. The option or stock purchase right will terminate upon the
expiration of the fifteen-day period. In addition, options granted under the
1998 Stock Plan may provide, and past grants have provided, for additional
vesting in the event of a change of control of bamboo.com.
Amendment and Termination of the 1998 Stock Plan
Unless terminated sooner, the 1998 Stock Plan will terminate automatically in
2008. In addition, the administrator has the authority to amend, suspend or
terminate the 1998 Plan, provided that no such action may affect any share of
common stock previously issued and sold or any option previously granted under
the 1998 Stock Plan.
1999 Employee Stock Purchase Plan
The Board of Directors adopted the 1999 Employee Stock Purchase Plan in June
1999, and the stockholders approved the Purchase Plan in July 1999.
45
<PAGE>
Number of Shares of Common Stock Available under the Purchase Plan
A total of 700,000 shares of common stock has been reserved for issuance
under the Purchase Plan. In addition, the Purchase Plan provides for annual
increases in the number of shares available for issuance under the Purchase
Plan on the first day of each fiscal year, beginning with fiscal 2000, equal to
the lesser of 2.5% of the outstanding shares of common stock on the first day
of the fiscal year, 700,000 shares or such lesser amount as may be determined
by the board.
Administration of the Purchase Plan
The Board of Directors or a committee appointed by the board administers the
Purchase Plan. The Board or its committee has full and exclusive authority to
interpret the terms of the Purchase Plan and determine eligibility.
Eligibility to Participate
Employees are eligible to participate if they are customarily employed by
bamboo.com or our subsidiary for at least 20 hours per week over five months in
any calendar year. However, an employee may not be granted an option to
purchase stock under the Purchase Plan if such an employee:
. immediately after grant owns stock possessing 5% or more of the total
combined voting power or value of all classes of the capital stock of
bamboo.com, or
. whose rights to purchase stock under all employee stock purchase plans of
bamboo.com accrues at a rate which exceeds $25,000 worth of stock for
each calendar year.
Offering Periods and Contributions
The Purchase Plan, which is intended to qualify under Section 423 of the
Code, contains consecutive, overlapping 24 month offering periods. Each
offering period includes four 6 month purchase periods. The offering periods
generally start on the first trading day on or after May 1 and November 1 of
each year, except for the first such offering period which will commence on the
first trading day on or after the effective date of this offering and will end
on the last trading day on or before April 30, 2001.
The Purchase Plan permits participants to purchase common stock through
payroll deductions of up to 15% of the participant's "compensation."
Compensation is defined as the participant's base straight time gross earnings
and commissions but excludes payments for overtime, shift premium payments,
incentive compensation, incentive payments, bonuses and other compensation. The
maximum number of shares a participant may purchase during a single offering
period is 10,000 shares.
Purchase of Shares
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each offering period. The price of the
stock purchased under the Purchase Plan is 85% of the lower of the fair market
value of the common stock at the beginning of the offering period or the end of
the applicable purchase period. In the event the fair market value at the end
of a purchase period is less than the fair market value of the Common Stock at
the beginning of the offering period, participants will be withdrawn from the
current offering period and will automatically be re-enrolled in a new offering
period. Participants may end their participation at any time during an offering
period, and they will be paid their payroll deductions to date. Participation
ends automatically upon termination of employment with bamboo.com.
Transferability of Rights
A participant may not transfer rights granted under the Purchase Plan other
than by will, the laws of descent and distribution or as may be otherwise
provided under the Purchase Plan.
46
<PAGE>
Adjustments upon Merger or Asset Sale
The Purchase Plan provides that, in the event of a merger of bamboo.com with
or into another corporation or a sale of substantially all of our assets, the
successor corporation may assume or substitute for each outstanding right to
purchase shares of Common Stock under the Purchase Plan. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened, and a new exercise date
will be set.
Amendment and Termination of the Purchase Plan
The 1999 Purchase Plan will terminate in 2009. However, the Board of
Directors has the authority to amend or terminate the Purchase Plan, except
that, subject to the exceptions described in the Purchase Plan, no such action
may adversely affect any outstanding rights to purchase stock under the
Purchase Plan.
Employment Agreements and Change of Control Arrangements
We have entered into employment agreements with Leonard McCurdy, Kevin
McCurdy, Howard Field, and Andrew Laszlo. These agreements have initial two-
year terms, and thereafter are automatically renewed on a yearly basis, absent
notification by either party to the contrary. These agreements also provide
that Leonard McCurdy, Kevin McCurdy, Mr. Field, and Mr. Laszlo each would be
granted an option to purchase shares of our Common Stock at an exercise price
of $0.18, vesting monthly over 24 months, in the following amounts: 336,000
shares, 268,800 shares, 168,000 shares and 336,000 shares, respectively. These
agreements provide that these options shall become fully vested upon a change
of control or the completion of this offering. These agreements provide that in
the event the executive is constructively or actually terminated without cause,
the executive shall be entitled to six monthly severance payments equal to one-
twelfth the executive's annual base salary as of the date of termination. At
the time of each monthly severance payment, Mr. Laszlo will also be entitled to
one-twelfth of the bonus compensation paid to him in the preceeding fiscal
year. In the event of such a termination, Leonard McCurdy and Mr. Laszlo shall
also be reimbursed up to $1500 per month and Kevin McCurdy and Mr. Field shall
also be reimbursed up to $750 per month for premium payments for group health
coverage for up to 12 months. A full acceleration of option vesting also shall
follow the constructive or actual termination of an executive without cause. If
the executive is terminated within 2 years of a change in control, the
executive is entitled to a lump sum payment within 10 days of such termination,
instead of monthly severance payments. These agreements provide that in the
event any payment or benefit by us to the executive is determined to be subject
to the golden parachute excise tax rules, the executive shall be entitled to
reimbursement by us in an amount sufficient to pay the excise tax and any
applicable federal and state income taxes on such reimbursement. The
executive's right to receive the benefits set forth above will immediately
terminate if the executive competes with us during the 12 months following
termination of employment or upon breach of any confidentiality agreement with
us.
In accordance with the terms of their option agreements under our 1998 Stock
Plan, whether or not the options are assumed or substituted in a merger,
acquisition or asset sale, each named executive officer's outstanding options,
subject to vesting, shall vest and become exercisable as to 50% of the unvested
shares at the time of such merger, acquisition or sale of assets.
47
<PAGE>
INTERESTS OF MANAGEMENT AND OTHERS IN TRANSACTIONS
Since January 1, 1998, some of our directors, executive officers and
affiliates have entered into transactions with us as follows:
<TABLE>
<CAPTION>
Price
Date of per
Name Purchase Type of Security Security Number of Securities(1)
- ------------------------ --------- ------------------------ -------- -----------------------
<S> <C> <C> <C> <C>
Jane McCurdy(2)......... 3/31/1998 Common Stock $ 0.25(10) 2,800
Kristy McCurdy(2)....... 3/31/1998 Common Stock $ 0.25(10) 2,800
4/8/1998 Common Stock $ 0.25(10) 15,400
Howard Field............ 3/31/1998 Common Stock $ 0.25(10) 168,000
4/8/1998 Common Stock $ 0.25(10) 15,400
6/28/1998 Common Stock units(6) $ 0.24(10) 35,000
Lanek Limited........... 3/31/1998 Common Stock $ 0.25(10) 361,200
6/28/1998 Common Stock units(6) $ 0.24(10) 70,000
Lisa Field(3)........... 3/31/1998 Common Stock $ 0.25(10) 5,600
Peter Field(3).......... 3/31/1998 Common Stock $ 0.25(10) 5,600
Carol Smith Slavens(3).. 3/31/1998 Common Stock $ 0.25(10) 8,400
12/8/1998 Series A Preferred Stock $ 1.43 35,000
Paul Slavens(3)......... 3/31/1998 Common Stock $ 0.25(10) 5,600
Mark Stephenson(4)...... 2/12/1998 Option to purchase -- 280,000
Common Stock
5/31/1998 Option to purchase -- 112,000
Common Stock
Vestmark Limited........ 6/28/1998 Common Stock units(6) $ 0.24(10) 35,000
4/8/1998 Common Stock $ 0.25(10) 70,000
5/22/1998 Common Stock (5) 285,600
1/1/1999 Option to purchase -- 7,700
Common Stock
Duncan Fortier.......... 4/21/1998 Common Stock $ 0.25(10) 42,000
2/2/1999 Option to purchase -- 33,600
Common Stock
4/6/1999 Option to purchase -- 50,400
Common Stock
Jascan Investments,
Inc.(7)................. 4/21/1998 Common Stock $ 0.25(10) 70,000
6/28/1998 Common Stock units(6) $ 0.24(10) 140,000
Walden Media and
Information Technology 2/18/1999 Convertible $850,000 $850,000 principal;
Fund, L.P.(8)........... subordinated 10% interest per
promissory note year; convertible
into Series B
preferred stock
3/12/1999 Series B Preferred Stock $ 2.074 1,374,204
5/5/1999 Series B Preferred Stock $ 2.074 482,177
Walden Japan Partners,
L.P. (8)................ 3/12/1999 Series B Preferred Stock $ 2.074 96,435
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Date of Price per
Name Purchase Type of Security Security Number of Securities
- ------------------------ --------- ------------------------ --------- --------------------
<S> <C> <C> <C> <C>
Walden EDB Partners,
L.P.(8)................ 3/12/1999 Series B Preferred Stock $2.074 96,435
Information Associates-
II, L.P.(9)............ 3/12/1999 Series B Preferred Stock $2.074 2,277,996
IA-II Affiliates Fund,
L.L.C.(9).............. 3/12/1999 Series B Preferred Stock $2.074 132,888
Intel Corporation....... 3/12/1999 Series B Preferred Stock $2.074 1,205,440
</TABLE>
- --------
(1) The number of shares of Series A and Series B preferred stock shown in the
table are adjusted to reflect the number of shares of common stock into
which the preferred stock will convert upon the consummation of the
offering.
(2) A relative of Leonard and Kevin McCurdy.
(3) A relative of Howard Field.
(4) Mr. Stephenson is an affiliate of Vestmark Limited and these options have
been exercised prior to this offering.
(5) These shares were issued as compensation for prior services performed by
Mr. Stephenson.
(6) Each unit consisted of one share of common stock and a warrant to purchase
one share of common stock at an exercise price of C$0.36.
(7) An entity affiliated with Duncan Fortier.
(8) Philip Sanderson is a partner of the Walden Media and Technology Fund,
L.P., which is affiliated with Walden EDB Partners, L.P. and Walden Japan
Partners, L.P.
(9) An affiliate of John Moragne.
(10) Each of these transactions were at C$0.36 which has been translated to US
dollars using the exchange rate in effect at the date of the transaction.
Each of the individuals listed above have entered into lockup agreements
pursuant to which they have agreed not to offer or sell any shares of common
stock or securities convertible into or exchangeable or exercisable for shares
of common stock for a period of 180 days from the date of this prospectus
without the prior written consent of Prudential Securities, on behalf of the
underwriters. Prudential Securities may, at any time and without notice, waive
the terms of these lockup agreements.
On February 2, 1999, we made a secured loan in the amount of $53,750 to Mr.
Laszlo for the purchase of 301,000 shares of our common stock pursuant to the
stock option grant made to Mr. Laszlo on December 30, 1999. The loan accrues
interest at 6% per annum and is secured by a full recourse promissory note, the
301,000 shares of our common stock and all proceeds of such shares.
On March 12, 1999, the Company entered into a strategic alliance agreement
with Intel Corporation, a greater than 5% stock holder.
On June 1, 1999, we made a secured loan in the amount of $20,000 to Mr.
Laszlo for the purchase of an aggregate of 98,000 shares of our common stock
pursuant to stock option grants made to Mr. Laszlo in February 1999 and April
1999. The loan accrues interest at the rate of 6% per annum and is secured by
the 98,000 shares of our common stock and all proceeds of such shares.
On January 1, 1999 we entered into employment agreements, which contain
severance provisions, with Leonard B. McCurdy, Kevin B. McCurdy, Howard Field
and Andrew P. Laszlo.
On June 11, 1999, we issued VantagePoint Venture Partners III, L.P. and
VantagePoint Communication Partners, L.P., together a greater than 5%
stockholder, 758,078 and 379,042 shares of common stock, respectively, and 667
and 333 shares of Series C redeemable preferred stock for an aggregate purchase
price of $6,666,667 and $3,333,333, respectively.
We have entered into indemnification agreements with our officers and
directors containing provisions that require us, among other things, to
indemnify our officers and directors against certain liabilities that may arise
49
<PAGE>
by reason of their status or service as officers or directors, other than
liabilities arising from willful misconduct of a culpable nature, and to
advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified.
These individuals have entered into lock-up agreements pursuant to which we
and they have agreed not to offer or sell any shares of common stock or
securities convertible into or exchangeable or exercisable for shares of common
stock for a period of 180 days from the date of this prospectus without the
prior written consent of Prudential Securities, on behalf of the underwriters.
Prudential Securities may, at any time and without notice, waive the terms of
these lockup agreements.
50
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to beneficial
ownership of our common stock, as of June 30, 1999 and as adjusted to reflect
the sale of common stock offered by us pursuant to this offering and the
conversion of all currently outstanding shares of convertible preferred stock
into shares of common stock. The following table lists:
. each person known by us to beneficially own more than 5% of the common
stock;
. each director;
. each Named Executive Officer; and
. all directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. The address for each listed director and officer is
c/o bamboo.com, Inc., 124 University Avenue, Palo Alto, California 94304.
Except as indicated by footnote, and subject to applicable community property
laws, the persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them. The
number of shares of common stock outstanding used in calculating the percentage
for each listed person includes the shares of common stock underlying options
or warrants that are exercisable within 60 days of June 30, 1999, but excludes
shares of common stock underlying options held by any other persons. Percentage
of beneficial ownership prior to the offering is based on 16,383,650 shares of
common stock outstanding as of June 30, 1999 after giving effect to the
conversion of our currently outstanding Series A and Series B preferred stock.
Percentage of beneficial ownership after the offering is based on 20,383,650
shares outstanding after the offering and 1,780,184 shares subject to options
that become exercisable immediately upon the completion of the offering. Kevin
B. McCurdy, Howard Field, Vestmark Limited and Andrew P. Laszlo have granted
the Underwriters an option to purchase up to an aggregate of 224,000 shares to
cover over-allotments. If the Underwriters exercise the over-allotment options
in full, each of Mr. McCurdy, Mr. Field, Vestmark Limited and Mr. Laszlo shall
sell up to 112,000, 56,000, 33,600 and 22,400 shares, respectively. If such
over-allotment option is exercised in full, Mr. McCurdy's, Mr. Field's,
Vestmark Limited's and Mr. Laszlo's percentage of beneficial ownership of our
common stock after the offering will be 6.29%, 7.90%, 3.53% and 2.82%,
respectively.
<TABLE>
<CAPTION>
Percentage of Shares
Beneficially Owned
Shares ------------------------
Beneficially Prior to After
Name of Beneficial Owner Owned Offering Offering
- ------------------------ ------------ ---------- ----------
<S> <C> <C> <C>
Funds affiliated with Trident
Capital
John Moragne (1).............. 2,410,884 (2) 14.72% 10.88%
2480 Sand Hill Road
Menlo Park, CA 94025
Funds affiliated with Walden
Media and Information
Technology Fund, L.P.
Philip Sanderson(3)........... 2,049,251 (4) 12.51% 9.25%
750 Battery Street, 7th Floor
San Francisco, CA 94025
Funds affiliated with
VantagePoint Venture Partners
III L.P....................... 1,137,120 (5) 6.94% 5.13%
101 Bayhill Drive, Suite 100
San Bruno, CA 94066
Intel Corporation.............. 1,205,440 7.36% 5.44%
2200 Mission College Blvd.
Santa Clara, CA 95052
Lanek Limited
Leonard B. McCurdy............ 2,125,200 (6) 12.97% 10.60%
Kevin B. McCurdy............... 1,363,600 (7) 8.32% 6.96%
Howard Field................... 1,741,245 (8) 10.63% 8.36%
Vestmark Limited............... 825,300 (9) 5.04% 3.78%
Duncan Fortier................. 456,400 (10) 2.79% 2.25%
Randall I. Bresee.............. 0 * 0.24%(11)
Andrew P. Laszlo............... 441,000 (12) 2.69% 3.00%
Mark R. Searle................. 0 * 0.19%(13)
All directors and executive
officers as a group
(14 persons).................. 14,004,876 (14) 85.48% 67.36%
</TABLE>
- --------
* Represents beneficial ownership of less than one percent of the common
stock.
51
<PAGE>
(1) Mr. Moragne, a director of bamboo.com is a member of Trident Capital
Management-II, L.L.C., the general partner of Information Associates-II,
L.P. Mr. Moragne is also a member of IA-II Affiliates Fund, L.L.C. Mr.
Moragne disclaims beneficial ownership of the shares held by Information
Associates-II, L.P. and IA-II Affiliates Fund, L.L.C., except to the
extent of his pecuniary interest therein.
(2) Represents 2,277,996 shares held by Information Associates-II, L.P. and
132,888 shares held by IA-II Affiliates Fund L.L.C.
(3) Mr. Sanderson, a director of bamboo.com, is a partner of Walden Media,
L.L.C., the General Partner of Walden Media and Information Technology
Fund, L.P. and an affiliate of Walden Japan Partners, L.P., and Walden EDB
Partners, L.P. and disclaims beneficial ownership of the shares held by
Walden Media and Information Technology Fund, L.P., Walden Japan Partners,
L.P., and Walden EDB Partners, L.P. except to the extent of his
proportionate ownership interest therein.
(4) Represents 1,856,381 shares held by Walden Media and Information
Technology Fund, L.P., 96,435 shares held by Walden Japan Partners, L.P.,
and 96,435 shares held by Walden EDB Partners, L.P.
(5) Represents 758,078 shares held by VantagePoint Venture Partners III, LP
and 379,042 shares held by VantagePoint Communications Partners, LP.
(6) Represents 1,971,200 shares held by Lanek Limited, a five percent
stockholder and affiliate of Leonard McCurdy, Chairman of our Board of
Directors and our Chief Executive, and 154,000 shares of common stock
beneficially owned as a result of options held by Leonard McCurdy and
Lanek Limited exercisable within 60 days of June 30, 1999 and includes
after the offering 224,000 shares that become exercisable upon the
completion of this offering.
(7) Includes 131,600 shares of common stock beneficially owned as a result of
options exercisable within 60 days of June 30, 1999 and includes after the
offering 179,200 shares that become exercisable upon the completion of
this offering.
(8) Includes 107,445 shares of common stock beneficially owned as a result of
options exercisable within 60 days of June 30, 1999 and includes after the
offering 112,000 shares that become exercisable upon the completion of
this offering.
(9) Includes 7,700 shares of common stock beneficially owned as a result of
options exercisable within 60 days of June 30, 1999 and includes after the
offering 12,600 shares held by Mark Stephenson, an affiliate of Vestmark
Limited, that become exercisable upon the completion of this offering.
(10) Includes 350,000 shares held by Jascan Investments Corporation, an entity
affiliated with Mr. Fortier and 64,400 shares of common stock beneficially
owned as a result of options exercisable within 60 days of June 30, 1999
and includes after the offering 42,000 shares that become exercisable upon
the completion of this offering.
(11) Includes after the offering 52,500 shares of common stock that become
exercisable upon the completion of this offering.
(12) Includes 42,000 shares of common stock beneficially owned as a result of
options exercisable within 60 days of June 30, 1999 and includes after the
offering 224,000 shares that become exercisable upon the completion of
this offering.
(13) Includes after the offering 42,000 shares of common stock that become
exercisable upon the completion of this offering.
(14) Includes options to purchase shares of our common stock issued to Mr.
Assaraf of which up to 154,000 are exercisable within 60 days of this
prospectus. Also includes options to purchase shares of our common stock
issued to Mr. Aicklen of which 95,436 are exercisable within 60 days of
this prospectus. Includes after the offering options to purchase shares of
our common stock issued to Mr. Assaraf of which 16,800 are exercisable
upon completion of this offering and options to purchase shares of our
common stock issued to Mr. Aicklen of which 33,600 are exercisable upon
completion of this offering.
52
<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
Bamboo.com's amended and restated certificate of incorporation, which will
become effective upon the closing of this offering, authorizes the issuance of
up to 70,000,000 shares of common stock, par value $0.001 per share, 7,421,536
shares of Class B common stock, par value $0.0001 per share and 5,001,100
shares of preferred stock, par value $0.001 per share, 1,100 shares of which
shall be designated Series C redeemable preferred stock and 5,000,000 shares of
which the rights and preferences of which may be established from time to time
by the Board of Directors. This description is only a summary. You should refer
to the amended and restated certificate of incorporation and bylaws which have
been filed with the Securities and Exchange Commission as exhibits to our
registration statement, of which this prospectus forms a part. As of June 30,
1999, 9,226,766 shares of common stock were outstanding and 2,556,024 shares of
preferred stock convertible into 7,156,882 shares of common stock upon the
completion of this offering were issued and outstanding. As of June 30, 1999,
we had 74 stockholders.
Common Stock
Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences to which holders of Preferred Stock issued after
the sale of the common stock offered hereby may be entitled, holders of common
stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up of
bamboo.com, holders of common stock would be entitled to share in bamboo.com's
assets remaining after the payment of liabilities and the satisfaction of any
liquidation preference granted the holders of any then outstanding shares of
Preferred Stock. Holders of common stock have no preemptive or conversion
rights or other subscription rights and there are no redemption or sinking fund
provisions applicable to the common stock. All outstanding shares of common
stock are, and the shares of common stock offered by bamboo.com in this
offering, when issued and paid for, will be, fully paid and nonassessable. The
rights, preferences and privileges of the holders of common stock are subject
to, and may be adversely affected by the rights of the holders of shares of any
series of Preferred Stock, which bamboo.com may designate in the future.
We have outstanding a warrant to purchase an aggregate of 280,000 shares of
our common stock at an aggregate exercise price of $400,000, which warrant
shall expire December 31, 1999. The shares issuable upon the exercise of this
warrant will be "restricted securities" under the Securities Act of 1933 but
are entitled to the registration rights described below.
