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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 26, 1999
REGISTRATION NO. 333-84189
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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JAGNOTES.COM INC.
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(Name of Small Business Issuer in its Charter)
Nevada
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(State of Incorporation)
8999 - Services, Nec
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(Primary Standard Industrial Classification Code No.)
88-0380456
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(IRS Employer I.D. No.)
2421 Atlantic Avenue, Suite 103, Manasquan, New Jersey 08736, (732) 292-1800
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(Address and Telephone Number of Principal Executive Office and
Principal Place of Business)
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Gary Valinoti, President
JagNotes.com Inc.
2421 Atlantic Avenue, Suite 103
Manasquan, New Jersey 08736
(732) 292-1800
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(Name, address and telephone number of agent for service)
Copy to:
Caldwell R. Campbell, Esq.
Day & Campbell, LLP
3070 Bristol Street, Suite 450
Costa Mesa, California 92626
(714) 429-2900
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Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
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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 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 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 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed maximum Proposed
Title of each class of Amount to be offering price maximum aggregate Amount of
securities to be registered registered per unit(1) offering price(1) registration fee
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<S> <C> <C> <C> <C>
Common Stock
$.00001 par value 2,468,520(2) $7.63(3) $18,834,807(3) $5,462
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Previously Paid $6,276
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TOTAL DUE 0
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee under Rule 457.
(2) Comprised of: (a) 1,838,390 shares presently outstanding, and (b) 630,130
shares issuable upon exercise of options or warrants.
(3) Based upon the average of the bid and asked prices for the common stock on
July 27, 1999, as reported by the OTC Bulletin Board.
---------------
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.
ii
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JAGNOTES.COM INC.
CROSS REFERENCE SHEET
Between Items of Form SB-2 and Prospectus
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND HEADING PROSPECTUS CAPTION
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<S> <C>
1. Forepart of the Registration Statement and Outside Front Outside Front Cover Page
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Cover Page; Plan of Distribution
9. Legal Proceedings The Company
10. Directors, Executive Officers, Promoters and Control Management and Executive Compensation
Persons
11. Security Ownership of Certain Beneficial Owners Security Ownership of Certain Beneficial
and Management Owners and Management Principal
Stockholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Position on Indemnification for Management and Executive Compensation
Securities Act Liabilities
15. Organization Within Last 5 Years Not Applicable
16. Description of Business The Company
</TABLE>
iii
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<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND HEADING PROSPECTUS CAPTION
- --------------------------------------- ------------------
<S> <C>
17. Management's Discussion and Analysis or Plan of Operations Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property The Company
19. Certain Relationships and Related Transactions n/a
20. Market Price for Common Equity and Related Stockholder Market for Common Stock and Related
Matters Stockholder Matters
21. Executive Compensation Management and Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Accountants on Accounting Experts
and Financial Disclosure
</TABLE>
iv
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Subject to completion, dated October 26, 1999
JAGNOTES.COM INC
PROSPECTUS
2,468,520 Shares of Common Stock
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These shares of common stock will be sold from time to time by the
selling stockholders listed on page 36. These stockholders previously purchased
the shares, or will purchase the shares upon exercise of options or warrants,
from the company in private transactions.
Our common stock is traded in the over the counter market and quoted on
the Nasdaq OTC Bulletin Board under the symbol "JNOT." The bid and asked prices
on October 18, 1999 were $5.56 and $6.38, respectively.
------------------
Brokers or dealers effecting transactions in these shares should
confirm that the shares are registered under applicable state law or that an
exemption from registration is available.
THESE SHARES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS INVESTMENT IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD PURCHASE THESE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR MORE INFORMATION.
-----------------
The date of this prospectus is ____________, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND IT MAY BE AMENDED IN THE
FUTURE. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SEC, BUT THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL NOR IS IT SEEKING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
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TABLE OF CONTENTS
PAGE
----
Summary 3
Risk Factors 6
Selected Financial Data 14
Management's Discussion and Analysis of Financial Condition
and Results of Operation 15
Market For Common Stock and Related Stockholder Matters 19
The Company 20
Management and Executive Compensation 30
Security Ownership of Certain Beneficial Owners and Management 33
Selling Stockholders 36
Plan of Distribution 39
Description of Securities 40
Legal Matters 40
Experts 40
Other Information 41
Index to Financial Statements F-1
2
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SUMMARY
This section highlights selected information only and may not contain
all of the information that may be important to you. Please read this entire
prospectus before making your investment decision. This summary, including the
summary financial information, is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus.
Throughout this prospectus, when we refer to "JagNotes" or when we
speak of ourselves generally, we are referring collectively to JagNotes.com Inc.
and its subsidiary unless the context indicates otherwise or as otherwise noted.
JagNotes(TM) is a trademark of JagNotes.com Inc.
THE COMPANY
JagNotes is an Internet-based provider of financial and investment
information. At our web site, www.JagNotes.com, our subscribers can access
timely financial information, reports and commentary as well as "JagNotes," a
daily early-morning investment report that summarizes newly issued research,
analyst opinions, upgrades, downgrades and analyst coverage changes from various
investment banks and brokerage houses. While our target market in the past has
been primarily limited to institutional investors, we are now, through the
Internet, targeting retail subscribers in an effort to rapidly expand our
subscriber base. A detailed description of our business strategy is provided
under the heading "The Company" below.