Class B Common Stock
Each holder of Class B common stock is entitled to one vote for each share on
all matters to be voted upon by the stockholders and, except as required by
law, shall have voting rights and powers equal to the voting rights and powers
of their common stock. There are no cumulative voting rights. Holders of Class
B common stock are not entitled to dividends and are not entitled to receive
any assets of the corporation upon the dissolution or liquidation of
bamboo.com. Under the terms of our pairing agreement with our Canadian
subsidiary, bamboo.com Canada, holders of Class B common stock must also hold
an equal number of shares of Series C preferred stock of bamboo.com Canada,
Inc., our subsidiary. These holders may elect at any time and for no cost to
convert their bamboo.com Canada Series C preferred stock into shares of our
common stock. Upon such a conversion, we are required to redeem such holders'
shares of our Class B common stock for a redemption price of $0.0001 per share.
Preferred Stock
Upon the closing of this offering, the Board of Directors will be authorized,
without stockholder approval, from time to time to issue up to an aggregate of
5,000,000 shares of preferred stock, $0.001 par value per
53
<PAGE>
share, in one or more series, each of such series to have such rights and
preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by
the Board of Directors. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of holders of any
preferred stock that may be issued in the future. Issuance of preferred stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could either have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire a majority of the outstanding stock of bamboo.com.
Bamboo.com has no present plans to issue any shares of preferred stock.
Registration Rights
Pursuant to the terms of the Investor Rights Agreement and upon the
consummation of this offering, the holders of 7,760,202 shares of the
outstanding common stock or their permitted transferees are entitled to rights
with respect to the registration of such shares under the Securities Act. The
holders of at least 60% of the registrable securities may require us, subject
to limitations, to file a registration statement covering at least 30% of the
registrable securities or any lesser amount of shares if the aggregate gross
offering price of at least $10 million. We are not required to effect (i) more
than two such registrations pursuant to such demand registration rights; (ii) a
registration within 60 days following the determination by our Board of
Directors to file a registration statement; (iii) a registration during the
period in which any other registration statement has been filed or has been
declared effective within the prior six months; or (iv) a registration for a
period not to exceed 90 days, if the Board of Directors of bamboo.com has made
a good faith determination that such registration would be seriously
detrimental to bamboo.com or to its stockholders. Furthermore, pursuant to the
terms of the Investor Rights Agreement, the holders of the registrable
securities are entitled to piggyback registration rights in connection with any
registration by us of our securities for its own account or the account of
other security holders. In the event that we propose to register any shares of
common stock under the Securities Act, the holders of such piggyback
registration rights are entitled to receive notice of such registration and are
entitled to include their shares therein.
At any time after we become eligible to file a registration statement on Form
S-3, holders of $1,000,000 of registrable securities may require us to file
registration statements on Form S-3 under the Securities Act with respect to
their shares of common stock. We are not required to effect more than one such
registration in any 12 month period.
Each of the foregoing registration rights is subject to conditions and
limitations, including the right of the underwriters in any underwritten
offering to limit the number of shares of registrable securities to be included
in such registration. The registration rights with respect to any holder
thereof terminate upon the earlier of 5 years from the effective date of this
offering or when the shares held by such holder may be sold under Rule 144
during any 90 day period. We are required to bear all of the expenses of all
such registrations, except underwriting discounts and commissions. Registration
of any of the registrable securities would result in such shares becoming
freely tradable without restriction under the Securities Act immediately upon
effectiveness of such registration. The Investor Rights Agreement also contains
a commitment of bamboo.com to indemnify the holders of registration rights,
subject to limitations.
Holders of the shares of common stock issuable upon exercise of the warrant
described above are entitled to piggyback registration rights.
Effect of Selected Provisions of the Certificate of Incorporation and Bylaws,
and the Delaware Antitakeover Statute
Provisions of our amended and restated certificate of incorporation and
bylaws may have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control
of bamboo.com. Such provisions could limit the price that investors might be
willing to pay in the future for shares of our common stock. These provisions
allow us to issue preferred stock without any vote or further action by the
stockholders and eliminate the right of stockholders to act by written consent
without a
54
<PAGE>
meeting. These provisions may make it more difficult for stockholders to take
corporate actions and could have the effect of delaying or preventing a change
in control of bamboo.com.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to exceptions, Section 203 of Delaware law prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
the interested stockholder attained such status with the approval of the board
of directors or unless the business combination is approved in a prescribed
manner. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to exceptions, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years did own fifteen
percent or more of a corporation's voting stock. This statute could prohibit or
delay the accomplishments of mergers or other takeover or change in control
attempts with respect to bamboo.com and, accordingly, may discourage attempts
to acquire us.
Our amended and restated certificate of incorporation provides that, upon the
closing of this offering, the Board of Directors will be divided into three
classes of directors with each class serving a staggered three-year term. The
classification system of electing directors may tend to discourage a third
party from making a tender offer or otherwise attempting to obtain control of
us and may maintain the incumbency of the Board of Directors, as the
classification of the Board of Directors generally increases the difficulty of
replacing a majority of the directors. Our amended and restated certificate of
incorporation eliminates the right of stockholders to act by written consent
without a meeting and our bylaws eliminate the right of stockholders to call
special meetings of stockholders. The amended and restated certificate of
incorporation does not provide for cumulative voting in the election of
directors. These and other provisions may have the effect of deferring hostile
takeovers or delaying changes in control or management of bamboo.com. The
amendment of any of these provisions would require approval by the Board of
Directors and holders of at least 66 2/3% of the outstanding common stock.
Board of Directors Vacancies
Our bylaws authorize the board of directors to fill vacant directorships or
increase the size of the Board of Directors. This may deter a stockholder from
removing incumbent directors and simultaneously gaining control of the Board of
Directors by filling the vacancies created by such removal with its own
nominees.
Stockholder Action; Special Meeting of Stockholders
Our certificate of incorporation provides that stockholders may act only at
duly called annual or special meetings of stockholders, not by written consent.
Our bylaws further provide that special meetings of our stockholders may be
called only by the President, Chief Executive Officer or Chairman of the Board
of Directors or a majority of the board of directors.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our bylaws provide that stockholders seeking to bring business before our
annual meeting of stockholders, or to nominate candidates for election as
directors at our annual meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice must be delivered to,
or mailed and received at, our principal executive offices not less than 120
days prior to the first anniversary of the date of notice of annual meeting
provided with respect to the previous year's annual meeting of stockholders'
provided, that if no annual meeting of stockholders was held in the previous
year or the date of the annual meeting of stockholders has been changed to be
more than 30 calendar days earlier than such anniversary, notice by the
stockholder, to be timely, must be received before the solicitation is made.
The bylaws also specify requirements as to the form and content of a
stockholder's notice. These provisions may discourage stockholders from
bringing matters before our annual meeting of stockholders or from making
nominations for directors at our annual meeting of stockholders.
55
<PAGE>
Authorized But Unissued Shares
Our authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval, subject to
limitations imposed by the Nasdaq National Market. These additional shares may
be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans. The existence of authorized but unissued and unreserved common
stock and preferred stock could render more difficult or discourage an attempt
to obtain control of us by means of a tender offer, merger or otherwise.
Limitation of Liability and Indemnification Matters
The certificate eliminates the personal liability of directors to the fullest
extent permitted by Delaware law. In addition, the certificate provides that we
may fully 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
by reason of the fact that such person is or was one of our directors or
officers or is or was serving at our request as a director of or officer of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, against expenses including attorney's fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding. Delaware law
provides that the indemnification permitted thereunder shall not be deemed
exclusive of any other rights to which the directors and officers may be
entitled under our bylaws, any agreement, a vote of stockholders or otherwise.
Section 145 of the Delaware General Corporation Law empowers a corporation to
indemnify its directors and officers and to purchase insurance with respect to
liability arising out of their capacity or status as directors and officers,
provided that this provision shall not eliminate or limit the liability of a
director for the following:
. any breach of the director's duty of loyalty to us or our stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. unlawful payments of dividends or unlawful stock purchases or
redemptions; or
. any transaction from which the director derived an improper personal
benefit.
Our Bylaws provide that we shall indemnify our directors, officers, employees
and other agents to the fullest extent permitted by law.
We believe that indemnification provisions under our bylaws covers at least
negligence and gross negligence on the part of indemnified parties. Our bylaws
also permit us to secure insurance on behalf of any officer, director, employee
or other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the bylaws permit such indemnification. We have
also entered into individual agreements to indemnify our directors and
executive officers. We believe that these provisions and agreements are
necessary to attract and retain qualified directors and executive officers. Our
bylaws also permit us to secure insurance on behalf of any officer, director,
employee or other agent for any liability arising out of his or her actions,
regardless of whether Delaware law would permit indemnification. We have
applied for liability insurance for our officers and directors.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Norwest Bank
Minnesota, National Association.
56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock.
The market price of our common stock could drop due to sales of a large number
of shares of our common stock or the perception that such sales could occur.
These factors could also make it more difficult to raise funds through future
offerings of common stock.
After this offering, 20,383,650 shares of common stock will be outstanding,
20,759,650 shares if the underwriters exercise their over-allotment options in
full. Of these shares, the 4,000,000 shares sold in this offering, 4,600,000
shares if the underwriters over-allotment options are exercised in full, will
be freely tradable without restriction under the Securities Act except for
shares purchased by "affiliates" of bamboo.com as defined in Rule 144 under the
Securities Act. The remaining 16,383,650 shares are "restricted securities"
within the meaning of Rule 144 under the Securities Act. The restricted
securities generally may not be sold unless they are registered under the
Securities Act or are sold pursuant to an exemption from registration, such as
the exemption provided by Rule 144 under the Securities Act.
Our officers, directors and stockholders holding 16,266,738 shares of common
stock have entered into lock-up agreements under which they have agreed not to
offer or sell any shares of common stock for a period of 180 days after the
date of this prospectus without the prior written consent of Prudential
Securities, on behalf of the underwriters. Prudential Securities may, at any
time and without notice, waive any of the terms of these lock-up agreements
specified in the underwriting agreement. Following the lock-up period, these
shares will not be eligible for sale in the public market without registration
under the Securities Act unless such sales meet the applicable conditions and
restrictions of Rule 144 as described below.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, any person, or persons whose shares are
aggregated, including an affiliate, who has beneficially owned shares for a
period of at least one year is entitled to sell, within any three-month period,
a number of shares that does not exceed the greater of:
. 1% of the then-outstanding shares of common stock, and
. the average weekly trading volume in the common stock during the four
calendar weeks immediately preceding the date on which the notice of such
sale on Form 144 is filed with the Securities and Exchange Commission.
Sales under Rule 144 are also subject to provisions, relating to notice and
manner of sale and the availability of current public information about us. In
addition, a person or persons whose shares are aggregated who has not been an
affiliate of us at any time during the 90 days immediately preceding a sale,
and who has beneficially owned the shares for at least two years, would be
entitled to sell such shares under Rule 144(k) without regard to the volume
limitation and other conditions described above. The above summary of Rule 144
is not intended to be a complete description.
In addition, our employees, directors, officers, advisors or consultants who
were issued shares pursuant to a written compensatory plan or contract may be
entitled to rely on the resale provisions of Rule 701, which permits
nonaffiliates to sell their Rule 701 shares without having to comply with the
public information, holding period, volume limitation or notice provisions of
Rule 144, and permits affiliates to sell their Rule 701 shares without having
to comply with Rule 144's holding period restrictions, in each case commencing
90 days after the date of this prospectus.
As soon as practicable following the closing of this offering, we intend to
file a registration statement under the Securities Act to register 8,179,394
shares of common stock issuable upon the exercise of outstanding stock options
or reserved for issuance under our stock option plan and our stock purchase
plan, of which 1,780,184 shares subject to options under our stock option plan
will be immediately exercisable and an additional 1,689,926 shares subject to
options under our stock option plan will be exercisable within 60 days of June
30, 1999. After the effective date of such registration statement, these shares
will be available for sale in the open market subject to the lock-up agreements
described above and, for our affiliates, to the conditions and restrictions of
Rule 144.
57
<PAGE>
UNDERWRITING
We and the selling stockholders have entered into an underwriting agreement
with the underwriters named below, for whom Prudential Securities Incorporated,
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated, Volpe Brown
Whelan & Company, LLC and E*OFFERING Corp. are acting as representatives. We,
and the selling stockholders if the over-allotment options are exercised, are
obligated to sell, and the underwriters are obligated to purchase, all of the
shares offered on the cover page of this prospectus, if any are purchased.
Subject to conditions of the underwriting agreement, each underwriter has
severally agreed to purchase the shares indicated opposite its name:
<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
Prudential Securities Incorporated....................................
Dain Rauscher Wessels.................................................
Volpe Brown Whelan & Company, LLC.....................................
E*OFFERING Corp.......................................................
---------
Total............................................................... 4,000,000
=========
</TABLE>
The underwriters may sell more shares than the total number of shares offered
on the cover page of this prospectus and they have, for a period of 30 days
from the date of this prospectus, over-allotment options to purchase up to
376,000 additional shares from us and up to 224,000 additional shares from the
selling stockholders. If any additional shares are purchased, the underwriters
will severally purchase the shares in the same proportion as per the table
above.
The representatives of the underwriters have advised us that the shares will
be offered to the public at the offering price indicated on the cover page of
this prospectus. The underwriters may allow to selected dealers a concession
not in excess of $ per share and such dealers may reallow a concession not in
excess of $ per share to other dealers. After the shares are released for
sale to the public, the representatives may change the offering price and the
concessions. The representatives have informed us that the underwriters do not
intend to sell shares to any investor who has granted them discretionary
authority.
We and the selling stockholders have agreed to pay to the underwriters the
following fees, assuming both no exercise and full exercise of the
underwriters' over-allotment options to purchase additional shares:
<TABLE>
<CAPTION>
Total Fees
---------------------------------------------
Fee Without Exercise of Full Exercise
Per Share Over-Allotment Options Over-Allotment Options
--------- ---------------------- ----------------------
<S> <C> <C> <C>
Fees paid by us......... $ $ $
Fees paid by selling
stockholders........... $ $ $
</TABLE>
In addition, we estimate that we will spend approximately $1.3 million in
expenses, including expenses for the selling stockholders, for this offering.
We and the selling stockholders have agreed to indemnify the underwriters
against liabilities, including liabilities under the Securities Act, or
contribute to payments that the underwriters may be required to make in respect
of these liabilities.
We, our officers and directors, and stockholders of bamboo.com, have entered
into lockup agreements pursuant to which we and they have agreed not to offer
or sell any shares of common stock or securities convertible into or
exchangeable or exercisable for shares of common stock for a period of 180 days
from the date of this prospectus without the prior written consent of
Prudential Securities, on behalf of the underwriters. Prudential Securities
may, at any time and without notice, waive the terms of these lockup agreements
specified in the underwriting agreement.
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<PAGE>
Prior to this offering, there has been no public market for our common stock.
The public offering price, negotiated between us and the representatives, is
based upon various factors such as our financial and operating history and
condition, our prospects, the prospects for the industry we are in and
prevailing market conditions.
Prudential Securities, on behalf of the underwriters, may engage in the
following activities in accordance with applicable securities rules:
. Over-allotments involving sales in excess of the offering size, creating
a short position. Prudential Securities may elect to reduce this short
position by exercising some or all of the over-allotment options.
. Stabilizing and short covering; stabilizing bids to purchase the shares
are permitted if they do not exceed a specified maximum price. After the
distribution of shares has been completed, short covering purchases in
the open market may also reduce the short position. These activities may
cause the price of the shares to be higher than would otherwise exist in
the open market.
. Penalty bids permitting the representatives to reclaim concessions from a
syndicate member for the shares purchased in the stabilizing or short
covering transactions that were retained by or released to the syndicate
member.
Such activities, which may be commenced and discontinued at any time, may be
effected on the Nasdaq National Market, in the over-the-counter market or
otherwise.
Each underwriter has represented that it has complied and will comply with
all applicable laws and regulations in connection with the offer, sale or
delivery of the shares and related offering materials in the United Kingdom,
including:
. the Public Offers of Securities Regulations 1995,
. the Financial Services Act 1986, and
. the Financial Services Act 1986, Investment Advertisements, Exemptions,
Order 1996 (as amended).
Prudential Securities and other underwriters have, from time to time,
performed various investment banking and financial advisory services on a fee
for services basis for bamboo.com. In March 1999, an entity affiliated with
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated, and an entity
with a business relationship with Prudential Securities each invested in our
private placement purchasing an aggregate of 86,102 shares and 8,610 shares,
respectively, of our Series B preferred stock, on the same terms and conditions
as the other investors in the private placement, including price per share.
bamboo.com has requested that the underwriters terminate the proposed
directed share program by which the underwriters had reserved shares for sale
at the same offering price directly to officers, directors, employees and
others. bamboo.com does not believe that there is any material liability
arising from these circumstances.
59
<PAGE>
E*OFFERING Corp. is making a prospectus in electronic format available on its
Internet Web site. Other than the prospectus in electronic format, the
information on such Web site is not part of this prospectus or the registration
statement of which the prospectus forms a part and has not been approved and/or
endorsed by bamboo.com or any underwriter in such capacity and should not be
relied on by prospective investors. E*OFFERING has agreed to allocate the
shares that it purchases to E*TRADE Securities, Inc. for distribution to retail
accounts. E*TRADE will generally allocate shares to its customers on a first
come, first served basis with 100 shares allocated to each customer.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
bamboo.com by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California.
Legal matters will be passed upon for the underwriters by Skadden, Arps, Slate,
Meagher & Flom LLP, Palo Alto, California. As of the date of this prospectus,
WS Investment Company 98B, WS Investment Company 99A, Mario Rosati a member of
Wilson Sonsini Goodrich & Rosati, P.C., and individuals and entities affiliated
with Wilson Sonsini Goodrich & Rosati, P.C., beneficially own an aggregate of
179,508 shares of bamboo.com's common stock.
EXPERTS
The consolidated balance sheets of bamboo.com, Inc. as of December 31, 1997
and 1998 and the consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1998 have been included herein in reliance on the report of
PricewaterhouseCoopers LLP, our independent accountants, which report is given
on the authority of that firm as experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission, a Registration
Statement on Form S-1 including the exhibits and schedules thereto under the
Securities Act with respect to the shares to be sold in this offering. This
prospectus does not contain all the information set forth in the Registration
Statement. For further information with respect to bamboo.com and the shares to
be sold in this offering, reference is made to the Registration Statement.
Statements contained in this prospectus as to the contents of any contract,
agreement or other document referred to, are not necessarily complete, and in
each instance reference is made to the copy of such contract, agreement or
other document filed as an exhibit to the Registration Statement, each
statement being qualified in all respects by a more complete description of the
matter involved, and each such statement shall be deemed incorporated by such
reference.
You may read and copy all or any portion of the Registration Statement or any
reports, statements or other information we file at the Commission's public
reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.C.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our filings,
including the Registration Statement will also be available to you on the
Commission's Internet site (http://www.sec.gov).
Bamboo.com intends to send to its stockholders annual reports containing
audited consolidated financial statements and quarterly reports containing
unaudited Consolidated Financial Statements for the first three quarters of
each fiscal year.
60
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Operations...................................... F-4
Consolidated Statements of Stockholders' Equity (Deficit).................. F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Consolidated Financial Statements................................. F-7
</TABLE>
F-1
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders of
bamboo.com, Inc. (formerly Jutvision Corporation)
(a development stage company)
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity (deficit) and of
cash flows present fairly, in all material respects, the financial position of
bamboo.com, Inc. (formerly Jutvision Corporation) (a development stage company)
and its subsidiary at December 31, 1997 and 1998 and the results of its
operations and its cash flows for the years ended December 31, 1996, 1997, and
1998 and the period from November 2, 1995 (date of inception) to December 31,
1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
San Jose, California
March 12, 1999, except for Note 14,
which is as of July 19, 1999
F-2
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, Pro Forma
---------------------- June 30, June 30, 1999
1997 1998 1999 (See Note 12)
--------- ----------- ------------ -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.............. $ 3,955 $ 430,097 $ 18,157,878
Accounts receivable, net
of allowance for doubtful
accounts of zero in 1997,
$1,304 in 1998 and $2,046
in 1999 (unaudited)...... 7,151 19,379 97,652
Prepaid expenses and other
current assets........... -- 78,979 495,599
--------- ----------- ------------
Total current assets..... 11,106 528,455 18,751,129
Property, plant and
equipment, net............ 14,263 211,663 1,692,926
Other assets............... -- 40,000 183,451
--------- ----------- ------------
Total assets............. $ 25,369 $ 780,118 $ 20,627,506
========= =========== ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable.......... $ 11,777 $ 133,446 $ 944,260
Accrued liabilities....... 24,206 122,104 1,005,800
Deferred revenue.......... -- -- 558,570
Notes payable to
stockholders............. 61,556 7,500 --
Current portion of
obligations under capital
lease.................... 178,132
--------- ----------- ------------
Total current
liabilities............. 97,539 263,050 2,686,762
Obligations under capital
lease, net of current
portion.................. -- -- 461,720
Series C mandatorily
redeemable preferred
stock.................... -- -- 4,452,398
--------- ----------- ------------
Total liabilities........ 97,539 263,050 7,600,880
--------- ----------- ------------
Commitments (Notes 7 and
10)
Stockholders' equity
(deficit):
Preferred stock: $0.001 par
value
Series A Convertible:
500,000 authorized
shares.................... -- 231 231 --
Issued and outstanding:
zero in 1997, 231,250
shares in 1998 and 1999
(unaudited) and zero pro
forma (unaudited)
(Liquidation value:
$925,000)................
Series B Convertible:
2,324,774 authorized
shares....................
Issued and outstanding:
zero in 1997 and 1998,
2,324,774 in 1999
(unaudited) and zero pro
forma (unaudited)
(Liquidation value:
$13,500,000)............. -- -- 2,325 --
Common stock:
$0.001 par value;
28,000,000 authorized
shares
Issued and outstanding:
zero in 1997 and 1998,
1,805,230 in 1999
(unaudited) and 8,962,114
pro forma (unaudited).... -- -- 1,805 $ 8,962
Class B common stock:
$0.0001 par value;
7,421,536 authorized
shares
Issued and outstanding:
2,845,025 shares in 1997,
7,421,536 shares in 1998,
1999 (unaudited) and pro
forma (unaudited)........ 62 520 520 520
Additional paid in
capital................... 160,842 2,652,982 40,946,651 40,942,050
Notes receivable from
stockholders.............. -- (53,806) (127,556) (127,556)
Unearned stock-based
compensation.............. -- -- (8,838,128) (8,838,128)
Accumulated other
comprehensive income
(loss).................... 267 (9,225) 8,144 8,144
Deficit accumulated during
the development stage..... (233,341) (2,073,634) (18,967,366) (18,967,366)
--------- ----------- ------------ ------------
Total stockholders'
equity (deficit)........ (72,170) 517,068 13,026,626 $ 13,026,626
--------- ----------- ------------ ============
Total liabilities and
stockholders' equity
(deficit)............... $ 25,369 $ 780,118 $ 20,627,506
========= =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
November 2,
1995 (date
of From
inception) Six Months Ended November 2,
Years ended December 31, to June 30, 1995 (date of
--------------------------------- December 31, ------------------------- inception) to
1996 1997 1998 1998 1998 1999 June 30, 1999
--------- --------- ----------- ------------ ----------- ------------ -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ -- $ 45,553 $ 77,410 $ 122,963 $ 39,391 $ 536,074 $ 659,037
Cost of revenues........ -- 15,204 67,710 82,914 34,155 449,035 531,949
--------- --------- ----------- ----------- ----------- ------------ ------------
Gross profit............ -- 30,349 9,700 40,049 5,236 87,039 127,088
Operating expenses:
Sales and marketing.... 4,784 9,672 883,469 897,925 417,485 5,768,969 6,666,894
General and
administrative........ 61,804 122,034 723,607 907,445 406,208 3,002,080 3,909,525
Research and
development........... 23,829 41,567 242,917 308,313 252,954 296,480 604,793
Stock-based
compensation.......... -- -- -- -- -- 6,955,478 6,955,478
--------- --------- ----------- ----------- ----------- ------------ ------------
Total.................. 90,417 173,273 1,849,993 2,113,683 1,076,647 16,023,007 18,136,690
--------- --------- ----------- ----------- ----------- ------------ ------------
Loss from operations.... (90,417) (142,924) (1,840,293) (2,073,634) (1,071,411) (15,935,968) (18,009,602)
Interest income......... -- -- -- -- -- 123,534 123,534
Interest expense........ -- -- -- -- -- (81,298) (81,298)
--------- --------- ----------- ----------- ----------- ------------ ------------
Net loss................ (90,417) (142,924) (1,840,293) (2,073,634) (1,071,411) (15,893,732) (17,967,366)
Beneficial conversion
feature of Series B
convertible preferred
stock.................. -- -- -- -- -- (1,000,000) (1,000,000)
--------- --------- ----------- ----------- ----------- ------------ ------------
Net loss attributable to
common stockholders.... $ (90,417) $(142,924) $(1,840,293) $(2,073,634) $(1,071,411) $(16,893,732) $(18,967,366)
========= ========= =========== =========== =========== ============ ============
Net loss per common
share--basic and
diluted................ $(0.04) $(0.05) $(0.31) $(0.57) $(0.22) $(2.14) $(4.52)
========= ========= =========== =========== =========== ============ ============
Weighted average common
shares--basic and
diluted................ 2,284,493 2,818,873 5,953,169 3,610,420 4,855,128 7,894,274 4,198,414
========= ========= =========== =========== =========== ============ ============
Pro forma net loss per
common share--basic and
diluted (unaudited).... $(0.30) $(0.57) $(1.84) $(4.31)
=========== =========== ============ ============
Pro forma weighted
average common shares--
basic and
diluted (unaudited).... 6,049,884 3,640,984 9,181,327 4,398,391
=========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Class B Notes Accumulated
Preferred Stock Common Stock Common Stock Additional Receivable Unearned Other
---------------- ---------------- ---------------- Paid In from Stock-Based Comprehensive
Number Amount Number Amount Number Amount Capital Stockholders Compensation Income (Loss)
--------- ------ --------- ------ --------- ------ ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Common stock
issued to
founder in
November 1995... -- $ -- -- $ -- 2,240,000 $ 1 $ -- $ -- $ -- $ --
Common stock
issued for cash
in December 1996
at C$0.36 per
share
(US$0.26)....... -- -- -- -- 560,000 56 147,240 -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- --
Other
comprehensive
loss............ -- -- -- -- -- -- -- -- -- (963)
--------- ------ --------- ------ --------- ---- ----------- --------- ------------ -------
Balance --
December 31,
1996............ -- -- -- -- 2,800,000 57 147,240 -- -- (963)
Common stock
issued for cash
in July 1997 at
C$0.42 per share
(US$0.30)....... -- -- -- -- 45,025 5 13,602 -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- --
Other
comprehensive
income.......... -- -- -- -- -- -- -- -- -- 1,230
--------- ------ --------- ------ --------- ---- ----------- --------- ------------ -------
Balance --
December 31,
1997............ -- -- -- -- 2,845,025 62 160,842 -- -- 267
Common stock
issued through
March to
September 1998
at fair value of
C$0.36 (US$0.24)
to C$1.07
(US$0.71)....... -- -- -- -- 1,342,231 134 431,689 -- -- --
Common stock
issued for
services through
February to May
1998 at fair
value of C$0.36
(US$0.25) to
C$0.50
(US$0.36)....... -- -- -- -- 1,027,600 103 325,397 -- -- --
Issuance of
options to
purchase common
stock for
services at fair
value of US$0.27
to US$0.36 per
share in
February to May
1998............ -- -- -- -- -- -- 536,419 -- -- --
Common stock
issued upon
exercise of
options at $0.01
per share in
September 1998.. -- -- -- -- 1,870,680 187 4,443 -- -- --
Warrants for
common stock
issued in June
1998............ -- -- -- -- -- -- 23,311 -- -- --
Issuance of
warrant for
common stock for
services........ -- -- -- -- -- -- 168,401 -- -- --
Common stock
issued upon
exercise of
options in
December 1998... -- -- -- -- 336,000 34 77,711 (77,745) -- --
Settlement of
note receivable
as offset to
note payable.... -- -- -- -- -- -- -- 23,939 -- --
Issuance of
Series A
convertible
preferred stock
in October and
December 1998 at
fair value of
$4.00 per
share........... 231,250 231 -- -- -- -- 924,769 -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- --
Other
comprehensive
loss............ -- -- -- -- -- -- -- -- -- (9,492)
--------- ------ --------- ------ --------- ---- ----------- --------- ------------ -------
Balance --
December 31,
1998............ 231,250 231 -- -- 7,421,536 520 2,652,982 (53,806) -- (9,225)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
Series B
preferred stock
at $5.807 per
share for cash
in March 1999
and May 1999... 2,013,279 2,013 -- -- -- -- 11,594,879 -- -- --
Dividend
relative to
beneficial
conversion
feature related
to issuance of
Series B
preferred stock
in May 1999..... -- -- -- -- -- -- 1,000,000 -- -- --
Issuance of
Series B
preferred stock
at $5.807 per
share on
conversion of
notes payable
and settlement
of interest
payable in
March 1999..... 311,495 312 -- -- -- -- 1,808,540 -- -- --
Common stock
options granted
for services in
January through
June 1999....... -- -- -- -- -- -- 1,412,455 -- -- --
Unearned
employee stock-
based
compensation.... -- -- -- -- -- -- 14,974,311 -- (14,974,311) --
Amortization of
employee stock-
based
compensation.... -- -- -- -- -- -- -- -- 6,647,842 --
Restricted
Common stock
issued to
service provider
in January
1999............ -- -- 120,400 120 -- -- 819,175 -- (819,295) --
Amortization of
stock based
compensation for
service
provider........ -- -- -- -- -- -- -- -- 307,636 --
Common stock
issued on
exercise of
stock options in
February, April
and June 1999... -- -- 434,000 434 -- -- 79,566 (73,750) -- --
Issuance of
common stock
with Series C
mandatorily
redeemable
preferred stock
in June 1999.... 1,250,830 1,251 6,604,743 -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- --
Other
comprehensive
income.......... -- -- -- -- -- -- -- -- 17,369
--------- ------ --------- ------ --------- ---- ----------- --------- ------------ -------
Balance -- June
30, 1999
(unaudited)..... 2,556,024 $2,556 1,805,230 $1,805 7,421,536 $520 $40,946,651 $(127,556) $ (8,838,128) $ 8,144
========= ====== ========= ====== ========= ==== =========== ========= ============ =======
<CAPTION>
Deficit
Accumulated
During the
Development
Stage Total
------------- -------------
<S> <C> <C>
Common stock
issued to
founder in
November 1995... $ -- $ 1
Common stock
issued for cash
in December 1996
at C$0.36 per
share
(US$0.26)....... -- 147,296
Net loss........ (90,417) (90,417)
Other
comprehensive
loss............ -- (963)
------------- -------------
Balance --
December 31,
1996............ (90,417) 55,917
Common stock
issued for cash
in July 1997 at
C$0.42 per share
(US$0.30)....... -- 13,607
Net loss........ (142,924) (142,924)
Other
comprehensive
income.......... -- 1,230
------------- -------------
Balance --
December 31,
1997............ (233,341) (72,170)
Common stock
issued through
March to
September 1998
at fair value of
C$0.36 (US$0.24)
to C$1.07
(US$0.71)....... -- 431,823
Common stock
issued for
services through
February to May
1998 at fair
value of C$0.36
(US$0.25) to
C$0.50
(US$0.36)....... -- 325,500
Issuance of
options to
purchase common
stock for
services at fair
value of US$0.27
to US$0.36 per
share in
February to May
1998............ -- 536,419
Common stock
issued upon
exercise of
options at $0.01
per share in
September 1998.. -- 4,630
Warrants for
common stock
issued in June
1998............ -- 23,311
Issuance of
warrant for
common stock for
services........ -- 168,401
Common stock
issued upon
exercise of
options in
December 1998... -- --
Settlement of
note receivable
as offset to
note payable.... -- 23,939
Issuance of
Series A
convertible
preferred stock
in October and
December 1998 at
fair value of
$4.00 per
share........... -- 925,000
Net loss........ (1,840,293) (1,840,293)
Other
comprehensive
loss............ -- (9,492)
------------- -------------
Balance --
December 31,
1998............ (2,073,634) 517,068
<CAPTION>
<S> <C> <C>
Issuance of
Series B
preferred stock
at $5.807 per
share for cash
in March 1999
and May 1999... -- 11,596,892
Dividend
relative to
beneficial
conversion
feature related
to issuance of
Series B
preferred stock
in May 1999..... (1,000,000) --
Issuance of
Series B
preferred stock
at $5.807 per
share on
conversion of
notes payable
and settlement
of interest
payable in
March 1999..... -- 1,808,852
Common stock
options granted
for services in
January through
June 1999....... -- 1,412,455
Unearned
employee stock-
based
compensation.... -- --
Amortization of
employee stock-
based
compensation.... -- 6,647,842
Restricted
Common stock
issued to
service provider
in January
1999............ -- --
Amortization of
stock based
compensation for
service
provider........ -- 307,636
Common stock
issued on
exercise of
stock options in
February, April
and June 1999... -- 6,250
Issuance of
common stock
with Series C
mandatorily
redeemable
preferred stock
in June 1999.... -- 6,605,994
Net loss........ (15,893,732) (15,893,732)
Other
comprehensive
income.......... -- 17,369
------------- -------------
Balance -- June
30, 1999
(unaudited)..... $(18,967,366) $ 13,026,626
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From From
November 2, November 2,
1995 (date of Six Months Ended 1995 (date of
Years ended December 31, inception) to June 30, inception) to
-------------------------------- December 31, ------------------------- June 30,
1996 1997 1998 1998 1998 1999 1999
-------- --------- ----------- ------------- ----------- ------------ -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating activities:
Net loss.............. $(90,417) $(142,924) $(1,840,293) $(2,073,634) $(1,071,411) $(15,893,732) $(17,967,366)
Items not affecting
cash:
Depreciation and
amortization......... 11,914 10,763 32,045 54,722 3,945 223,837 278,559
Allowance for doubtful
accounts............. -- -- 1,304 1,304 -- 742 2,046
Interest on Series C
mandatorily
redeemable preferred
stock................ -- -- -- -- -- 81,298 81,298
Issuance of common
stock in exchange for
services............. -- -- 370,404 370,404 370,404 -- 370,404
Issuance of Series B
convertible preferred
stock in settlement
of interest payable.. -- -- -- -- -- 8,852 8,852
Issuance of warrant
for common stock for
services............. -- -- 168,401 168,401 -- -- 168,401
Issuance of options
for common stock for
services............. -- -- 536,419 536,419 536,419 1,412,455 1,948,874
Stock-based
compensation......... -- -- -- -- -- 6,955,478 6,955,478
Changes in assets and
liabilities:
Accounts receivable,
net................. -- (7,384) (14,443) (21,827) (16,480) (77,607) (99,434)
Prepaid expenses and
other current
assets.............. -- -- (82,982) (82,982) (2,447) (418,935) (501,917)
Other assets......... -- -- (40,000) (40,000) -- (143,451) (183,451)
Accounts payable..... 16,160 7,957 126,612 150,729 (335) 814,764 965,493
Accrued liabilities.. -- 8,046 93,946 101,992 -- 899,029 1,001,021
Deferred revenue..... -- -- -- -- -- 558,570 558,570
-------- --------- ----------- ----------- ----------- ------------ ------------
Net cash used in
operating
activities......... (62,343) (123,542) (648,587) (834,472) (179,905) (5,578,700) (6,413,172)
-------- --------- ----------- ----------- ----------- ------------ ------------
Investing activities:
Purchase of capital
assets............... (30,430) (6,458) (219,068) (255,956) (26,818) (1,241,657) (1,497,613)
-------- --------- ----------- ----------- ----------- ------------ ------------
Net cash used in
investing
activities......... (30,430) (6,458) (219,068) (255,956) (26,818) (1,241,657) (1,497,613)
-------- --------- ----------- ----------- ----------- ------------ ------------
Financing activities:
Notes payable to
stockholders......... 77,278 (13,702) (26,828) 36,748 (26,294) (7,655) 29,093
Proceeds from issuance
of convertible notes
payable.............. -- -- -- -- -- 1,800,000 1,800,000
Proceeds from issuance
of common stock, net
of issuance costs.... 147,297 13,607 386,919 547,823 248,111 6,605,994 7,153,817
Proceeds from exercise
of common stock
options.............. -- -- 4,630 4,630 -- 6,250 10,880
Proceeds from issuance
of Series A
convertible preferred
stock, net of
issuance costs....... -- -- 925,000 925,000 -- -- 925,000
Proceeds from issuance
of Series B
convertible preferred
stock, net of
issuance costs....... -- -- -- -- -- 11,596,982 11,596,982
Proceeds from issuance
of Series C
mandatorily
redeemable preferred
stock................ -- -- -- -- -- 4,371,100 4,371,100
Proceeds on capital
lease obligation..... -- -- -- -- -- 204,947 204,947
Repayments of capital
lease obligation..... -- -- -- -- -- (28,538) (28,538)
Proceeds from issuance
of warrants.......... -- -- 23,311 23,311 23,311 -- 23,311
-------- --------- ----------- ----------- ----------- ------------ ------------
Net cash provided by
financing
activities......... 224,575 (95) 1,313,032 1,537,512 245,128 24,549,080 26,086,592
-------- --------- ----------- ----------- ----------- ------------ ------------
Effect of exchange rate
changes on cash....... (963) 3,211 (19,235) (16,987) 2,735 (942) (17,929)
-------- --------- ----------- ----------- ----------- ------------ ------------
Increase (decrease) in
cash during the
period................ 130,839 (126,884) 426,142 430,097 41,140 17,727,781 18,157,878
Cash and cash
equivalents, Beginning
of period............. -- 130,839 3,955 -- 3,955 430,097 --
-------- --------- ----------- ----------- ----------- ------------ ------------
Cash and cash
equivalents, End of
period................ $130,839 $ 3,955 $ 430,097 $ 430,097 $ 45,095 $ 18,157,878 $ 18,157,878
======== ========= =========== =========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
NOTE 1--NATURE OF OPERATIONS AND BASIS OF PRESENTATION:
Bamboo.com Inc. (the "Company" or "bamboo Delaware") was incorporated on
March 26, 1998 as Jutvision Corporation under the laws of the state of
Delaware. The Company has a wholly owned subsidiary bamboo.com Canada Inc.
("bamboo Canada"), a company incorporated on December 23, 1998 under the laws
of the province of Ontario, Canada as Jutvision Canada Inc. The Company and its
subsidiary generate revenue from virtual tours of real estate properties on the
Internet. Tours are produced by videotaping the inside and outside of the home
or other property, processing the videotape into a complete virtual tour, and
distributing the virtual tour to sites on the Internet. The virtual tours
provide enhanced visual content and are integrated with multiple listing
services by real estate destination web sites. The Company's markets are the
United States and Canada.
The business of the Company was previously operated as Jutvision Corporation,
a company incorporated on November 2, 1995 under the laws of the Province of
Ontario, Canada.
On January 1, 1999, the Board of Directors authorized a corporate
reorganization (see Note 2). Through a series of share exchange agreements,
bamboo Delaware, emerged as the parent company of bamboo Canada and Jutvision
Corporation was merged with bamboo Canada. Prior to the reorganization,
bamboo.com did not have any operations, assets or liabilities.
Under the terms of the reorganization, there was no change in ownership and,
therefore, Jutvision Corporation, has been treated as a predecessor business
and its results presented as the historic results of the Company. The
predecessor business's financial statements presented herein include the
results of operations and cash flows for the periods ended December 31, 1996,
1997, 1998 and the period from November 2, 1995 (date of inception) to December
31, 1998 and the balance sheets as of December 31, 1997 and 1998.
NOTE 2--REORGANIZATION:
Each Board of Directors approved a reorganization of Jutvision Corporation,
bamboo Canada and bamboo Delaware effective January 1, 1999 through the
following share exchange arrangements:
a) Exchange of common stockholdings
The common stockholders of Jutvision Corporation agreed to exchange the
outstanding 7,421,536 common shares on a one-for-one basis for Series B
convertible preferred shares of bamboo Canada. In addition, holders of the
outstanding common stock of Jutvision Corporation also agreed to purchase on a
pro-rata basis 7,421,536 Class B common shares of bamboo Delaware on a one-for-
one basis for $0.0001 per share.
Under the charters of the respective companies and under a Conversion and
Pairing Agreement, between bamboo Delaware and bamboo Canada, the holders of
the Series B convertible preferred stock of bamboo Canada may exchange their
shares at any time on a one-for-one basis for common stock of bamboo Delaware,
and the shares of the Series B will be redeemed at par value of $0.0001 per
share. Common stock and Class B common stock of bamboo Delaware have identical
rights and privileges with regard to voting. The Series B convertible preferred
stock has voting privileges only where a separate class vote is required by
law. The Series B convertible preferred stock may not be transferred without
either a two-thirds vote of the existing common stockholder of bamboo Canada or
approval of the Board of Directors of bamboo Canada.
The Series B convertible preferred stock of bamboo Canada will automatically
convert into common stock of bamboo Delaware if:
. the net proceeds of an initial public offering of bamboo Delaware common
stock exceeds $15,000,000; or,
F-7
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
. there is written election by not less than two-thirds majority of the
Series B holders; or
. there is a liquidation, dissolution or winding-up of bamboo Canada.
Due to the terms of the Conversion and Pairing Agreement, the equity interest
of the Series B convertible preferred shareholders of bamboo Canada is
inseparable from and substantively represents an equivalent equity interest in
bamboo Delaware. Accordingly, these shares are presented as equity in the
parent company in the consolidated financial statements. (See also note 14.)
b) Exchange of preferred stockholdings
In connection with the reorganization, holders of the 231,250 outstanding
Series A convertible preferred shares of Jutvision Corporation agreed to
exchange their shares on a one-for-one basis for Series A convertible preferred
stock of bamboo Delaware.
On December 23, 1998, 500,000 shares of the undesignated preferred stock in
bamboo Delaware were designated as Series A convertible preferred stock, having
the same rights and characteristics as the Series A convertible preferred
shares of Jutvision Corporation.
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of consolidation
These consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
Foreign currency translation
The functional currency of the Company's subsidiary and Jutvision
Corporation is the Canadian dollar. Accordingly, assets and liabilities are
translated at exchange rates in effect at the balance sheet date. Revenue and
expenses are translated at the average rates of exchange during the year.
Translation gains and losses are recorded in accumulated other comprehensive
income (loss).
In Jutvision Corporation's financial statements, monetary assets and
liabilities denominated in foreign currencies were translated into the
functional currency, Canadian dollars, at the exchange rate prevailing at the
balance sheet date. Non-monetary assets and liabilities and transactions were
translated at exchange rates prevailing at the respective transaction dates.
Exchange gains and losses were included in the statement of operations and
comprehensive income (loss).
Unaudited interim results
The accompanying interim financial statements as of June 30, 1999, and for
the six months ended June 30, 1998 and 1999 are unaudited. The unaudited
interim financial statements have been prepared on the same basis as the annual
financial statements and, in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to
present fairly in all material respects the Company's consolidated financial
position, results of operations and its cash flows as of June 30, 1999 and for
the six months ended June 30, 1998 and 1999. The financial data and other
information disclosed in these notes to financial statements related to these
periods are unaudited. The results for the six months ended June 30, 1999 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1999.
F-8
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original or
remaining maturities of three months or less at the date of purchase to be cash
equivalents.
Financial instruments
The carrying amounts of certain of the Company's financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable, and
notes payable to stockholders approximate fair value due to their short-term
maturities.
Certain risks and concentrations
The Company's financial instruments that are exposed to concentration of
credit risk consist primarily of cash and cash equivalents and accounts
receivable. The Company maintains its accounts for cash and cash equivalents
with one major bank in the United States and one major bank in Canada. Deposits
in these banks may exceed the amount of insurance provided on such deposits.
The Company has not experienced any losses on its deposits of its cash and cash
equivalents.
The Company's revenue is derived entirely from virtual tour services. The
Company performs ongoing credit evaluations of its customers' financial
condition and generally requires no collateral. Four customers accounted for
41%, 28%, 19% and 12% of total accounts receivable as of December 31, 1997. Two
customers accounted for 58% and 13% of total accounts receivable as of December
31, 1998. At June 30, 1999 (unaudited) 4 customers accounted for 33%, 24%, 20%
and 12% of total accounts receivable. Revenues from a single customer
represented 25%, 77% and 9% (unaudited) of total revenue for the years ended
December 31, 1997 and 1998 and the six months ended June 30, 1999 (unaudited)
respectively. 100%, 100% and 10% (unaudited) of revenues were earned from
customers located in Canada with accounts receivable balances denominated in
Canadian dollars in the years ended December 31, 1997 and 1998, and the six
months ended June 30, 1999 (unaudited).
The Company does not list real estate on its own web site and is therefore
dependent upon distribution agreements with real estate destination sites. If
any of these agreements were terminated its revenue and results of operations
could be adversely affected.
Property, plant and equipment
Property, plant and equipment are recorded at cost and depreciated on a
straight line basis over the estimated lives of the assets ranging between two
and five years. Leasehold improvements are amortized over the term of the lease
or the estimated useful lives, whichever is shorter.
Depreciation and amortization expense for the periods ended December 31,
1996, 1997, 1998 and from November 2, 1995 (date of inception) to December 31,
1998, was $11,914, $10,763, $32,045 and $54,722, respectively.
F-9
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Accounting for long-lived assets
The Company reviews property, plant and other long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amounts of an asset may not be recoverable. Recoverability is measured
by comparison of its carrying amount to future net cash flows the assets are
expected to generate. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the projected discounted future cash flows arising
from the asset.
Revenue recognition
The Company generates revenue from services provided to real estate agents
that includes videotaping a home or other property, processing the videotape
into a complete virtual tour and distributing the virtual tour to sites on the
internet. Revenue from the sale of tours is recognized at the time a virtual
tour is posted to the Web site selected by the real estate agent, provided
there are no remaining significant obligations and collection of the resulting
receivable is probable. The Company calculates a return provision based on
historical experience and makes appropriate reserves at the time revenue is
recognized.
Stock-based compensation
The Company has adopted the disclosure provisions of Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-based Compensation." The Company has elected to
continue accounting for stock-based compensation issued to employees using
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees," and, accordingly, pro forma disclosures required under
SFAS No. 123 have been presented. Stock and other equity instruments issued to
non-employees have been accounted for in accordance with SFAS No. 123 and
valued using the Black-Scholes model.
Income taxes
The Company accounts for its income taxes in accordance with the liability
method. Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and income tax bases of
assets and liabilities and are measured using the enacted tax rates and laws.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amounts expected to be realized.
Research and development costs
Research and development costs are charged to operations as incurred.
Net loss per common share
Basic net loss per common share is computed by dividing the net loss
available to common stockholders for the period by the weighted average number
of common shares outstanding during the period. Diluted net loss per common
share is computed by dividing the net loss for the period by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares, composed of common shares issuable upon the
exercise of stock options and warrants and upon conversion of Series A and
Series B convertible preferred stock, are included in the diluted net loss per
share computation to the extent
F-10
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
such shares are dilutive. A reconciliation of the numerator and denominator
used in the calculation of basic and diluted net loss per common share follows:
<TABLE>
<CAPTION>
From From
November 2, November 2,
1995 (date of Six Months Ended 1995 (date of
Years ended December 31, inception) to June 30, inception) to
----------------------------------- December 31, ------------------------- June 30,
1996 1997 1998 1998 1998 1999 1999
---------- ---------- ----------- ------------- ----------- ------------ -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Numerator
Net loss attributable
to common
stockholders.......... $ (90,417) $ (142,924) $(1,840,293) $(2,073,634) $(1,071,411) $(16,893,732) $(18,967,366)
========== ========== =========== =========== =========== ============ ============
Denominator
Weighted average common
shares -- basic and
diluted............... 2,284,493 2,818,873 5,953,169 3,610,420 4,855,128 7,966,179 4,200,127
Weighted average common
shares subject to
repurchase............ -- -- -- -- -- (71,905) (1,713)
---------- ---------- ----------- ----------- ----------- ------------ ------------
Denominator for basic
and diluted
calculation........... 2,284,493 2,818,873 5,953,169 3,610,420 4,855,128 7,894,274 4,198,414
---------- ---------- ----------- ----------- ----------- ------------ ------------
Net loss per common
share -- basic and
diluted............... $ (0.04) $ (0.05) $ (0.31) $ (0.57) $ (0.22) $ (2.14) $ (4.52)
========== ========== =========== =========== =========== ============ ============
The following table summarizes common stock equivalents that are not included
in the diluted net income per share calculation of the denominator above
because to do so would be antidilutive for the periods indicated:
<CAPTION>
From From
November 2, November 2,
1995 (date of Six Months Ended 1995 (date of
Years ended December 31, inception) to June 30, inception) to
----------------------------------- December 31, ------------------------- June 30,
1996 1997 1998 1998 1998 1999 1999
---------- ---------- ----------- ------------- ----------- ------------ -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted average effect
of common stock
equivalents:
Series A convertible
preferred stock....... -- -- 96,715 30,564 -- 647,500 113,746
Series B convertible
preferred stock....... -- -- -- -- -- 639,553 86,231
Options to purchase
common stock.......... -- -- -- -- 365,556 4,589,980 529,411
Warrants to purchase
common stock.......... -- -- -- -- -- 180,548 --
Common stock subject to
repurchase............ -- -- -- -- -- 71,905 1,713
---------- ---------- ----------- ----------- ----------- ------------ ------------
-- -- 96,715 30,564 365,556 6,129,486 731,101
========== ========== =========== =========== =========== ============ ============
</TABLE>
Comprehensive income (loss)
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting comprehensive income (loss) and its components in financial
statements. Comprehensive income (loss), as defined, includes all changes in
equity during a period from non-owner sources.
F-11
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
The components of comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>
From From
November 2, November 2,
1995 (date of Six Months Ended 1995 (date of
Years ended December 31, inception) to June 30, inception) to
------------------------ December 31, ------------------------- June 30,
1996 1997 1998 1998 1998 1999 1999
--------- ---------- ------------ ------------- ----------- ------------ -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net loss............... $(90,417) $(142,924) $(1,840,293) $(2,073,634) $(1,071,411) $(15,893,732) $(17,967,366)
Foreign currency
translation
adjustment............ (963) 1,230 (9,492) (9,225) 773 17,369 8,144
--------- ---------- ------------ ------------ ----------- ------------ ------------
Comprehensive loss..... $(91,380) $(141,694) $(1,849,785) $(2,082,859) $(1,070,638) $(15,876,363) $(17,959,222)
========= ========== ============ ============ =========== ============ ============
</TABLE>
Recent accounting pronouncements
In March 1998, the Accounting Standards Executive Committee ("AcSEC") issued
Statement of Position ("SOP") No. 98-1, "Software for Internal Use," which
provides guidance on accounting for the cost of computer software developed or
obtained for internal use. SOP No. 98-1 is effective for financial statements
for fiscal years beginning after December 15, 1998. The Company does not expect
that the adoption of SOP No. 98-1 will have a material impact on its financial
statements.
In April 1998, AcSEC issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities." This SOP provides guidance on the financial reporting of start-up
costs and organization costs. It requires the costs of start-up activities and
organization costs to be expensed as incurred. The SOP is effective for
financial statements for fiscal years beginning after December 15, 1998. The
Company does not expect that the adoption of SOP No. 98-5 will have a material
impact on its financial statements.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 establishes new standards of
accounting and reporting for derivative instruments and hedging activities.
SFAS 133 requires that all derivatives be recognized at fair value in the
statement of financial position, and that the corresponding gains or losses be
reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that
exists. SFAS 133 will be effective for fiscal years beginning after June 15,
2000. The Company does not currently hold derivative instruments or engage in
hedging activities.
NOTE 4--BALANCE SHEET ACCOUNTS:
Property, Plant and Equipment:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Service provider equipment............................... $ -- $197,441
Computer equipment....................................... 32,287 44,672
Office equipment......................................... 4,653 11,108
Leasehold improvements................................... -- 4,100
-------- --------
36,940 257,321
Less: Depreciation and amortization...................... (22,677) (45,658)
-------- --------
$ 14,263 $211,663
======== ========
</TABLE>
F-12
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Accrued Liabilities:
<TABLE>
<CAPTION>
1997 1998
------- --------
<S> <C> <C>
Accrued liabilities--trade................................. $ 4,614 $ 82,104
Accrued marketing costs.................................... 19,592 --
Accrued salaries and benefits.............................. -- 40,000
------- --------
$24,206 $122,104
======= ========
</TABLE>
NOTE 5--CONVERTIBLE SUBORDINATED PROMISSORY NOTES PAYABLE:
On February 2, 1999, the Company issued convertible subordinated promissory
notes of $1,800,000, which bore interest at a rate of 10% per annum. On
March 12, 1999, the entire principal balance of $1,800,000 plus accrued
interest of $8,850 was converted into 311,495 shares of Series B convertible
preferred stock of the Company.
NOTE 6--PREFERRED STOCK:
Under the Company's Certificate of Incorporation, as amended, the Company's
preferred stock is issuable in series and the Company's Board of Directors,
subject to stockholder approval, is authorized to determine the rights,
preferences and privileges of each series. The Company has authorized 2,824,774
shares of convertible preferred stock, of which 500,000 is designated Series A
convertible preferred stock ("Series A") and 2,324,774 is designated Series B
convertible preferred stock ("Series B").
On March 12, 1999, the Company issued 2,152,574 shares of Series B preferred
stock, having a par value of $0.001 per share, at $5.807 per share for total
cash proceeds of $10,686,011 and for conversion of notes payable and settlement
of accrued interest of $1,808,850.
The terms of Series A and Series B are as follows:
Dividends
The holders of Series A and Series B are entitled to dividends of $0.32 and
$0.4646, respectively, per share per annum, as and when declared by the Board
of Directors.
Voting rights
Each share of Series A and Series B entitles a holder to the number of votes
per share equal to the number of shares of common stock (including fractions of
a share) into which each share of Series A and Series B is convertible.
Liquidation
Upon any liquidation, dissolution or winding up of the Company, the holders
of the Series A and Series B shall rank in parity with each other and will be
entitled to receive, in equal preference, before any distribution or payment is
made to the holders of common stock, a sum equal to all declared and unpaid
dividends, in addition to an amount per share of $4.00 and $5.807,
respectively. In addition, Series B holders are entitled to participate pro
rata based on the number of shares of common stock into which the Series B
convert, along with the holders of the common stock in any surplus assets
remaining after payment of the liquidation preferences. If such liquidation
F-13
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
occurs prior to December 31, 1999, this amount is limited to $8.7105 per
Series B share. In the event such liquidation occurs after December 31, 1999,
this amount is limited to $14.5175 per Series B share.
Conversion
Each share of Series A and Series B is convertible into the number of shares
of common stock determined by dividing $4.00 and $5.807, respectively, by the
conversion price at the time in effect for each such share of convertible
preferred stock. The conversion price for Series A and Series B is $1.43 and
$2.07, respectively, per share. Conversion can be requested at any time at the
option of the holder.
The convertible preferred stock would automatically convert into common stock
at the conversion price relevant at that time, if the Company closes a firm
commitment underwritten public offering of shares of common stock in which the
aggregate price received for such shares by the Company (net of underwriting
discounts, commissions and expenses) was at least $10.0 million or $4.15 per
share, or upon the written election of not less than two-thirds vote of the
then outstanding Series A and B.
NOTE 7--COMMON STOCK:
Common Stock
The Company's Certificate of Incorporation authorizes the Company to issue
28,000,000 common shares with $0.001 par value. Each common share entitles the
holder to one vote. The holders of the shares of common stock are also entitled
to receive dividends whenever funds are legally available and when declared by
the Board of Directors, subject to the prior rights of holders of all classes
of stock at the time outstanding having priority rights as to dividends.
On September 15, 1998, the Company authorized a 1,000:1 common stock split.
The effect of this stock split has been retroactively reflected throughout the
financial statements.
Class B Common Stock
As part of the reorganization on January 1, 1999, (Note 2) the Company
authorized and issued 7,421,536 Class B common shares with a par value of
$0.0001 per share. Each common share entitles the holder to one vote.
Common share units
On June 28, 1998, the Company issued 120,000 common share units for total
proceeds of $76,404, net of share issuance costs. Each unit consisted of 2.8
common shares and a warrant to purchase 2.8 common shares. The fair value of
the warrants was established at $23,311 using the Black-Scholes method with the
following assumptions, no annual dividend, volatility of 100%, risk free
interest rate of 5.35% and term of one year. Based on the fair value of the
underlying instruments within the common share unit, $53,093 of the total
proceeds was allocated to common shares and the balance of $23,311 was
allocated to the warrants to purchase common shares. Each warrant entitled the
holder to purchase 2.8 common shares at approximately $0.23 per share on or
before June 28, 1999. On December 8, 1998, the warrants were exercised to
purchase 336,000 common shares for net proceeds of $77,745.
On December 31, 1998, promissory notes pertaining to this warrant conversion
were outstanding in the amount of $53,806. The promissory notes are non-
interest bearing until June 28, 1999, after which interest
F-14
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
accrues at the prime rate charged from time to time by the Royal Bank of
Canada, compounded semi-annually, and have no repayment terms.
Issued for services rendered
At various times throughout the year ended December 31, 1998, 1,027,600
common shares were issued to certain individuals, for services rendered. The
fair market value of the stock issued of $325,500 was charged to results of
operations and comprehensive loss.
Stock option plan
1998 Employee, Director and Consultant Stock Option Plan
During 1998, the Company authorized an Employee, Director and Consultant
Stock Option Plan for a total of 2,380,000 common shares. This plan became
effective on January 1, 1999 once the Company was reorganized. During 1999, an
additional 4,399,394 common shares were authorized under the Plan. Each option
under the incentive plan allows for the purchase of common stock of the Company
and expires not later than five or ten years from the date of grant, depending
on the ownership of the option participants. The vesting terms of the stock
options will be determined on each grant date and are generally two or three
years; however, the amount of options that can be exercised per participant in
any calendar year will be restricted to an aggregate fair market value of
$100,000 of the underlying common stock.
Activity under the Plan is set forth below (unaudited):
<TABLE>
<CAPTION>
Average
Exercise Weighted
Available Options Price Per Exercise
for Grant Outstanding Share Price Amount
---------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Balance, January 1,
1999................... -- -- $ -- $ -- $ --
Options authorized...... 6,779,394
Options granted......... (6,500,586) 6,500,586 $0.18-3.57 $0.27 1,764,632
Options exercised....... -- (434,000) $ 0.18 $0.18 (80,000)
Options canceled........ 39,200 (39,200) $0.27-0.54 $0.33 (12,750)
Stock purchase rights
granted................ (120,400) 120,400 $ 0.18 $0.18 21,500
Stock purchase rights
exercised.............. -- (120,400) $ 0.18 $0.18 (21,500)
---------- --------- ---------- ----- ----------
Balances, June 30,
1999................... 197,608 6,027,386 $0.18-3.57 $0.28 $1,671,882
========== ========= ========== ===== ==========
</TABLE>
The options outstanding and currently exercisable by exercise price at June
30, 1999 are as follows (unaudited):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- --------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Number Contractual Exercise Number Exercise
Exercise Price Outstanding Life (Years) Price Outstanding Price
-------------- ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.18................ 4,173,786 9.8 $0.18 1,006,636 $0.18
$0.27................ 1,201,900 9.9 0.27 94,752 0.27
$0.36................ 67,200 9.8 0.36 -- 0.36
$0.54................ 472,500 9.9 0.54 26,600 0.54
$3.57................ 112,000 10.0 3.57 -- 3.57
--------- ---------
6,027,386 1,127,988
========= =========
</TABLE>
F-15
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Pro forma stock compensation
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123") for option grants to employees. Had compensation
cost been determined based on the fair value at the grant date for the awards
in 1999 consistent with the provisions of SFAS No. 123, the Company's net loss
for 1999 would have been as follows
<TABLE>
<CAPTION>
Six months
ended June 30,
1999
--------------
<S> <C>
Net loss attributable to common stockholders--as reported
(unaudited)............................................... $(16,893,732)
Net loss attributable to common stockholders--pro forma
(unaudited)............................................... $(17,046,502)
Net loss per common share--basic and diluted as reported
(unaudited)............................................... $ (2.14)
Net loss per common share--basic and diluted pro forma
(unaudited)............................................... $ (2.16)
</TABLE>
Such pro forma disclosures may not be representative of future compensation
cost because options vest over several years and additional grants are made
each year.
Option agreements
On February 12, 1998, the Company issued 1,400,000 stock options to non-
employees, and on May 31, 1998, the Company issued an additional 470,680 stock
options to non-employees, in exchange for management services. The stock
options allowed the holder to purchase one common share for $0.01 per share,
expired ten years from the date of grant and vested immediately. As of December
31, 1998, all of the options had been exercised resulting in cash proceeds of
$4,630.
The fair value of each stock option granted to non-employees was estimated on
the date the non-employee earned the option using the Black-Scholes option-
pricing model with the following assumptions: no annual dividend, expected
volatility of 55%, risk-free interest rate of 5.36%; and expected life of ten
years. The weighted average fair value of stock options earned in 1998 was
$0.29. The resulting values have been charged to the statement of operations
and comprehensive loss in the period that services were rendered. The fair
value of the stock options charged to the statement of operations and
comprehensive loss in 1998 was $536,419.
Restricted stock agreements
In February 1999, the Company issued from the plan 120,400 shares of its
common stock on exercise of stock purchase rights granted in exchange for
services under restricted purchase agreements. At June 30, 1999, 95,317
(unaudited) common shares are subject to repurchase under these agreements at
the option of the Company. The repurchase provision expires upon involuntary
termination of the purchaser's services, an initial public offering of the
common stock of the Company, or merger or reorganization of the Company.
Warrants and commitments
Pursuant to a marketing and distribution agreement entered into on November
11, 1998, the Company agreed to issue a stock purchase warrant once the Company
was reorganized. The warrant allows the holder to purchase 280,000 shares of
common stock at $1.43 per share and expires on December 31, 1999. The warrant
has been recorded at its fair value of $168,401 with the costs charged to the
statement of operations and comprehensive income (loss) in the year ended
December 31, 1998. The fair value of the warrant was estimated using the Black-
Scholes option-pricing model. The following assumptions were used in the model:
no annual dividend, expected volatility of 55%, risk-free interest rate of
5.35%; and an expected life of 1.2 years.
F-16
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Stock-based compensation (unaudited)
In connection with certain stock option grants to employees during the six
months ended June 30, 1999, the Company recorded unearned stock-based
compensation totalling $15.0 million, which is being amortized over the vesting
periods of the related options which is generally two to three years.
Amortization of this stock-based compensation recognized during the six months
ended June 30, 1999 totalled approximately $6.6 million. The total unearned
stock-based compensation recorded to date will be amortized as follows: $3.5
million for the remainder of 1999; $3.4 million in 2000; $1.2 million in 2001;
$280,000 in 2002 and $20,000 in 2003. 1,780,184 shares of common stock subject
to options will vest immediately in the quarter in which this initial public
offering is completed resulting in additional amortization of employee stock-
based compensation expense of approximately $1.8 million in the quarter in
which this offering is completed.
Additionally, the Company recorded unearned stock-based compensation for
restricted common stock granted to a service provider of approximately
$819,000, which is being amortized over two years. Amortization of the fair
value of this restricted common stock resulted in stock-based compensation of
approximately $308,000 during the six months ended June 30, 1999. Quarterly
amortization associated with the restricted common stock is subject to
significant increase or decrease in future quarters based upon future changes
in the fair value of the Company's common stock. The Company's option to
repurchase lapses upon completion of this public offering if this occurs prior
to the end of the two years.
NOTE 8--INCOME TAXES:
The principal items accounting for the difference between income taxes
computed at the Canadian statutory rate and the provision for income taxes are
as follows:
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Canadian statutory
rate................... 44.5% 44.5% 44.5%
Amounts not deductible
for tax purposes....... (0.6)% (0.5)% --
Operating losses not
benefited.............. (43.9)% (44.0)% (44.5)%
----- ----- -----
-- -- --
===== ===== =====
</TABLE>
At December 31, 1998, Jutvision Corporation had accumulated income tax losses
of $1,944,259 available in Canada for carry-forward to reduce taxable income of
future years, the benefit of which has not been recorded in these financial
statements. The income tax losses expire as follows:
<TABLE>
<S> <C>
2002.............................................................. $ 82,787
2003.............................................................. 137,272
2004.............................................................. 1,724,200
----------
$1,944,259
==========
</TABLE>
For Canadian federal and Ontario provincial tax purposes, Jutvision
Corporation's net operating loss carryforwards are subject to certain
limitations on utilization in the event of changes in ownership.
F-17
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Deferred tax assets are summarized as follows:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Non-capital losses..................................... $ 97,926 $ 865,185
Share issue costs...................................... -- 2,464
Property, plant and equipment.......................... 4,724 5,322
--------- ---------
102,650 872,971
Valuation allowance.................................... (102,650) (872,971)
--------- ---------
$ -- $ --
========= =========
</TABLE>
The Company has recorded a full valuation allowance against its deferred tax
assets because it believes it is more likely than not that sufficient taxable
income will not be realized during the carryforward period to utilize the
deferred tax asset. The valuation allowance increased by $770,321 during 1998.
Realization of the future tax benefits related to the deferred tax assets is
dependent upon many factors, including bamboo Canada's ability to generate
taxable income in Canada within the loss carryforward periods.
NOTE 9--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
From From
November 2, November 2,
1995 (date of Six Months Ended 1995 (date of
Years ended December 31, inception) to June 30, inception) to
-------------------------- December 31, ----------------------- June 30,
1996 1997 1998 1998 1998 1999 1999
-------- -------- -------- ------------- ----------- ----------- -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Supplemental disclosures
cash flow information:
Unearned stock based
compensation related
to stock options
grants................ $ -- $ -- $ -- $ -- $ -- $6,757,240 $6,757,240
======== ======== ======== ======== ======== ========== ==========
Property Plant and
Equipment acquired
under capital leases.. 463,443 463,443
======== ======== ======== ======== ======== ========== ==========
Conversion of notes
payable to Series B
convertible preferred
stock................. $ -- $ -- $ -- $ -- $ -- $1,800,000 $1,800,000
======== ======== ======== ======== ======== ========== ==========
Issuance of Series B
convertible preferred
stock in settlement of
interest.............. $ -- $ -- $ -- $ -- $ -- $ 8,850 $ 8,850
======== ======== ======== ======== ======== ========== ==========
Exercise of common
stock options and
warrants in exchange
for note receivable... $ -- $ -- $ 77,745 $ 77,745 $ -- $ 73,750 $ 131,495
-------- -------- -------- -------- -------- ---------- ----------
Stock options issued
for prepaid rent
expense............... $ -- $ -- $ -- $ -- $ -- $ 19,629 $ 19,629
======== ======== ======== ======== ======== ========== ==========
Interest paid.......... $ -- $ -- $ -- $ -- $ -- $ 9,906 $ 9,906
======== ======== ======== ======== ======== ========== ==========
Note receivable settled
as offset of note
payable............... $ -- $ -- $ 23,939 $ 23,939 $ -- $ -- $ 23,939
======== ======== ======== ======== ======== ========== ==========
Common stock issued
below fair value...... $ -- $ -- $ 44,904 $ 44,904 $ 44,904 $ -- $ 44,904
======== ======== ======== ======== ======== ========== ==========
Issuance of common
stock for services.... $ -- $ -- $325,500 $325,500 $325,500 $ 175,742 $ 546,146
======== ======== ======== ======== ======== ========== ==========
Issuance of warrant for
common stock for
services.............. $ -- $ -- $168,401 $168,401 $ -- $ -- $ 168,401
======== ======== ======== ======== ======== ========== ==========
Issuance of options for
common stock for
services.............. $ -- $ -- $536,419 $536,419 $536,419 $ 742,203 $1,278,622
======== ======== ======== ======== ======== ========== ==========
</TABLE>
F-18
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
NOTE 10--COMMITMENTS:
The Company is obligated under leases for the rental of facilities, computer
equipment and office equipment. Minimum future rental payments under the
Company's current leases in effect as at December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999................................................................ $470,000
2000................................................................ 391,000
2001................................................................ 377,000
2002................................................................ 61,000
</TABLE>
Total rent expense was $733, $8,005, $39,245 and $47,983 in the years ended
1996, 1997, 1998 and for the period from November 2, 1995 date of incorporation
to December 31, 1998 respectively.
Marketing and Distribution Agreements
The Company has entered into marketing and distribution agreements with
certain real estate destination Web sites to maintain certain promotional and
linkage rights, and technology access in exchange for total minimum payments of
$14,063,375 payable over three years. A total of $6,906,250 of the payments are
noncancelable. The Company records the expenses as incurred. Under the terms of
the agreements (as amended), the following minimum non-cancelable and total
future payments are due beginning in April 1999:
<TABLE>
<CAPTION>
Non Cancelable Total
-------------- -----------
<S> <C> <C>
Year ended December 31, 1999..................... $2,250,000 $ 2,382,000
Year ended December 31, 2000..................... 4,656,250 4,722,750
Year ended December 31, 2001..................... -- 5,437,188
Year ended December 31, 2002..................... -- 1,521,437
---------- -----------
$6,906,250 $14,063,375
========== ===========
</TABLE>
NOTE 11--RELATED PARTY TRANSACTIONS:
The Company purchased capital equipment of $10,500 in 1996 and $3,500 in 1997
from a stockholder.
Notes payable to stockholders are non-interest bearing if repaid in total, on
or before June 30, 1999. If the notes are unpaid after June 30, 1999, interest
will accrue at the prime rate charged by the Royal Bank of Canada, compounded
semi-annually.
NOTE 12--UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE AND PRO FORMA
STOCKHOLDERS' EQUITY (DEFICIT):
Upon the closing of the Company's initial public offering, all outstanding
convertible preferred stock will be converted automatically into common stock.
The pro forma effect of this conversion has been presented as a separate column
in the Company's balance sheet, assuming the conversion had occurred as of June
30, 1999.
Pro forma basic and diluted net loss per common share have been computed as
described in Note 3 and also give effect to common equivalent shares from
preferred stock that will automatically convert upon the closing of the
Company's initial public offering (using the as-if-converted method) for 1998
and the six months ended June 30, 1999.
F-19
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
A reconciliation of the numerator and denominator used in the calculation of
pro forma basic and fully diluted net loss per common share follows:
<TABLE>
<CAPTION>
Cumulative Cumulative
from from
November 2, Six November 2,
Year 1995 (date of months 1995 (date of
ended inception) to ended inception) to
December 31, December 31, June 30, June 30,
1998 1998 1999 1999
------------ ------------- ------------ -------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net loss attributable to
common stockholders.... $(1,840,293) $(2,073,634) $(16,893,732) $(18,967,366)
=========== =========== ============ ============
Shares used in computing
basic and diluted net
loss per share......... 5,953,169 3,610,420 7,894,274 4,198,414
Adjusted to reflect the
effect of the assumed
conversion of
convertible preferred
stock from the date of
issuance:
Series A convertible
preferred stock...... 96,715 30,564 647,500 113,746
Series B convertible
preferred stock...... -- -- 639,553 86,231
----------- ----------- ------------ ------------
96,715 30,564 1,287,053 199,977
----------- ----------- ------------ ------------
Weighted average shares
used in computing pro
forma basic and diluted
net loss per share..... 6,049,884 3,640,984 9,181,327 4,398,391
=========== =========== ============ ============
Pro forma basic and
diluted net loss per
share.................. $ (0.30) $ (0.57) $ (1.84) $ (4.31)
=========== =========== ============ ============
</TABLE>
NOTE 13--GEOGRAPHIC INFORMATION:
The Company has adopted the Financial Accounting Standards Board's Statements
of Financial Accounting Standards No. 131, or SFAS 131, "Disclosures about
Segments of an Enterprise and Related Information," effective for fiscal years
beginning after December 31, 1997. SFAS 131 supersedes Statement of Financial
Accounting Standards No. 14 of SFAS 14, "Financial Reporting for Segments of a
Business Enterprise." SFAS 131 changes current practice under SFAS 14 by
establishing a new framework on which to base segment reporting and also
requires interim reporting of segment information.
Management uses one measurement of profitability for its business. The
Company markets its products and related services to customers in the United
States and Canada.
Revenue and long-lived asset information by geographic area are as follows:
<TABLE>
<CAPTION>
Long Lived
Revenues Assets
-------- ----------
<S> <C> <C>
1998
Canada................................................. $77,410 $ 49,427
United States.......................................... -- 162,236
------- --------
$77,410 $211,663
======= ========
1997
Canada................................................. $45,553 $ 14,263
United States.......................................... -- --
------- --------
$45,553 $ 14,263
======= ========
</TABLE>
F-20
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
NOTE 14--SUBSEQUENT EVENTS:
Distribution Agreements
On March 16, 1999 and July 15, 1999, the Company entered into two separate
distribution agreements with real estate destination Web sites to maintain
certain promotional and linkage rights. At June 30, 1999, the additional
minimum future payments required under these agreements are as follows:
<TABLE>
<S> <C>
Year ended December 31, 1999....................................... $360,000
Year ended December 31, 2000....................................... 555,000
--------
$915,000
========
</TABLE>
In addition under the terms of the distribution agreement entered into on
July 15, 1999, the Company is subject to making additional payments totaling
$1,375,000 which are contingent upon the party achieving certain milestones.
Line of Credit
On April 16, 1999, the Company obtained up to $1.0 million in short term
financing which bears interest at prime (7.75% at June 30, 1999). No advances
have been drawn from this line of credit.
Capital lease obligations
On March 24, 1999, the Company entered into a master capital lease agreement
to obtain up to $1,500,000 in capital lease financing for purchases of video
equipment, office furniture and other equipment including computer hardware and
software made subsequent to January 1, 1999. The available lease line expires
on December 31, 1999. On April 14, 1999 and May 6, 1999, the Company committed
$204,947 and $425,747, respectively in property, plant and equipment to capital
lease under a sale and leaseback provision of the master capital lease
agreement. At June 30, 1998, property, plant and equipment totaling $612,770
were subject to capital lease obligations.
At June 30, 1999, the future minimum payments under these and other capital
lease agreements are as follows:
<TABLE>
<S> <C>
1999............................................................... $262,895
2000............................................................... 263,962
2001............................................................... 276,641
--------
Minimum lease payments............................................. 803,498
Less amount representing interest.................................. 163,646
--------
Principal amount of minimum lease payments......................... 639,852
Less current portion............................................... 178,132
--------
461,720
========
</TABLE>
Name change
On April 23, 1999, Jutvision Canada, Inc. changed its name to bamboo.com
Canada, Inc. and Jutvision Corporation changed its name to bamboo.com, Inc.
F-21
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
Private Placements
On May 5, 1999, the Company issued an additional 172,206 shares of Series B
convertible preferred stock with a par value of $0.001 for $5.807 per share for
total cash proceeds of $1,000,000. In connection with this issuance, the
Company has recorded a charge of $1 million representing a beneficial
conversion feature limited to the proceeds received.
On June 7, 1999, bamboo Canada amended its articles of incorporation and the
Conversion and Pairing Agreement to reflect the creation of Series C
convertible preferred shares ("Series C shares"). Effective June 11, 1999, the
outstanding Series B convertible preferred shares were converted to Series C
convertible preferred shares. The Series C shares have substantially all of the
same rights and preferences as the Series B convertible preferred shares,
except that the Series C shares do not automatically convert in the event that
the parent company, bamboo.com, completes an initial public offering of its
stock. Under the amended conversion and pairing agreement, the Series C shares
are exchangeable on a one for one basis for common stock of the parent company,
bamboo.com, and the shares of the Series C will be redeemed at par value of
$0.0001 per share.
On June 11, 1999, the Company authorized 1,100 shares of its Series C
mandatorily redeemable preferred stock, and entered into an agreement to sell
1,100 shares of its Series C mandatorily redeemable preferred stock and
1,250,830 shares of its common stock for total gross proceeds of $11.0 million.
Dividends
The holders of Series C mandatorily redeemable preferred stock are entitled
to receive cumulative dividends out of any assets legally available and prior
and in preference to any other securities, of $500 per share accruing annually
from June 30, 2000.
Voting rights
The Series C mandatorily redeemable preferred stockholders are entitled to
elect one director to the Board of Directors, which currently consists of six
directors in total.
Redemption
The shares of the Series C mandatorily redeemable preferred stock may be
redeemed at any time at the option of the Company by payment of an amount of
$10,000 per share plus any accrued and unpaid dividends. At the option of the
holders, the Company is required to redeem the stock in a single instalment
after the occurrence of a redemption event. A redemption event being defined as
the earliest to occur of (a) the sale of the Company's common stock in an
underwritten public offering with aggregate proceeds in excess of $10 million;
(b) a change in control; or (c) June 8, 2004.
Liquidation
The holders of the Series C mandatorily redeemable preferred stock shall be
entitled to receive prior and in preference to any other distribution, dividend
or redemption payments of any assets of the company their payment of the
redemption price.
The $11.0 million of proceeds from issuance has been allocated to the Series
C mandatorily redeemable preferred stock and the common stock based on their
relative fair values. Accordingly, $4.4 million has been allocated to the
Series C redeemable preferred stock and $6.6 million has been allocated to the
common stock at June 11, 1999.
F-22
<PAGE>
BAMBOO.COM, INC.
(FORMERLY JUTVISION CORPORATION)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of June 30, 1999 and/or for the periods ended June 30, 1998 and
1999 is unaudited
The relative fair values are $8.0 million for the Series C mandatorily
redeemable preferred stock and $12.1 million for the common stock. The
corresponding discount of $6.6 million recognized on the Series C mandatorily
redeemable preferred stock will be amortized using the effective interest rate
to the statement of operations as an interest charge over the five-year period
to June 8, 2004. In the six month period ended June 30, 1999 the Company
recognized approximately $81,000 of the discount as an interest charge.
Under the terms of the Series C mandatorily redeemable preferred stock
agreement, such redemption would first become available upon completion of an
Initial Public Offering, ("IPO") by the Company. Therefore in the quarter in
which the IPO becomes effective the Series C mandatorily redeemable preferred
stock may be redeemed and an additional interest charge of up to $6.5 million
will be recorded to accrete the preferred stock to its redemption value of
$11.0 million.
Employee Stock Purchase Plan
In addition, on June 9, 1999, the Board of Directors approved the 1999
Employee Stock Purchase Plan subject to stockholder approval and effectiveness
of the Company's IPO Registration Statement with the Securities and Exchange
Commission. On July 19, 1999, the Company's stockholders approved the adoption
of the 1999 Employee Stock Purchase Plan under which 700,000 shares have been
reserved for issuance.
Initial Public Offering
On June 9, 1999, the Company approved the issuance and sale in an
underwritten public offering of the Company's common stock.
Stock Split
On July 19, 1999, the Company approved a 2.8 for 1 forward split of its
common stock, which will be effected prior to the closing of the public
offering. All common stock data and common stock option plan information has
been restated to reflect the forward split.
In addition, the conversion prices of the Company's Series A and Series B
convertible preferred stock have also been adjusted to reflect the effect of
the forward split.
F-23
<PAGE>
OUR SERVICE MAKES IT SIMPLE
[DIAGRAM THAT DETAILS THE SIX STEPS OF OUR FULL SERVICE PROCESS]
STEP 1. REAL ESTATE AGENT DECIDES TO USE BAMBOO.COM 360 VIRTUAL TOUR TO MARKET A
PROPERTY.
STEP 2. REAL ESTATE AGENT CONTACTS BAMBOO.COM CALL CENTER.
STEP 3. BAMBOO.COM SERVICE PROVIDER IS SENT TO PROPERTY
STEP 4. BAMBOO.COM SERVICE PROVIDER SHOOTS VIDEO OF PROPERTY
STEP 5. VIDEO IS PROCESSED BY BAMBOO.COM
STEP 6. 360 VIRTUAL TOUR IS POSTED TO THE WEB AND EMAILED TO THE REAL ESTATE
AGENT.
<PAGE>
- -------------------------------------------------------------------------------
Until , 1999, all dealers effecting transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
- -------------------------------------------------------------------------------
[LOGO OF BAMBOO.COM APPEARS HERE]
Prudential Securities
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
Volpe Brown Whelan & Company
E*OFFERING
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the
underwriting discounts, payable by the Registrant in connection with the sale
of the securities being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and the Nasdaq/NMS listing fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 19,182
NASD Filing Fee.................................................. 7,786
Nasdaq National Market Listing Fee............................... 94,000
Printing Costs................................................... 400,000
Legal Fees and Expenses.......................................... 350,000
Accounting Fees and Expenses..................................... 300,000
Blue Sky Fees and Expenses....................................... 15,000
Transfer Agent and Registrar Fees................................ 25,000
Miscellaneous.................................................... 89,032
----------
Total.......................................................... $1,300,000
==========
</TABLE>
Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Article VII of our current
Certificate of Incorporation (Exhibit 3.1 hereto) and Article VI of our current
Bylaws (Exhibit 3.3 hereto) provide for indemnification of our directors,
officers, employees and other agents to the maximum extent permitted by
Delaware law. In addition, we have entered into Indemnification Agreements
(Exhibit 10.1 hereto) with our officers and directors. The Underwriting
Agreement (Exhibit 1.1) also provides for cross-indemnification among
bamboo.com and the Underwriters with respect to certain matters, including
matters arising under the Securities Act.
Item 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since our incorporation in November 1995, we have sold and issued the
following securities:
1. On November 2, 1995 we issued 2,240,000 shares of common stock to two
founders: Kevin McCurdy and Lanek Limited, an entity controlled by Len
McCurdy for an aggregate consideration of C$10.00.
2. On December 12, 1996 we issued 112,000 shares of common stock to one
U.S. investor, IBT Ventures and a total of 448,000 shares of common
stock to twelve non-U.S. investors: Peter Field, Lloyd Hope, Jane
McCurdy, Kristy McCurdy, Carol Slavens, Michael Slavens, Nolan
Bederman, Sam Bederman, Lisa Field, Paul Slavens, Invescorp Limited,
and Global Technologies for an aggregate consideration C$200,000.00.
3. On July 31, 1997 we issued 45,024 shares of common stock to six non-
U.S. investors: Lisa Field, Peter Field, Carol Slavens, Michael
Slavens, Paul Slavens, Alevai Developments Limited for an aggregate
consideration of C$18,759.89.
4. On February 12, 1998 we issued 420,000 shares of common stock to three
officers: Leonard McCurdy, Kevin McCurdy, Howard Field for an aggregate
consideration of C$150,000, paid for by services rendered and options
to purchase 1,400,000 shares of common stock at an exercise price
of $.01.
II-1
<PAGE>
5. On March 31, 1998 we issued a total of 616,000 shares of common stock
to fourteen non-U.S. investors: Nolan Bederman, Howard Field, Lisa
Field, Peter Field, Lloyd Hope, Jane McCurdy, Kristy McCurdy, Carol
Slavens, Michael Slavens, Paul Slavens, Lanek Limited, Invescorp
Limited, and Alevai Developments Limited for an aggregate consideration
of C$220,000.
6. On April 8, 1998 we issued a total of 100,800 shares of common stock to
one officer and two non- U.S. investors: Howard Field, Vestmark Limited
and Kristy McCurdy, respectively, for an aggregate consideration of
C$36,000.
7. On April 13, 1998 we issued 112,000 shares of common stock to one
employee, Justin Holmes, for an aggregate consideration of C$40,000.
8. On April 21, 1998 we issued a total of 112,000 shares of common stock
to one officer and one investor: Duncan Fortier and Jascan Investment
Corp., respectively, for an aggregate consideration of C$40,000.
9. On May 22, 1998 we issued a total of 495,600 shares of common stock to
two investors: Pierre G. Lesperance and Mark Stephenson for an
aggregate consideration of C$177,000.
10. On June 28, 1998 we issued 120,000 units for 2.8 shares of common stock
and one warrant to purchase an additional 2.8 shares of common stock to
six investors: Roy Dalton, Jascan Investments Inc., Lanek Limited,
Vince Oddy, Vestmark Limited, and Howard Fieldwhich were exercised for
an aggregate consideration of C$120,000.
11. On September 28, 1998 we issued a total of 37,432 shares of common
stock to three investors: Donna Goldstein, Roseco Incorporated, and
421272 Ontario Limited for an aggregate consideration of C$40,104.
12. On September 30, 1998 we issued 140,000 shares of common stock to one
investor, Matthew Kunzweiler for an aggregate consideration of
C$150,000.
13. On October 20, 1998 we issued a total of 416,500 shares of Series A
preferred stock to eleven investors: Braden L. Berg, Jerome Gotkin,
Peter E. Jaffe, John P. Kelleher, Elizabeth Kunkel, Peter S. Lawrence,
Tamar Kagan Levine, Lewis S. Kunkel, Jr. And Louise R. Kunkel, Barbara
F. Reily, Salomon Smith Barney-Custodian for the Sep IRA of Marc S.
Levine, and V.R. Investments, LP at an aggregate consideration of
$595,000.
14. On November 11, 1998 we issued a warrant to purchase 280,000 shares of
common stock to one investor, RealSelect, Inc. for an exercise price of
$1.43 per share.
15. On December 8, 1998 we issued a total of 70,000 shares of Series A
preferred stock to three U.S. Investors: Mario M. Rosati, W.S.
Investment Company, 98B, and Matthew Kunzweiler and a total of 161,000
shares of Series A preferred stock to seven investors: Acheson Family
Trust, Paula Oprica Aicklen, Charmaine Doyle, Michael J. Hemmer, Carol
Smith Slavens and Darin Vest at an aggregate consideration of
C$330,000.
16. On January 1, 1999 we issued a total of 7,421,536 shares of Class B
redeemable common stock to twenty-eight shareholders: 421272 Ontario
Limited, Alevai Developments Limited, Nolan Bederman, Sam Bederman, Roy
Dalton, Howard Field, Lisa Field, Peter Field, Duncan Fortier, Global
Technology Investments Ltd., Donna Goldstein, Justin Holmes, Lloyd
Hope, IBT Ventures, Jascan Investments Inc., Matthew Kunzweiler, Lanek
Limited, Pierre G. Lesperance, Jane McCurdy, Kristy McCurdy, Kevin B.
McCurdy, Vince Oddy, Cameron Roach, Roseco Incorporated, Carol Smith
Slavens, Michael Slavens, Paul Slavens, and Vestmark Limited as part of
the amalgamation and reorganization of our business as a Delaware
corporation.
17. On February 25, 1999 we issued a total of 120,400 shares of common
stock to two investors: Mario M. Rosati and WS Investment Company, 99A
for an aggregate consideration of $21,500.
II-2
<PAGE>
18. On March 12, 1999 we issued a total of 6,027,194 shares of Series B
preferred stock to eighteen investors: Comstock Net Services, Inc.,
Dain Rauscher Wessels Investors LLC, DigaComm (JVN), L.L.C., Jerome
Gotkin, Melody Kean Haller, Information Associates-II, L.P., IA-II
Affiliates Fund, L.L.C., Intel Corporation, JVC Associates Partnership,
Bill Kunzweiler, Peter S. Lawrence, Michael A. Berke-Trustee of the JV
#1 Trust, Silicon Valley Bancshares, Michael Stefonick, Walden Media
and Information Technology Fund, L.P., Walden EDB Partners, L.P.,
Walden Japan Partners, L.P., and WS Investment Company, 99A for an
aggregate consideration of $12,499,962.37.
19. On May 5, 1999 the Company issued 482,177 shares of Series B preferred
stock to one investor, Walden Media and Information Technology Fund,
L.P. for a total purchase price of $1,000,000.24.
20. On June 11, 1999 the Company entered into an agreement to sell 1,100
shares of its Series C redeemable preferred stock and 1,250,830 shares
of its common stock to five investors: GCW&F Investment Partners, HKL
I, LLC, Jason Strober, VantagePoint Venture Partners III, LP, and
VantagePoint Communications Partners, LP for an aggregate consideration
of $11,000,000.
21. Since our incorporation, we have issued options and stock purchase
rights to purchase an aggregate of 6,620,986 shares of our common stock
under the 1998 Employee Director and Consultant Stock Plan to
employees, directors, and consultants with exercise prices ranging from
$0.1786 to $3.5714.
The issuances of securities described in Items 1-12 were sold Canadian
dollars and are denominated above in Canadian dollars. "C$" means Canadian
dollars.
The issuances of securities described in Items 1, 3-6, 8-11 were sold to
persons who were neither nationals nor residents of the United States and no
facilities or instrumentalities of U.S. interstate commerce were used in
connection with any offer or sale thereof.
The number of shares of Series A and Series B preferred stock described in
Items 13, 15, 18 and 19 are adjusted to reflect the number of shares of common
stock into which the preferred stock will convert upon the consummation of the
offering.
The issuance of the other above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of such
Securities Act as transactions by an issuer not involving any public offering.
In addition, the issuances described in Item 20 were deemed exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and warrants issued
in such transactions. All recipients had adequate access, through their
relationships with us, to information about us.
Item 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Registrant as currently in effect.*
3.2 Form of Certificate of Incorporation of Registrant to be filed
immediately following the closing of the offering made under this
Registration Statement.*
3.3 Articles of Amalgamation of Jutvision Canada, Inc. (bamboo.com) dated
January 1, 1999.*
3.4 Articles of Amendment of Jutvision Canada, Inc. (bamboo.com) dated
April 23, 1999.*
3.5 Articles of Amendment of bamboo.com Canada, Inc. dated June 7, 1999.*
3.6 Amended and Restated Conversion and Pairing Agreement with bamboo.com
Canada, Inc. dated as of June 7, 1999.*
3.7 Bylaws of Registrant as currently in effect.*
3.8 Form of Bylaws of Registrant to be adopted immediately following the
closing of the offering made under this Registration Statement.*
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
3.9 Series C Redeemable Preferred Stock Purchase Agreement dated as of
June 11, 1999.*
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.*
9.1 Share Contribution, Subscription, Right of First Refusal and Voting
Agreement Dated Jan. 1, 1999.*
10.1 Form of Indemnification Agreement between the Registrant and each of
its directors and officers.*
10.2 1998 Employee, Director and Consultant Stock Plan and the form
agreement thereunder, as currently in effect.*
10.3 Amended and Restated 1998 Employee, Director and Consultant Stock Plan
and the Form Agreement thereunder to be adopted immediately upon the
effectiveness of the Registration Statement (which supersedes the
Amended and Restated 1998 Employee, Director and Consultant Stock Plan
originally filed on June 14).*
10.4 1999 Employee Stock Purchase Plan and Form of Agreements thereunder
(which supersedes the 1999 Employee Stock Purchase Plan and form of
agreements thereunder originally filed on June 14).*
10.5 Investors' Rights Agreement dated as of March 12, 1999 among
bamboo.com and certain investors.*
10.6 Joint Services Agreement with RealSelect, Inc. dated as of Nov. 11,
1998, as amended June 11, 1999.+*
10.7 Distribution Agreement with Microsoft Corporation dated as of March
16, 1999.+*
10.8 Distribution Agreement with HomeSeekers.com, Inc. dated as of Nov. 20,
1998.+*
10.9 Distribution Agreement with Homes.com, a division of PCL Media
Limited, dated as of May 10, 1999.+*
10.10 [Intentionally omitted]
10.11 Form of bamboo.com Approved Web Pro Agreement.*
10.12 [Intentionally omitted]
10.13 Line of Credit with Silicon Valley Bank dated April 16, 1999.*
10.14 Master lease agreement with Silicon Valley Bank dated March 24, 1999.*
10.15 Sublease with Pete's Brewing Company dated November 2, 1998.*
10.16 Sublease with Pete's Brewing Company dated December 1, 1998.*
10.17 Sublease with Information Access Inc. dated Nov. 15, 1998, and
amendment dated Feb. 22, 1999.*
10.18 Service Provider Agreement with TBI Imaging dated Nov. 23, 1998 (also
form of).*
10.19 Employment Agreement with Leonard B. McCurdy.*
10.20 Employment Agreement with Kevin B. McCurdy.*
10.21 Employment Agreement with Andrew P. Laszlo.*
10.22 Employment Agreement with Howard D. Field.*
10.23 Amended and Restated Employment Agreement with Mark R. Searle dated
June 1, 1999 (which supersedes the Employment Agreement with Mark R.
Searle originally filed on June 14, 1999).*
10.24 Employment Agreement with Randall I. Bresee.*
10.25 Employment Agreement with Andrew J. Aicklen.*
10.26 Sublease with Transmode Consultants Inc./Traxis Inc. dated May 27,
1999.*
10.27 Distribution and Co-Marketing Agreement with The Equity Group dated
May 5, 1999.*
10.28 Distribution and Co-Marketing Agreement with Northside Realty dated
June 3, 1999.*
10.29 Distribution and Co-Marketing Agreement with Carlson Real Estate dated
May 19, 1999.*
10.30 Sales and Co-Marketing Agreement with Metropolitan Regional
Information Systems, Inc. dated June 9, 1999.*
10.31 Distribution and Co-Marketing Agreement with Sudler/Beliard Gordon
dated May 28, 1999.*
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.32 Distribution and Co-Marketing Agreement with Keller Williams Southwest
Region dated May 25, 1999.*
10.33 Distribution and Co-Marketing Agreement with Pacific Union Real Estate
Group, Inc. dated June 9, 1999.*
10.34 Services Agreement with The Prudential Real Estate Affiliates, Inc.
dated June 8, 1999.*
10.35 Non-Exclusive Distribution Agreement with Multiple Listing Service of
Northern Illinois dated May 26, 1999.*
10.36 Distribution and Co-Marketing Agreement with Keller Williams Fox &
Associates dated June 10, 1999.*
10.37 Distribution Agreement with Toronto Real Estate Board dated April 14,
1999.*
10.38 Distribution and Co-Marketing Agreement with John L. Scott, Inc. dated
April 7, 1999.*
10.39 Distribution Agreement with Windermere Real Estate Services Company
dated March 17, 1999.*
10.40 Distribution Agreement with St. Joe Real Estate Services, Inc., d/b/a
Arvida Realty Services dated March 5, 1999.*
10.41 Distribution Agreement with GTE Enterprise Solutions dated January 12,
1999 as amended January 19, 1999.*
10.42 Agreement with Loop Ventures, Inc. dated Nov. 6, 1998.*
10.43 Access Agreement with Cendant Corporation dated July 15, 1999.+*
10.44 RE/MAX Approved Supplier License Agreement with RE/MAX International,
Inc. dated April 5, 1999.*
10.45 Distribution Agreement with State-Wide Multiple Listings Service, Inc.
dated May 27, 1999.*
10.46 Distribution Agreement with Metrolist, Inc. dated March 16, 1999.*
10.47 Strategic Alliance Agreement with Data Management Services, a division
of Moore North America, Inc. dated July 27, 1999.*
21.1 Subsidiaries of Registrant.*
23.1 Consent of PricewaterhouseCoopers LLC.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (contained in
Exhibit 5.1)*
23.3 Consent of Dave Liniger.*
24.1 Power of Attorney (see page II-7).*
27.1 Financial Data Schedule.*
</TABLE>
- --------
*Previously Filed
+Confidential Treatment Requested
(b)Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
Other schedules are omitted because they are not applicable, or because the
information is included in the Financial Statements or the Notes thereto.
Item 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-5
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
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.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 10 to the Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Palo Alto, State of California on August 25, 1999.
/s/ Randall I. Bresee
By: _________________________________
Randall I. Bresee
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 10 to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Leonard B. McCurdy Chief Executive Officer, August 25, 1999
______________________________________ Chairman and Director
Leonard B. McCurdy
* Kevin B. McCurdy Executive Vice President August 25, 1999
______________________________________ and Director
Kevin B. McCurdy
/s/ Randall I. Bresee Chief Financial Officer August 25, 1999
______________________________________
Randall I. Bresee
* Duncan Fortier Director August 25, 1999
______________________________________
Duncan Fortier
* John Moragne Director August 25, 1999
______________________________________
John Moragne
* Philip Sanderson Director August 25, 1999
______________________________________
Philip Sanderson
</TABLE>
By:
/s/ Randall I. Bresee
______________________________
Randall I. Bresee
(Attorney-In-Fact)
II-7
<PAGE>
Report of Independent Accountants on Financial Statement Schedule
To the board of Directors and Stockholders of bamboo.com Inc. (a development
stage company) (formerly Jutvision Corporation):
Our audits of the consolidated financial statements referred to in our report
dated March 12, 1999, except for Note 14, which is as of July 19, 1999,
appearing on page F-2 of this Form S-1 also included an audit of the financial
statement schedule listed under item 16(b) of this Form S-1. In our opinion,
this financial statement schedule presents fairly, in all material respects,
the information set forth therein when read in conjunction with the related
consolidated financial statements.
PricewaterhouseCoopers LLP
San Jose, California
July 19, 1999
S-1
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Additions
Charged
Balance at to Cost Balance at
Beginning and Ending of
of Period Expenses Deductions Period
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Year End December 31, 1996
Allowance for doubtful accounts..... $ -- $ -- $-- $ --
Year End December 31, 1997
Allowance for doubtful accounts..... $ -- $ -- $-- $ --
Year End December 31, 1998
Allowance for doubtful accounts..... $ -- $1,304 $-- $1,304
Six months ended June 30, 1999
Allowance for doubtful accounts..... $1,304 $ 742 $-- $2,046
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of Registrant as currently in effect.*
3.2 Form of Certificate of Incorporation of Registrant to be filed
immediately following the closing of the offering made under this
Registration Statement.*
3.3 Articles of Amalgamation of Jutvision Canada, Inc. (bamboo.com) dated
January 1, 1999.*
3.4 Articles of Amendment of Jutvision Canada, Inc. (bamboo.com) dated
April 23, 1999.*
3.5 Articles of Amendment of bamboo.com Canada, Inc. dated June 7, 1999.*
3.6 Amended and Restated Conversion and Pairing Agreement with bamboo.com
Canada, Inc. dated as of June 7, 1999.*
3.7 Bylaws of Registrant as currently in effect.*
3.8 Form of Bylaws of Registrant to be adopted immediately following the
closing of the offering made under this Registration Statement.*
3.9 Series C Redeemable Preferred Stock Purchase Agreement dated as of
June 11, 1999.*
4.1 Specimen Common Stock Certificate.*
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.*
9.1 Share Contribution, Subscription, Right of First Refusal and Voting
Agreement Dated Jan. 1, 1999.*
10.1 Form of Indemnification Agreement between the Registrant and each of
its directors and officers.*
10.2 1998 Employee, Director and Consultant Stock Plan and the form
agreement thereunder, as currently in effect.*
10.3 Amended and Restated 1998 Employee, Director and Consultant Stock Plan
and the Form Agreement thereunder to be adopted immediately upon the
effectiveness of the Registration Statement (which supersedes the
Amended and Restated 1998 Employee, Director and Consultant Stock Plan
originally filed on June 14).*
10.4 1999 Employee Stock Purchase Plan and Form of Agreements thereunder
(which supersedes the 1999 Employee Stock Purchase Plan and form of
agreements thereunder originally filed on June 14).*
10.5 Investors' Rights Agreement dated as of March 12, 1999 among
bamboo.com and certain investors.*
10.6 Joint Services Agreement with RealSelect, Inc. dated as of Nov. 11,
1998, as amended June 11, 1999.+*
10.7 Distribution Agreement with Microsoft Corporation dated as of March
16, 1999.+*
10.8 Distribution Agreement with HomeSeekers.com, Inc. dated as of Nov. 20,
1998.+*
10.9 Distribution Agreement with Homes.com, a division of PCL Media
Limited, dated as of May 10, 1999.+*
10.10 [Intentionally omitted]
10.11 Form of bamboo.com Approved Web Pro Agreement.*
10.12 [Intentionally omitted]
10.13 Line of Credit with Silicon Valley Bank dated April 16, 1999.*
10.14 Master lease agreement with Silicon Valley Bank dated March 24, 1999.*
10.15 Sublease with Pete's Brewing Company dated November 2, 1998.*
10.16 Sublease with Pete's Brewing Company dated December 1, 1998.*
10.17 Sublease with Information Access Inc. dated Nov. 15, 1998, and
amendment dated Feb. 22, 1999.*
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.18 Service Provider Agreement with TBI Imaging dated Nov. 23, 1998 (also
form of).*
10.19 Employment Agreement with Leonard B. McCurdy.*
10.20 Employment Agreement with Kevin B. McCurdy.*
10.21 Employment Agreement with Andrew P. Laszlo.*
10.22 Employment Agreement with Howard D. Field.*
10.23 Amended and Restated Employment Agreement with Mark R. Searle dated
June 1, 1999 (which supersedes the Employment Agreement with Mark R.
Searle originally filed on June 14, 1999).*
10.24 Employment Agreement with Randall I. Bresee.*
10.25 Employment Agreement with Andrew J. Aicklen.*
10.26 Sublease with Transmode Consultants Inc./Traxis Inc. dated May 27,
1999.*
10.27 Distribution and Co-Marketing Agreement with The Equity Group dated
May 5, 1999.*
10.28 Distribution and Co-Marketing Agreement with Northside Realty dated
June 3, 1999.*
10.29 Distribution and Co-Marketing Agreement with Carlson Real Estate dated
May 19, 1999.*
10.30 Sales and Co-Marketing Agreement with Metropolitan Regional
Information Systems, Inc. dated June 9, 1999.*
10.31 Distribution and Co-Marketing Agreement with Sudler/Beliard Gordon
dated May 28, 1999.*
10.32 Distribution and Co-Marketing Agreement with Keller Williams Southwest
Region dated May 25, 1999.*
10.33 Distribution and Co-Marketing Agreement with Pacific Union Real Estate
Group, Inc. dated June 9, 1999.*
10.34 Services Agreement with The Prudential Real Estate Affiliates, Inc.
dated June 8, 1999.*
10.35 Non-Exclusive Distribution Agreement with Multiple Listing Service of
Northern Illinois dated May 26, 1999.*
10.36 Distribution and Co-Marketing Agreement with Keller Williams Fox &
Associates dated June 10, 1999.*
10.37 Distribution Agreement with Toronto Real Estate Board dated April 14,
1999.*
10.38 Distribution and Co-Marketing Agreement with John L. Scott, Inc. dated
April 7, 1999.*
10.39 Distribution Agreement with Windermere Real Estate Services Company
dated March 17, 1999.*
10.40 Distribution Agreement with St. Joe Real Estate Services, Inc., d/b/a
Arvida Realty Services dated March 5, 1999.*
10.41 Distribution Agreement with GTE Enterprise Solutions dated January 12,
1999 as amended January 19, 1999.*
10.42 Agreement with Loop Ventures, Inc. dated Nov. 6, 1998.*
10.43 Access Agreement with Cendant Corporation dated July 15, 1999.+*
10.44 RE/MAX Approved Supplier License Agreement with RE/MAX International,
Inc. dated April 5, 1999.*
10.45 Distribution Agreement with State-Wide Multiple Listings Service, Inc.
dated May 27, 1999.*
10.46 Distribution Agreement with Metrolist, Inc. dated March 16, 1999.*
10.47 Strategic Alliance Agreement with Data Management Services, a division
of Moore North America, Inc. dated July 27, 1999.*
21.1 Subsidiaries of Registrant.*
23.1 Consent of PricewaterhouseCoopers LLC.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
23.2 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (contained in Exhibit
5.1)*
23.3 Consents of Dave Liniger.*
24.1 Power of Attorney (see page II-7).*
27.1 Financial Data Schedule.*
</TABLE>
- --------
*Previously Filed
+Confidential Treatment Requested
<PAGE>
Exhibit 1.1
bamboo.com, Inc.
4,600,000 Shares /1/
Common Stock
UNDERWRITING AGREEMENT
----------------------
August 16, 1999
PRUDENTIAL SECURITIES INCORPORATED
DAIN RAUSCHER WESSELS, a division of
Dain Rauscher Incorporated
VOLPE BROWN WHELAN & COMPANY
E*OFFERING CORP.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Ladies and Gentlemen:
Each of bamboo.com, Inc., a Delaware corporation (the "Company"), the
stockholders of the Company named in Schedule 3 hereto (collectively, "Selling
Securityholders") including Kevin B. McCurdy and Howard Field (collectively, the
" Principal Selling Securityholders"), hereby confirms its agreement with the
several underwriters named in Schedule 1 hereto (the "Underwriters"), for whom
you have been duly authorized to act as representatives (in such capacities, the
"Representatives"), as set forth below. If you are the only Underwriters, all
references herein to the Representatives shall be deemed to be to the
Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
----------
Company proposes to issue and sell to the several Underwriters an aggregate of
4,000,000 shares (the "Firm Securities") of the Company's Common Stock, par
value $0.001 per share ("Common Stock"). The Company and the Selling
Securityholders also propose to issue and sell to the several Underwriters not
more than 600,000 additional shares of Common Stock if requested by the
Representatives as provided in Section 4 of this Agreement. Any and all shares
of Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Option Securities," and the Firm
- -------------------------------
/1/ Plus an option to purchase from bamboo.com, Inc. and the Selling
Securityholders up to 600,000 additional shares to cover over-allotments.
<PAGE>
Securities and any Option Securities are collectively referred to herein as the
"Securities."
2. Representations and Warranties of the Company and the Principal Selling
-----------------------------------------------------------------------
Securityholders. Each of the Company and the Principal Selling Securityholders
- ----------------
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-80639) with respect to
the Securities, including a prospectus subject to completion, has been filed by
the Company with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and one or more amendments
to such registration statement has been so filed. After the execution of this
Agreement, the Company will file with the Commission either (i) if such
registration statement, as it has been amended, has been declared by the
Commission to be effective under the Act, either (A) if the Company relies on
Rule 434 under the Act, a Term Sheet (as hereinafter defined) relating to the
Securities, that shall identify the Preliminary Prospectus (as hereinafter
defined) that it supplements containing such information as is required or
permitted by Rules 434, 430A and 424(b) under the Act or (B) if the Company does
not rely on Rule 434 under the Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i)(A) or (i)(B) of
this sentence as have been provided to and approved by the Representatives prior
to the execution of this Agreement, or (ii) if such registration statement, as
it has been amended, has not been declared by the Commission to be effective
under the Act, an amendment to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement. The Company may also
file a related registration statement with the Commission pursuant to Rule
462(b) under the Act for the purpose of registering certain additional
Securities, which registration shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined); the term "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each prospectus
subject to completion filed with any such registration statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means:
<PAGE>
(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the
Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending use of
any Preliminary Prospectus. When any Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements of,
the Act and the rules and regulations of the Commission thereunder and (ii) did
not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared effective, it
(i) contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that is
a part thereof or any amendment or supplement to the Prospectus is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus or part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and on the Firm
Closing Date and any Option Closing Date (both as hereinafter defined), the
Prospectus, as amended or supplemented at any such time, (i) contained or will
contain all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements of, the
Act and the rules and regulations of the Commission thereunder and (ii) did not
or will not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (b) do not apply to statements or omissions made in
any Preliminary Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein.
<PAGE>
(c) If the Company has elected to rely on Rule 462(b) and the Rule 462(b)
Registration Statement has not been declared effective (i) the Company has filed
a Rule 462(b) Registration Statement in compliance with and that is effective
upon filing pursuant to Rule 462(b) and has received confirmation of its receipt
and (ii) the Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under the Act or
the Commission has received payment of such filing fee.
(d) The Company and each of its subsidiaries have been duly organized and are
validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation and are duly qualified to transact
business as foreign corporations and are in good standing under the laws of all
other jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified would not result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole ("Material Adverse Change").
(e) The Amalgamation Agreement, dated as of December 31, 1998 between
Jutvision Corporation, an Ontario, Canada corporation and a subsidiary of the
Company, Jutvision Canada, Inc., now known as bamboo Canada Inc. ("bamboo
Canada"), an Ontario, Canada corporation (the "Amalgamation Agreement"), was
appended to and formed part of the Certificate of Amalgamation dated January 1,
1999 which caused the amalgamation of Jutvision Corporation, with and into
bamboo Canada. The Amalgamation Agreement has been duly authorized, executed and
delivered by each of Jutvision Corporation and bamboo Canada and is a valid and
binding agreement of Jutvision Corporation and bamboo Canada, enforceable
against each in accordance with its terms and conforms to the description
thereof in the Prospectus.
(f) The Amended and Restated Conversion and Pairing Agreement, dated as of
June 7, 1999, entered into between the Company and bamboo Canada (the
"Conversion and Pairing Agreement"), has been duly authorized, executed and
delivered by each of the Company and bamboo Canada and is a valid and binding
agreement of the Company and bamboo Canada, enforceable against each in
accordance with its terms and conforms to the description thereof in the
Prospectus.
(g) The Company and each of its subsidiaries had all requisite corporate power
and corporate authority to execute and deliver the Amalgamation Agreement and to
consummate the transactions contemplated thereby.
(h) All consents, approvals and authorizations of and filings with any
governmental entity with respect to any applicable laws required on the part of
the Company or any of its subsidiaries in connection with the valid execution
and delivery of the Amalgamation Agreement, or the consummation of the
transaction contemplated thereby, have been obtained or made.
<PAGE>
(i) Neither the performance, execution and delivery of the Amalgamation
Agreement by the Company or any of its subsidiaries, nor the consummation by the
Company and its subsidiaries of the transactions contemplated thereby, nor
compliance by the Company and its subsidiaries with any of the provisions
thereof, will result in any of the following: (a) a violation of the restated
certificate of incorporation or bylaws of the Company or its subsidiaries, (b) a
default or event that, with the notice or lapse of time, or both would
constitute a default, breach or violation of any material contracts of the
Company, (c) an event that would permit any person or entity to terminate any
material contract of the Company or to accelerate the maturity of any obligation
of the Company or its subsidiaries, (d) a violation or breach of any applicable
laws, or (e) a violation of any judicial order to which the Company or any of
its subsidiaries is a party.
(j) The Class B common stock conforms to the description thereof in all
material respects under the heading "Description of Capital Stock - Class B
Common Stock."
(k) The Company and each of its subsidiaries have full power (corporate and
other) to own or lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the Prospectus or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus; and
the Company has full power (corporate and other) to enter into this Agreement
and to carry out all the terms and provisions hereof to be carried out by it.
(l) The issued shares of capital stock of bamboo Canada have been duly
authorized and are validly issued, fully paid and nonassessable and, are owned
beneficially and of record, by the Company free and clear of any security
interests, liens, encumbrances, equities or claims, except for 7,421,538 Series
C Convertible Preferred Shares of bamboo Canada, which convert at the option of
the holder thereof into 7,421,538 shares of Common Stock of the Company.
(m) The authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization," and, after
giving effect to the offering will be as set forth under the column "Pro Forma
As Adjusted" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or pursuant
to the exercise of options or warrants referred to in the Prospectus). All of
the issued shares of capital stock of the Company and its subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable; none of
the outstanding shares of capital stock of the Company or its subsidiaries was
issued in violation of the preemptive or other similar rights of any security
holder of the Company. The shares of issued and outstanding capital stock of the
Company and its subsidiaries have been issued in compliance, with all federal
and state securities laws, and Canadian laws; and no preemptive rights of, or
rights of refusal in favor of, stockholders exist with respect to the Common
Stock, or the issue and sale thereof, pursuant to the restated certificate of
incorporation or bylaws of the Company, and
<PAGE>
there are no contractual or statutory preemptive rights that have not been
waived, rights of first refusal or rights of co-sale which exist with respect to
the issue and sale of the Common Stock; except as described in the Prospectus,
there are no outstanding options, warrants or other rights to purchase,
agreements to issue or other rights to convert any obligations into shares of
capital stock of the Company or any of its subsidiaries.
(n) The Firm Securities and the Option Securities have been duly authorized
and at the Firm Closing Date or the related Option Closing Date (as the case may
be), after payment therefor in accordance herewith, will be validly issued,
fully paid and nonassessable. No holders of outstanding shares of capital stock
of the Company are entitled as such to any preemptive or other rights to
subscribe for any of the Securities, and no holder of securities of the Company
has any right which has not been fully exercised or waived to require the
Company to register the offer or sale of any securities owned by such holder
under the Act in the public offering contemplated by this agreement.
(o) The capital stock of the Company and its subsidiaries conforms to the
description thereof contained in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus.
(p) Except as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), there are no outstanding (A)
securities or obligations of the Company or any of its subsidiaries convertible
into or exchangeable for any capital stock of the Company or any such
subsidiary, (B) warrants, rights or options to subscribe for or purchase from
the Company or any such subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (C) obligations of the
Company or any such subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options.
(q) The consolidated financial statements and schedules of the Company and its
consolidated subsidiaries included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the Company and
its consolidated subsidiaries and the results of operations and changes in
financial condition as of the dates and periods therein specified. Such
financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved. The financial data set forth under the caption "Summary
Consolidated Financial Data," "Capitalization" and "Selected Consolidated
Financial Data" in the Prospectus (or, if the Prospectus is not in exis-
<PAGE>
tence, the most recent Preliminary Prospectus) fairly present, on the basis
stated in the Prospectus (or such Preliminary Prospectus), the information
included therein.
(r) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act and the applicable rules
and regulations thereunder.
(s) The execution and delivery of this Agreement have been duly authorized by
the Company and this Agreement has been duly executed and delivered by the
Company, and is the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
(t) No legal or governmental proceedings are pending to which the Company or
any of its subsidiaries is a party or to which the property of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus), and
no such proceedings have been threatened against the Company or any of its
subsidiaries or with respect to any of their respective assets, technologies or
properties; and no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) or filed as required.
(u) The issuance, offering and sale of the Securities to the Underwriters by
the Company pursuant to this Agreement, the compliance by the Company with the
other provisions of this Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be required under
state securities or blue sky laws and, if the registration statement filed with
respect to the Securities (as amended) is not effective under the Act as of the
time of execution hereof, such as may be required (and shall be obtained as
provided in this Agreement) under the Act, or (ii) conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the Company or any
of its subsidi-
<PAGE>
aries, or any statute or any judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator applicable to the
Company or any of its subsidiaries.
(v) Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus, neither the Company nor any
of its subsidiaries has sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding and there has not been any Material
Adverse Change, or any development involving a prospective Material Adverse
Change.
(w) The Company has not, directly or indirectly, (i) taken any action designed
to cause or to result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities or
(ii) since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(x) The Company has not distributed and, prior to the later of (i) the Closing
Date and (ii) the completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering and sale of the
Securities other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or other materials, if any permitted by the Act.
(y) Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), (1) the Company and its
subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock; (3) the Company has not purchased any of the
outstanding capital stock of its subsidiaries, nor declared, paid or otherwise
made any dividend or distribution of any kind on such capital stock and (4)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its consolidated subsidiaries,
<PAGE>
except in each case as described in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(z) The Company and each of its subsidiaries have good and marketable title in
fee simple to all items of real property and marketable title to all personal
property owned by each of them, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary, and any real property and buildings held under lease
by the Company or any such subsidiary are held under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary, in each case except as described in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(aa) Except as described in the Prospectus, no labor dispute with the
employees of the Company or any of its subsidiaries exists or is threatened that
would result in a Material Adverse Change.
(bb) The Company and its subsidiaries own or possess, all material patents,
patent applications, trademarks, service marks, trade names, licenses,
copyrights and proprietary or other confidential information currently employed
by them in connection with their respective businesses, and neither the Company
nor any such subsidiary has received any notice of infringement of or conflict
with asserted rights of any third party with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Change.
(cc) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not cause a Material Adverse Change. The officers
and directors of the Company and bamboo Canada are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary for officers and directors liability
insurance of a public company and as would cover claims which could be
<PAGE>
made in connection with the issuance of the Securities; and the Company has no
reason to believe that it will not be able to renew its existing directors and
officers liability insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to cover its
officers and directors.
(dd) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(ee) The Company and its subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state, provincial or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Change.
(ff) The Company will conduct its operations in a manner that will not subject
it to registration as an investment company under the Investment Company Act of
1940, as amended, and this transaction will not cause the Company to become an
investment company subject to registration under such Act.
(gg) The Company has filed all foreign, federal, state and local tax returns
that are required to be filed or has requested extensions thereof (except in any
case in which the failure so to file would not result in a Material Adverse
Change) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(hh) Neither the Company nor any of its subsidiaries is in violation of any
applicable federal, provincial or state law or regulation relating to
occupational safety and health or to the storage, handling or transportation of
hazardous or toxic materials and the Company and its subsidiaries have received
all permits, licenses or other approvals required of them under applicable
federal and state occupational
<PAGE>
safety and health and environmental laws and regulations to conduct their
respective businesses, and the Company and each such subsidiary is in compliance
with all terms and conditions of any such permit, license or approval, except
any such violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals which would not, singly or in the
aggregate, result in a Material Adverse Change.
(ii) The statistical and market-related data included in the Registration
Statement and the Prospectus are derived from sources which the Company
reasonably and in good faith believes to be accurate, reasonable and reliable;
such data agrees in all material respects with the sources from which they were
derived, and to the Company's knowledge, such data reasonably describes the
markets or industries in which the Company conducts or proposes to conduct its
business.
(jj) Except for the shares of capital stock of each of the subsidiaries owned
by the Company and such subsidiaries, neither the Company nor any such
subsidiary owns any shares of stock or any other equity securities of any
corporation or has any equity interest in any firm, partnership, association or
other entity, except as described in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(kk) The Shares have been duly authorized for listing on the Nasdaq National
Market, subject to official notice of issuance.
(ll) There are no holders of securities of the Company, who, by reason of the
filing of the Registration Statement, have the right (and have not waived such
right) to request the Company to register under the Act, or to include in the
Registration Statement, securities held by them.
(mm) The Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
<PAGE>
(nn) No default exists, and no event has occurred which, with notice or lapse
of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease or other material agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties is bound.
(oo) Except as disclosed in the Prospectus or except as not reasonably
required to be disclosed in the Prospectus, there are no outstanding loans,
advances, or guarantees of indebtedness by the Company to or for the benefit of
any of the executive officers or directors of the Company or any of the members
of the families of any of them.
(pp) The execution and delivery of the Amendment to Joint Services Agreement,
Warrant and Option Agreement, entered into between the Company, RealSelect, Inc.
and HomeStore.com, Inc. has been duly authorized by the Company, and is a valid
and binding agreement of each party, enforceable against each party in
accordance with its terms canceling and terminating the terms of the Option
Agreement previously entered into between the Company and RealSelect, Inc.
(qq) Each certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
3. Representations and Warranties of the Selling Securityholders. Each
--------------------------------------------------------------
Selling Securityholder represents and warrants to, and agrees with, each of the
several Underwriters that:
(a) Such Selling Securityholder has full power to enter into this Agreement
and to sell, assign, transfer and deliver to the Underwriters the Securities to
be sold by such Selling Securityholder hereunder in accordance with the terms of
this Agreement; and this Agreement has been duly executed and delivered by such
Selling Securityholder.
(b) Such Selling Securityholder has duly executed and delivered a power of
attorney and custody agreement (with respect to such Selling Securityholder, the
"Power-of-Attorney" and the "Custody Agreement", respectively), each in the form
heretofore delivered to the Representatives, appointing Kevin B. McCurdy,
Leonard B. McCurdy, Randall I. Bresee, Hunter Farrell and Mario Rosati as such
Selling Securityholder's attorney-in-fact (the "Attorney-in-Fact") with
authority to execute,
<PAGE>
deliver and perform this Agreement on behalf of such Selling Securityholder and
appointing Norwest Bank Minnesota, N.A., as custodian thereunder (the
"Custodian"). Certificates in negotiable form, endorsed in blank or accompanied
by blank stock powers duly executed, with signatures appropriately guaranteed,
representing the Securities to be sold by such Selling Securityholder hereunder
have been deposited with the Custodian pursuant to the Custody Agreement for the
purpose of delivery pursuant to this Agreement. Such Selling Securityholder has
full power to enter into the Custody Agreement and the Power-of-Attorney and to
perform its obligations under the Custody Agreement. The Custody Agreement and
the Power-of-Attorney have been duly executed and delivered by such Selling
Securityholder and, assuming due authorization, execution and delivery by the
Custodian, are the legal, valid, binding and enforceable instruments of such
Selling Securityholder. Such Selling Securityholder agrees that each of the
Securities represented by the certificates on deposit with the Custodian is
subject to the interests of the Underwriters hereunder, that the arrangements
made for such custody, the appointment of the Attorney-in-Fact and the right,
power and authority of the Attorney-in-Fact to execute and deliver this
Agreement, to agree on the price at which the Securities (including such Selling
Securityholder's Securities) are to be sold to the Underwriters, and to carry
out the terms of this Agreement, are to that extent irrevocable and that the
obligations of such Selling Securityholder hereunder shall not be terminated,
except as provided in this Agreement or the Custody Agreement, by any act of
such Selling Securityholder, by operation of law or otherwise, whether in the
case of any individual Selling Securityholder by the death or incapacity of such
Selling Securityholder, in the case of a trust or estate by the death of the
trustee or trustees or the executor or executors or the termination of such
trust or estate, or in the case of a corporate or partnership Selling
Securityholder by its liquidation or dissolution or by the occurrence of any
other event. If any individual Selling Securityholder, trustee or executor
should die or become incapacitated or any such trust should be terminated, or if
any corporate or partnership Selling Securityholder shall liquidate or dissolve,
or if any other event should occur, before the delivery of such Securities
hereunder, the certificates for such Securities deposited with the Custodian
shall be delivered by the Custodian in accordance with the respective terms and
conditions of this Agreement as if such death, incapacity, termination,
liquidation or dissolution or other event had not occurred, regardless of
whether or not the Custodian or the Attorney-in-Fact shall have received notice
thereof.
(c) Such Selling Securityholder is the lawful owner of the Securities to be
sold by such Selling Securityholder hereunder and upon sale and delivery of, and
payment for, such Securities, as provided herein, such Selling Securityholder
will convey good and marketable title to such Securities, free and clear of any
security interests, liens, encumbrances, equities, claims or other defects.
<PAGE>
(d) Such Selling Securityholder has not, directly or indirectly, (i) taken
any action designed to cause or result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company (except for
the sale of Securities by the Selling Securityholders under this Agreement).
(e) To the extent that any statements or omissions are made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Selling Securityholder specifically
for use therein, such Preliminary Prospectus did, and the Registration Statement
and the Prospectus and any amendments or supplements thereto, when they become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act and the respective rules
and regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading. Such Selling
Securityholder has reviewed the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and the Registration
Statement, and the information regarding such Selling Securityholder set forth
therein under the caption "Principal and Selling Securityholders" is complete
and accurate.
(f) The sale by such Selling Securityholder of Securities pursuant hereto is
not prompted by any adverse information concerning the Company that is not set
forth in the Registration Statement or the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(g) The sale of the Securities to the Underwriters by such Selling
Securityholder pursuant to this Agreement, the compliance by such Selling
Securityholder with the other provisions of this Agreement, the Custody
Agreement and the consummation of the other transactions herein contemplated do
not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, such as may be required under state securities or blue sky laws and,
if the registration statement filed with respect to the
<PAGE>
Securities (as amended) is not effective under the Act as of the time of
execution hereof, such as may be required (and shall be obtained as provided in
this Agreement) under the Act, or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under
any indenture, mortgage, deed of trust, lease or other material agreement or
instrument to which such Selling Securityholder is a party or by which such
Selling Securityholder or any of such Selling Securityholder's properties are
bound, or any statute or any judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator applicable to such
Selling Security holder.
(h) Such Selling Securityholder will deliver to the Representatives no later
than the third business day prior to the Option Closing Date a properly
completed and executed U.S. Treasury Department Form W-9 (or Form W-8 for non-
U.S. residents).
4. Purchase, Sale and Delivery of the Securities.
---------------------------------------------
(a) On the basis of the representations, warranties, agreements and covenants
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company, at
a purchase price of $_____ per share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. One or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company to the Representatives
for the respective accounts of the Underwriters, against payment by or on behalf
of the Underwriters of the purchase price therefor by wire transfer in same-day
funds (the "Wired Funds") to the account of the Company. Such delivery of and
payment for the Firm Securities shall be made at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, Palo Alto, California 94301, at 9:30 A.M., New York
time, on __________, 1999, or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 11 hereof, such time and date of delivery against
payment being herein referred to as the "Firm Closing Date". The Company will
make such certificate or certificates for the Firm Securities available for
checking and packaging by the Representatives at the offices in New York, New
York of the Company's transfer agent or registrar or of Prudential Securities
Incorporated at least 24 hours prior to the Firm Closing Date.
<PAGE>
(b) For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Securities as contemplated by the Prospectus,
the Company and the Selling Securityholders hereby grant to the several
Underwriters an option to purchase, severally and not jointly, the Option
Securities. The purchase price to be paid for any Option Securities shall be the
same price per share as the price per share for the Firm Securities set forth
above in paragraph (a) of this Section 4. The option granted hereby may be
exercised as to all or any part of the Option Securities from time to time
within (thirty) days after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange is open for trading). The Underwriters shall
not be under any obligation to purchase any of the Option Securities prior to
the exercise of such option. The Representatives may from time to time exercise
the option granted hereby by giving notice in writing or by telephone (confirmed
in writing) to the Company and the Selling Securityholders setting forth the
aggregate number of Option Securities as to which the several Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representatives and Company
may agree upon or as the Representatives may determine pursuant to Section 11
hereof, is herein called the "Option Closing Date" with respect to such Option
Securities. The obligation of each Underwriter to the Company and each of the
Selling Securityholders shall be to purchase from the Company and the Selling
Securityholders that number of shares of the Option Securities which represents
the same proportion of the total number of shares of the Option Securities to be
sold by each of the Company and the Selling Securityholders pursuant to this
Agreement as the number of shares of the Option Securities set forth opposite
the name of such Underwriter in Schedule I hereto represents of the total number
of shares of Option Securities to be purchased by all Underwriters pursuant to
this Agreement, as adjusted by you in such manner as you deem advisable to avoid
fractional shares. If the option is exercised as to a portion of the Option
Securities, the obligation of each Underwriter shall be to purchase such Option
Securities from the Company, and any remaining portion shall be purchased from
the Selling Securityholders in that number of shares which represents the same
proportion of the total number of shares of the Option Securities to be sold by
the Selling Securityholders pursuant to this Agreement as the number of shares
of the Option Securities set forth opposite the name of each such Selling
Securityholder in Schedule 3. In entering into this Agreement, each Underwriter
is contracting severally and not jointly; except as provided in Section 11, the
agreement of each Underwriter is to purchase only the respective number of
shares of the Option Securities as
<PAGE>
specified in Schedule 1. If the option is exercised as to all or any portion of
the Option Securities, one or more certificates in definitive form for such
Option Securities, and payment therefor, shall be delivered on the related
Option Closing Date in the manner, and upon the terms and conditions, set forth
in paragraph (a) of this Section 4, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) Each of the Company and the Selling Securityholders hereby acknowledges
that the wire transfer by or on behalf of the Underwriters of the purchase price
for any Shares does not constitute closing of a purchase and sale of the Shares.
Only execution and delivery of a receipt for Shares by the Underwriters
indicates completion of the closing of a purchase of the Shares from the Company
and the Selling Securityholders . Furthermore, in the event that the
Underwriters wire funds to the Company or the Selling Securityholders prior to
the completion of the closing of a purchase of Shares, each of the Company and
the Selling Securityholders hereby acknowledges that until the Underwriters
execute and deliver a receipt for the Shares, by facsimile or otherwise, the
Company or the Selling Securityholder, as the case may be, will not be entitled
to the Wired Funds and shall return the Wired Funds to the Underwriters as soon
as practicable (by wire transfer of same-day funds) upon demand. In the event
that the closing of a purchase of Shares is not completed and the Wired Funds
are not returned by the Company or the Selling Securityholders to the
Underwriters on the same day the Wired Funds were received by such party, such
party agrees to pay to the Underwriters in respect of each day the Wired Funds
are not returned by it, in same-day funds, interest on the amount of such Wired
Funds in an amount representing the Underwriters' cost of financing as
reasonably determined by Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as one of the
Representatives, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
5. Offering by the Underwriters. Upon your authorization of the release of
-----------------------------
the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
6. Covenants of the Company. The Company covenants and agrees with each of the
-------------------------
Underwriters that:
<PAGE>
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required, the
Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. During any time when a prospectus relating to the Securities is required to
be delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the prospectus, Term Sheet or the amendment referred to in the second
sentence of Section 2(a) hereof, any amendment or supplement to such Prospectus,
Term Sheet or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement of which the Representatives previously have been advised
and furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Representatives shall not have given their
consent. The Company will prepare and file with the Commission, in accordance
with the rules and regulations of the Commission, promptly upon request by the
Representatives or counsel for the Underwriters, any amendments to the
Registration Statement or amendments or supplements to the Prospectus that may
be necessary or advisable in connection with the distribution of the Securities
by the several Underwriters, and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will advise the Representatives,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed and will
provide evidence satisfactory to the Representatives of each such filing or
effectiveness.
(b) The Company will advise the Representatives, promptly after receiving
notice or obtaining knowledge thereof, of (i) the issuance by the Commission of
any stop order suspending the effectiveness of the Original Registration
Statement or any Rule 462(b) Registration Statement or any amendment thereto or
any order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, (ii) the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, (iii)
the institution, threatening or contemplation of any proceeding for any such
purpose or (iv) any request made by the Commission for amending the Original
Registration Statement or any Rule 462(b) Registration Statement, for amending
or supplementing the Prospectus or for additional information. The Company will
use its best efforts to prevent the issuance
<PAGE>
of any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and will continue such qualifications in
effect for as long as may be necessary to complete the distribution of the
Securities, provided, however, that in connection therewith the Company shall
-------- -------
not be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 6(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Representatives and
to counsel for the Underwriters a conformed copy of the registration statement
originally filed with respect to the Securities and each amendment thereto (in
each case including exhibits thereto) or any Rule 462(b) Registration Statement,
certified by the Secretary or an Assistant Secretary of the Company to be true
and complete copies thereof as filed with the Commission by electronic
transmission, (ii) to each other Underwriter, a conformed copy of such
registration statement or any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of each Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto as the Representatives may reasonably request; without
limiting the application of clause (iii) of this sentence, the Company, not
later than (A) 6:00 P.M., New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 10:00
A.M., New York City time, on such date or (B) 2:00 P.M., New York City time, on
the business day following the date of determination of the public offering
price, if such determination occurred after 10:00 A.M., New York City time, on
such date,
<PAGE>
will deliver to the Underwriters, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as the Representatives may
reasonably request for purposes of confirming orders that are expected to settle
on the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally available to its
securityholders and to the Representatives a consolidated earnings statement of
the Company and its subsidiaries that satisfies the provisions of Section 11(a)
of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the Securities
as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the prior written
consent of Prudential Securities Incorporated, on behalf of the Underwriters,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, pledge, grant of any option to purchase or other sale or
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for shares of Common Stock for a period of 180
days from the date of the Prospectus, except pursuant to this Agreement and
except for issuances pursuant to the existing employee benefit plans or stock
option plans of the Company outstanding on the date hereof or pursuant to the
terms of convertible securities of the Company or its subsidiaries outstanding
on the date hereof, in each case as described in the Prospectus.
(i) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
(j) The Company will obtain the agreements described in 9(g) hereof prior to
the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration Statement
becomes effective or the period prior to the Option Closing Date, any rumor,
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Common Stock has been or
is likely to be materially affected (regardless of whether such rumor,
publication or event neces-
<PAGE>
sitates a supplement to or amendment of the Prospectus), the Company will, after
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company shall both file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) and pay the applicable fees in accordance with Rule 111 promulgated under
the Act by the earlier of (i) 10:00 P.M. Eastern time on the date of this
Agreement and (ii) the time confirmations are sent or given, as specified by
Rule 462(b)(2).
(m) The Company will cause the Securities to be duly included for quotation
on The Nasdaq Stock Market's National Market (the "Nasdaq National Market")
prior to the Firm Closing Date. The Company will ensure that the Securities
remain included for quotation on the Nasdaq National Market following the Firm
Closing Date.
(n) The Company will promptly redeem each share of Class B common stock prior
to and upon the effectiveness of the conversion of each of the Series C
Convertible Preferred Shares of bamboo Canada into shares of Common Stock of the
Company in accordance with the terms of the Conversion and Pairing Agreement and
their respective charters.
7. Covenants of the Selling Securityholders. Each of the Selling
----------------------------------------
Securityholders covenants and agrees with each of the Underwriters that:
(a) Each Selling Securityholder will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, offer, sell, offer
to sell, contract to sell, pledge, grant any option to purchase or otherwise
sell or dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other sale or disposition) of any
Securities legally or beneficially owned by such Selling Securityholder or any
securities convertible into, or exchangeable or exercisable for, Securities for
a period of 180 days after the date hereof.
(b) Such Selling Securityholder will not, directly or indirectly, (i) take
any action designed to cause or result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities or (ii)
<PAGE>
(A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling Securityholders
under this Agreement).
8. Expenses. The Company will pay all costs and expenses incident to the
--------
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 13 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the registration statement originally filed with
respect to the Securities and any amendment thereto, any Rule 462(b)
Registration Statement, any Preliminary Prospectus and the Prospectus and any
amendment or supplement thereto, this Agreement and any blue sky memoranda, (ii)
all arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the Underwriters
relating thereto, (vi) the filing fees of the Commission and the National
Association of Securities Dealers, Inc. relating to the Securities and the fees
of underwriter's counsel incurred in connection with the review of the Offering
by the NASD, (vii) any quotation of the Securities on the Nasdaq National
Market, (viii) any meetings with prospective investors in the Securities (other
than as shall have been specifically approved by the Representatives to be paid
for by the Underwriters) and (ix) advertising relating to the offering of the
Securities (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters).
If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 9 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 13 hereof or because of any failure, refusal or inability on the part
of the Company to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder other than by reason of a default by any
of the Underwriters, the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including counsel fees and disbursements)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
<PAGE>
9. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the statements of the Company's officers made pursuant
to the provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) If the Original Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Original Registration Statement or such amendment and, if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have been declared effective not later than the earlier of (i)
11:00 A.M., New York time, on the date on which the amendment to the
registration statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission and (ii) the time confirmations are sent or given as specified by
Rule 462(b)(2), or with respect to the Original Registration Statement, or such
later time and date as shall have been consented to in writing by the
Representatives; if required, the Prospectus or any Term Sheet that constitutes
a part thereof and any amendment or supplement thereto shall have been filed
with the Commission in the manner and within the time period required by Rules
434 and 424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Wilson, Sonsini, Goodrich & Rosati, a professional corporation,
counsel for the Company, to the effect that:
(i) the Company and each of its subsidiaries listed in Exhibit 22 to
the Registration Statement (the "Subsidiaries") have been duly
incorporated or amalgamated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation or amalgamation and are duly qualified to transact business
as foreign corporations and are in good standing un-
<PAGE>
der the laws of all other jurisdictions where the ownership or leasing of
their respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so qualified
would not result in a Material Adverse Change.
(ii) the Conversion and Pairing Agreement, entered into between the
Company and bamboo Canada (the "Conversion and Pairing Agreement"), has
been duly authorized, executed and delivered by (the Company and is a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms and conforms to the description
thereof in the Prospectus;
(iii) the Class B common stock conforms to the description thereof in
all material respects under the heading "Description of Capital Stock -
Class B Common Stock; "
(iv) the Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus; and the Company has full power
(corporate and other) to enter into this Agreement and to consummate the
transactions contemplated thereby;
(v) the authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption
"Capitalization," and, after giving effect to the offering will be set
forth under the column "Pro Forma As Adjusted" under the caption
"Capitalization" (except for subsequent issuances, if any pursuant to
this Agreement, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus or pursuant to the exercise of
options referred to in the Prospectus). All of the issued shares of
capital stock of the Company and its subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable; to
our knowledge none of the outstanding shares of capital stock of the
Company or its subsidiaries was issued in violation of the preemptive or
other similar rights of any security holder of the Company. To our
knowledge, no preemptive rights of, or rights of refusal in favor of,
stockholders exist with respect to the Common Stock, or the issue and
sale thereof, pursuant to the restated certificate of incorporation or
<PAGE>
bylaws of the Company, and there are no contractual or statutory
preemptive rights that have not been waived, rights of first refusal or
rights of co-sale which exist with respect to the issue and sale of the
Common Stock; except as described in the Prospectus, there are no
outstanding options, warrants or other rights to purchase, agreements to
issue or other rights to convert any obligations into shares of capital
stock of the Company or any of its subsidiaries;
(vi) the Firm Securities and the Option Securities have been duly
authorized and at the Firm Closing Date or the related Option Closing
Date (as the case may be), after payment therefor in accordance herewith,
will be validly issued, fully paid and nonassessable. To our knowledge,
no holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe for any
of the Securities, and other than as described in the Prospectus no
holder of securities of the Company has any right (other than rights
which have been waived) to require the Company to register the offer or
sale of any securities owned by such holder under the Act in the public
offering contemplated by this agreement;
(vii) the statements set forth (A) under the heading "Description of
Capital Stock," "Certain Transactions," and "Management" in the
Prospectus and (B) in the Registration Statement under Item 14, insofar
as such statements constitute matters of law, summaries of legal matters,
the Company's charters and by-laws or legal proceedings, or legal
conclusions, have been reviewed by us and are complete in all material
respects;
(viii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company;
(ix) (A) to our knowledge, no legal or governmental proceedings are
pending to which the Company or any of the subsidiaries is a party or to
which the property of the Company or any of the subsidiaries is subject,
which if determined adversely to the Company or its subsidiary would
result in a Material Adverse Change and, to our knowledge of such
counsel, no such proceedings have been threatened against the Company or
any of the subsidiaries or with re-
<PAGE>
spect to any of their respective properties and (B) we do not know of any
contract or other document required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required;
(x) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have
been obtained and such as may be required under state securities or blue
sky laws, or (B) conflict with or result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
agreement included as an exhibit to the registration statement, or the
charter documents or by-laws of the Company or any of the subsidiaries,
or any statute or any judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator known to such
counsel and applicable to the Company or subsidiaries;
(xi) the Registration Statement is effective under the Act; any
required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 434 and 424(b) has been made in the
manner and within the time period required by Rules 434 and 424(b); and
to our knowledge no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted;
(xii) the Registration Statement originally filed with respect to the
Securities and each amendment thereto, any Rule 462(b) Registration
Statement and the Prospectus (in each case, other than the financial
statements and other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the rules and
regulations of the Commission thereunder; and
(xiii) if the Company elects to rely on Rule 434, the Prospectus is not
"materially different", as such term is used in Rule
<PAGE>
434, from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective amendment
thereto (including such information that is permitted to be omitted
pursuant to Rule 430A).
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date and the date of such opinion,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of its date or the date of
such opinion, included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and as to matters involving the
application of laws of any jurisdiction other than the State of Delaware or the
United States, to the extent satisfactory in form and scope to counsel for the
Underwriters upon the opinion of Beard, Winter, Canadian counsel. The foregoing
opinion shall also state that the Underwriters are justified in relying upon
such opinion of Canadian counsel, and copies of such opinion shall be delivered
to the Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Beard, Winter, Canadian counsel for the Company, to the effect
that:
(i) the Amalgamation Agreement, dated as of December 31, 1998 between
Jutvision Corporation, an Ontario, Canada corporation, and a subsidiary
of the Company, Jutvision Canada, Inc., now known as bamboo.com Canada,
Inc. ("bamboo Canada"), an Ontario, Canada corporation (the "Amalgamation
Agreement"), was appended to and formed part of the Certificate of
Amalgamation dated January 1, 1999 which caused the amalgamation of
Jutvision Corporation, with and into bamboo Canada. The Amalgamation
Agreement has been duly authorized, executed and delivered by each of
Jutvision Corporation and bamboo Canada and is a valid and
<PAGE>
binding agreement of Jutvision Corporation and bamboo Canada, enforceable
against each in accordance with its terms and conforms to the description
thereof in the Prospectus;
(ii) bamboo Canada and Jutvision Corporation had all requisite
corporate power and corporate authority to execute and deliver the
Amalgamation Agreement and to consummate the transactions contemplated
thereby;
(iii) all consents, approvals and authorizations of and filings with any
governmental entity with respect to any applicable laws required on the
part of the Company or any of its subsidiaries in connection with the
valid execution and delivery of the Amalgamation Agreement, or the
consummation of the transaction contemplated thereby, have been obtained
or made;
(iv) neither the performance, execution and delivery of the
Amalgamation Agreement, nor the consummation of the transactions
contemplated thereby, nor compliance by the Company and its subsidiaries
with any of the provisions thereof, will result in any of the following:
(a) a violation of the restated certificate of incorporation or bylaws of
the Company or its subsidiaries, (b) a default or event that, with the
notice or lapse of time, or both would constitute a default, breach or
violation of any material contracts, (c) an event that would permit any
person or entity to terminate any material contract or to accelerate the
maturity of any obligation of the Company or its subsidiaries, (d) a
violation or breach of any applicable laws, or (e) a violation of any
judicial order to which the Company or any of its subsidiaries are a
party;
(v) the issued shares of capital stock of bamboo Canada have been duly
authorized and validly issued, are fully paid and nonassessable and, are
owned beneficially and of record, by the Company free and clear of any
security interests, liens, encumbrances, equities or claims, except for
7,421,538 of Series C Convertible Preferred Shares of bamboo Canada,
which convert at the option of the holder thereof into 7,421,538 shares
of Common Stock of the Company;
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a
<PAGE>
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or the date of such opinion, included or includes any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(d) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP, 525 University
Avenue, Suite 220, Palo Alto, CA 94301, counsel for the Underwriters, with
respect to the issuance and sale of the Firm Securities, the Registration
Statement and the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, such counsel
may rely as to all matters of law upon the opinion of Canadian counsel referred
to in paragraph (b) above.
(e) The Selling Securityholders shall have furnished to the Representatives
the opinion of Wilson, Sonsini, Goodrich and Rosati, a professional corporation,
counsel for the Selling Securityholders, dated the Closing Date, to the effect
that:
(i) such Selling Securityholder has full power to enter into this
Agreement, the Custody Agreement and the Power-of-Attorney and to sell,
transfer and deliver the Securities being sold by such Selling
Securityholder hereunder in the manner provided in this Agreement and to
perform its obligations under the Custody Agreement; this Agreement, the
Custody Agreement and the Power-of-Attorney have been duly executed and
delivered by each Selling Securityholder; assuming due authorization,
execution and delivery by the Custodian, the Custody Agreement and the
Power-of-Attorney are the legal, valid, binding and enforceable
instruments of such Selling Securityholder, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law);
<PAGE>
(ii) the delivery by each Selling Securityholder to the several
Underwriters of certificates for the Securities being sold hereunder by
such Selling Securityholder against payment therefor as provided herein,
will convey good and valid title to such Securities to the several
Underwriters, free and clear of all encumbrances, equities or claims;
(iii) to our knowledge, the sale of the Securities to the Underwriters
by such Selling Securityholder pursuant to this Agreement, the compliance
by such Selling Securityholder with the other provisions of this
Agreement, the Custody Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and such as may
be required under state securities or blue sky laws, or (ii) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under any indenture, mortgage,
deed of trust, lease or other agreement or instrument known to us to
which such Selling Securityholder is a party or by which such Selling
Securityholder or any of such Selling Securityholder's properties are
bound, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator applicable
to such Selling Securityholder.
In rendering such opinion, such counsel may rely, as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and public officials and, as to matters involving the application of
laws of any jurisdiction other than the State of Delaware or the United States,
to the extent satisfactory in form and scope to counsel for the Underwriters,
upon the opinion of Beard, Winter, Canadian counsel. The foregoing opinion shall
also state that the Underwriters are justified in relying upon such opinion of
Canadian counsel, and copies of such opinion shall be delivered to the
Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (e) shall include any amendment or supplement thereto at the date of
such opinion.
(f) The Representatives shall have received from PricewaterhouseCoopers LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
<PAGE>
(i) they are independent accountants with respect to the Company and
its consolidated subsidiaries within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial statements
and schedules examined by them and included in the Registration Statement
and the Prospectus comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations;
(iii) on the basis of a reading of the latest available interim
unaudited consolidated financial statements of the Company and its
consolidated subsidiaries, carrying out certain specified procedures
(which do not constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(iii), a reading of the minute books of the shareholders, the board of
directors and any committees thereof of the Company and each of its
consolidated subsidiaries, and inquiries of certain officials of the
Company and its consolidated subsidiaries who have responsibility for
financial and accounting matters, nothing came to their attention that
caused them to believe that:
(iv) the unaudited consolidated financial statements of the Company and
its consolidated subsidiaries included in the Registration Statement and
the Prospectus do not comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations thereunder or are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements
included in the Registration Statement and the Prospectus;
(v) at a specific date not more than five business days prior to the
date of such letter, there were any changes in the capital stock or long-
term debt of the Company and its consolidated subsidiaries or any
decreases in net current assets or stockholders' equity of the Company
and its consolidated subsidiaries, in each case compared with amounts
shown on the June 30, 1999 unaudited consolidated balance sheet included
in the Registration Statement and the
<PAGE>
Prospectus, or for the period from July 1, 1999 to __________________;
(vi) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting
records of the Company and its consolidated subsidiaries and are included
in the Registration Statement and the Prospectus under the captions
"Summary Consolidated Financial Date," "Capitalization," "Selected
Financial Data," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and in Exhibit 11 to the
Registration Statement, and have compared such amounts, percentages and
financial information with such records of the Company and its
consolidated subsidiaries and with information derived from such records
and have found them to be in agreement, excluding any questions of legal
interpretation; and
(vii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards No.
71, Interim Financial Information, on the unaudited financial statements
included in the Registration Statement.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(g) The Representatives shall have received a certificate, dated the Firm
Closing Date, from Leonard B. McCurdy and Randall I. Bresee of the Company to
the effect that:
<PAGE>
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement as of its date, as of the time of its
effectiveness and as of the Firm Closing Date, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein
not misleading, and the Prospectus as of its date and as of the Firm
Closing Date, as amended or supplemented as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and the Company has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied at
or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings
for that purpose have been instituted or threatened or, to the best of
the Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the
Company nor any of its subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a prospective Material Adverse Change.
(h) The Representatives shall have received a certificate from each Selling
Securityholder, signed by such Selling Securityholder, dated the Option Closing
Date, to the effect that:
(i) the representations and warranties of such Selling Securityholder
in this Agreement are true and correct as if made on and as of the
Closing Date;
<PAGE>
(ii) to the extent that any statements or omissions are made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by such Selling
Securityholder specifically for use therein, the Registration Statement,
as amended as of the Closing Date, does not include any untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(iii) such Selling Securityholder has performed all covenants and
agreements on its part to be performed or satisfied at or prior to the
Closing Date.
(i) The Representative shall have received from each person who is a director
or officer of the Company or who owns any securities of the Company or its
subsidiaries an agreement to the effect that such person will not, directly or
indirectly, without the prior written consent of Prudential Securities
Incorporated, on behalf of the Underwriters, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale, pledge,
grant of any option to purchase or other sale or disposition) of any shares of
Common Stock or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock of itself or any subsidiary or file any registration
statement under the 1933 Act with respect to any of the foregoing, except for
filing a Registration Statement on Form S-8 to register shares of Common Stock
for issuance under the Company stock option plan, for a period of 180 days from
the date of the Prospectus, except pursuant to this Agreement and except for
issuances pursuant to the existing employee benefit plans or stock option plans
of the Company outstanding on the date hereof or pursuant to the terms of
convertible securities of the Company outstanding on the date hereof, in each
case pursuant to the plans described in the Prospectus.
(j) On or before the Firm Closing Date, the Representatives and counsel for
the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
<PAGE>
(k) Prior to the commencement of the offering of the Securities, the
Securities shall have been included for trading on the Nasdaq National Market.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
10. Indemnification and Contribution.
---------------------------------
(a) The Company and each Selling Securityholder, jointly and severally, agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Securities Exchange Act of 1934 (the "Exchange Act") against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under state law,
common law, the Exchange Act, the Act, Canadian law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company or a Principal Selling Securityholder in Section 2 or the Selling
Security holders in Section 3 of this Agreement; provided, however, that
no indemnification agreement is made by the Selling Securityholders other
than the Principal Selling Securityholders with respect to statements
made in Section 2;
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement or any amendment or
supplement thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other document,
or any amendment or supplement thereto, executed by the Company or a
Selling Securityholder or based upon written information furnished by or
on behalf of the Com-
<PAGE>
pany or a Selling Securityholder filed in any jurisdiction (foreign or
domestic) in order to qualify the Securities under the securities or blue
sky laws thereof or filed with the Commission or any securities
association or securities exchange (each a "Application");
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment or supplement thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or
any Application a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(iv) any untrue statement or alleged untrue statement of any material
fact contained in any audio or visual materials provided by the Company
or based upon written information furnished by or on behalf of the
Company, including, without limitation, slides, videos, films, tape
recordings, used in connection with the marketing of the Securities,
including, without limitation, statements communicated to securities
analysts employed by the Underwriters; or
(v) the Company's directed share program.
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and each
-----------------
Selling Securityholder will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and provided, further, that the Company and each
-------- --------
Selling Securityholder will not be liable to any Underwriter or any person
controlling such Underwriter with respect to any such untrue statement or
omission made in any Preliminary Prospectus that is corrected in the Prospectus
(or any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Securities from such Underwriter but was
not sent or given a copy of the Prospectus (as amended or supplemented) at or
prior to the written confirmation of
<PAGE>
the sale of such Securities to such person in any case where such delivery of
the Prospectus (as amended or supplemented) is required by the Act and it shall
have been determined by a final judgment of a court of competent jurisdiction
that any Underwriter or any person controlling such Underwriter would not have
incurred such loss, claim, damage or liability had the Prospectus (as amended or
supplemented) been delivered or sent, unless such failure to deliver the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 6(d) and (e) of this Agreement. This indemnity agreement
will be in addition to any liability which the Company and the Selling
Securityholder may otherwise have. Neither the Company nor any Selling
Securityholder will, without the prior written consent of the Representatives
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not any such Underwriter or any person who
controls any such Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement, each Selling Securityholder and each person, if any, who
controls the Company or such Selling Securityholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company or any such director,
officer or controlling person of the Company or such Selling Securityholder may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application or (ii) the omission or the alleged omission to state therein
a material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person or such Selling Securi-
<PAGE>
tyholder in connection with investigating or defending any such loss, claim,
damage, liability or any action in respect thereof. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 10 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 10, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 10. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
-----------------
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 10 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 10, representing the indemnified parties under
such paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
set-
<PAGE>
tlement of such action effected by such indemnified party without the consent of
the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 10 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each indemnifying party,
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section II (f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among
<PAGE>
Underwriters shall be governed by the provisions of the Prudential Securities
Incorporated Master Agreement Among Underwriters. For purposes of this paragraph
(d), each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
11. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 12 hereof. In the event of any default by one or more Underwriters
as described in this Section 11, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 4 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 11. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
12. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, its officers and the
several Un-
<PAGE>
derwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, any Underwriter or any controlling person referred to
in Section 10 hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 2, 6,7 and 10 hereof shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement.
13. Termination.
-----------
(a) The Agreement may be terminated with respect to the Firm Securities or
any Option Securities in the sole discretion of the Representatives by notice to
the Company given prior to the Firm Closing Date or the related Option Closing
Date, respectively, in the event that the Company shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on its part to
be performed or satisfied hereunder at or prior thereto or, if at or prior to
the Firm Closing Date or such Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall have, in the sole
judgment of the Representatives, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Company), in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries;
(ii) trading in the Common Stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or Nasdaq National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange or market system;
(iii) a banking moratorium shall have been declared by New York or
United States authorities; or
<PAGE>
(iv) there shall have been (A) an outbreak or escalation of hostilities
between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the
United States or (C) any other calamity or crisis or material adverse
change in general economic, political or financial conditions having an
effect on the U.S. financial markets that, in the sole judgment of the
Representatives, makes it impractical or inadvisable to proceed with the
public offering or the delivery of the Securities as contemplated by the
Registration Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 13 shall be
without liability of any party to any other party except as provided in Section
12 hereof.
14. Limitation of Liability.
------------------------
The liability of each Selling Securityholder, including the Principal
Selling Security holders, under Sections 2 and 10 shall not exceed an amount
equal to the initial public offering price of the Option Securities sold by such
Selling Securityholder to the Underwriters. The Underwriters shall seek
indemnification or other remedies, to which they are entitled under Sections 2
and 10 first from the Company. If the Company does not respond to the
Underwriters after 30 days, then the Underwriters may seek such indemnification
or other remedies from the Selling Security holders. In the event that the
Underwriters are unable (or believe that they will be unable to) obtain such
indemnification or other remedies from the Company, the Underwriters may then
seek indemnification or other remedies from the Selling Security holders.
15. Information Supplied by Underwriters. The statements set forth in the
-------------------------------------
last paragraph on the front cover page and under, the tables below paragraphs 1
and 4, and paragraphs 2, 3, 8, 9, 11- 13, of the heading "Underwriting" in any
Preliminary Prospectus or the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 10 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
16. Notices. All communications hereunder shall be in writing and, if sent
-------
to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, One New York Plaza, New York, New York 10292, Attention: Equity
Transactions Group; with a
<PAGE>
copy to Skadden, Arps, Slate, Meagher & Flom LLP, 525 University Avenue, Suite
220, Palo Alto, CA 94301, Attention: Gregory C. Smith, and if sent to the
Company, shall be delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to the Company at 124 University Avenue, Palo Alto, CA
94301, Attention: Randall I. Bresee; with a copy to Wilson, Sonsini, Goodrich &
Rosati, a professional corporation, 650 Page Mill Road, Palo Alto, CA 94304,
Attention: Isaac J. Vaughn.
17. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 10 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 10 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
18. Applicable Law. The validity and interpretation of this Agreement, and
--------------
the terms and conditions set forth herein, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws.
19. Consent to Jurisdiction and Service of Process. All judicial proceedings
----------------------------------------------
arising out of or relating to this Agreement may be brought in any state or
federal court of competent jurisdiction in the State of New York, and by
execution and delivery of this Agreement, each Selling Securityholder accepts
for itself and in connection with its properties, generally and unconditionally,
the nonexclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each Selling Securityholder
designates and appoints Kevin B. McCurdy, and such other persons as may
hereafter be selected by such Selling Securityholder irrevocably agreeing in
writing to so serve, as its agent to receive on its behalf service of all
process in any such proceedings in any such court, such service
<PAGE>
being hereby acknowledged by such Selling Securityholder to be effective and
binding service in every respect. A copy of any such process so served shall be
mailed by registered mail to each Selling Securityholder at its address provided
in Section 15 hereof; provided, however, that, unless otherwise provided by
-------- -------
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by any Selling Securityholder
refuses to accept service, such Selling Securityholder hereby agrees that
service of process sufficient for personal jurisdiction in any action against
such Selling Securityholder in the State of New York may be made by registered
or certified mail, return receipt requested, to such Selling Securityholder at
its address provided in Section 15 hereof, and such Selling Securityholder
hereby acknowledges that such service shall be effective and binding in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of any Underwriter to bring
proceedings against any Selling Securityholder in the courts of any other
jurisdiction.
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
bamboo.com, Inc.
By ________________________
[Title]
PRINCIPAL SELLING SECURITYHOLDERS
By ________________________
Name: Kevin B. McCurdy
<PAGE>
By ________________________
Name: Howard Field
SELLING SECURITYHOLDERS
By ________________________
Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
DAIN RAUSCHER WESSELS, A Division of
Dain Rauscher Incorporated
VOLPE BROWN WHELAN & COMPANY
E*OFFERING CORP.
By PRUDENTIAL SECURITIES INCORPORATED
By _____________________
Jean-Claude Canfin
Managing Director
For itself and on behalf of the Representatives.
<PAGE>
SCHEDULE 1
UNDERWRITERS
Securities to Number of Firm
Underwriter be Purchased
- ----------- ------------
PRUDENTIAL SECURITIES INCORPORATED.......
DAIN RAUSCHER WESSELS, a division of
Dain Rauscher Incorporated
VOLPE BROWN WHELAN & COMPANY
E*OFFERING CORP.
_______________
Total ..............
<PAGE>
SCHEDULE 2
SUBSIDIARIES
Name Jurisdiction of Incorporation
- ---- -----------------------------
<PAGE>
SCHEDULE 3
Name Number of Shares to be Sold
- ---------------------------------------------------------------
bamboo.com, Inc.
Kevin B. McCurdy
Howard Field
Andrew P. Laszlo
Vestmark Limited
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated March 12, 1999, except for Note 14, which is as of July 19,
1999, relating to the financial statements and financial statement schedule of
bamboo.com, which appear in such Registration Statement. We also consent to the
references to us under the headings "Experts" and "Selected Financial Data" in
such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
August 24, 1999