Our address is 2421 Atlantic Avenue, Suite 103, Manasquan, New Jersey
08736 and our telephone number is (732) 292-1800.
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THE SELLING STOCKHOLDER OFFERING
These shares of common stock will be sold from time to time by the
selling stockholders listed on page 35. JagNotes will not receive any of the
proceeds from the sale of these shares.
<TABLE>
<S> <C>
JagNotes.com Inc. common stock outstanding as of
July 31, 1999(1) 13,996,290 shares
Shares offered by the selling stockholders(2) 2,468,520 shares
Risk Factors This offering involves a high
degree of risk. Please read
"Risk Factors" beginning on page
6, and the rest of this
prospectus, before making your
investment decision.
Nasdaq Symbol JNOT
</TABLE>
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(1) Does not include 630,120 shares issuable upon the exercise of outstanding
options or warrants as of the date of this prospectus
(2) Includes 630,120 shares issuable upon exercise of options or warrants held
by the selling stockholders as of the date of this prospectus
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SUMMARY FINANCIAL DATA
The consolidated statement of operations data for the year ended July
31, 1999 and the consolidated balance sheet data as of July 31, 1999 have been
derived from financial statements which have been audited by J.H. Cohn LLP,
independent public accountants, and included elsewhere in this prospectus. The
consolidated statement of operations data for the year ended July 31, 1998 have
been derived from financial statements which have been audited by Stephen R.
Russo, CPA, independent certified public accountant, and included elsewhere in
this prospectus.
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Fiscal Year Ended July 31,
---------------------------
1999 1998
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Subscription Revenues $ 800,716 $ 932,553
Net Income (Loss) $(915,292) $ 2,649
Basic Net Earnings (Loss) per Share $ (.10) $ --
Basic Weighted Average Common Shares Outstanding 9,237,693 3,500,000
CONSOLIDATED BALANCE SHEET DATA
Fiscal Year
Ended
July 31, 1999
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Total Assets $7,109,241
Total Liabilities $ 414,617
Stockholders' Equity $6,694,624
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RISK FACTORS
An investment in these shares is highly speculative and involves a high
degree of risk. In this section of the prospectus we highlight certain specific
risks with respect to JagNotes, its business and the purchase of these shares.
These risk factors are not a complete list of all risks factors that may affect
JagNotes or its stock. Please carefully consider these risk factors and the
other information contained in this prospectus, before deciding to purchase
these shares.
WE ARE NEW TO THE RETAIL MARKETPLACE AND TO THE INTERNET
Until recently our business was limited to distributing reports by fax
to a limited number of institutional traders, brokers, investment managers and
the like. We did not launch our web site or begin to focus on expansion into the
public retail market until 1999. Accordingly, there is a limited operating
history upon which to judge our current operations. In deciding whether to
purchase these shares, you should consider our prospects in light of the risks,
expenses, and difficulties frequently encountered by a small business beginning
operations in a highly competitive industry. We expect our operating expenses to
increase significantly as a result of our expansion of the business and, since
we have a limited operating history marketing our products and services to the
public over the Internet, we cannot assure you that our business will be
profitable or that we will ever generate sufficient revenues to meet our
expenses and support our anticipated activities. See "Business" and "Financial
Statements."
WE HAVE LOST, AND MAY CONTINUE TO LOSE, MONEY
As of July 31, 1999, we had incurred losses to date of approximately
$1,097,000 and we expect to incur additional losses in fiscal year 2000. In
addition, we expect to continue to incur significant operating expenses. As a
result, we will need to generate significant revenues to achieve profitability,
which may not occur. Even if we do achieve profitability, we may be unable to
sustain or increase profitability on a quarterly or annual basis in the future.
See "Selected Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
WE ARE IN AN INTENSELY COMPETITIVE BUSINESS WITH LOW BARRIERS TO ENTRY
Providing financial information and analysis over the Internet is a
relatively new business, but it is already intensely competitive. An increasing
number of web-based financial information providers are competing for
subscribers, customers, advertisers, content providers, analysts, commentators
and staff, and we continue to face competition from traditional news and
information sources including television and print. We expect competition from
both sources to intensify and increase in the future.
Our largest competitors include:
o Online financial news and information providers including
TheStreet.com, MarketWatch.com and The Motley Fool
o Traditional media sources such as The Wall Street Journal, Barrons,
CNNfn, and CNBC, many or most of whom also have an Internet
presence
o Terminal-based financial news providers including Bloomberg,
Reuters and Dow Jones
o Online brokerage firms such as E*Trade, Charles Schwab or DLJ
Direct
o Internet giants such as Yahoo, Go Network and America Online
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Many of our current and potential competitors have greater name
recognition, financial, technical or marketing resources, and more extensive
customer bases than we do, all of which could be leveraged to gain market share
to our detriment.
The barriers to entry into our business are relatively low - i.e., it
is not difficult for new competitors to enter the market. Much of the
information we provide is publicly available and we do not have any patented or
otherwise protected technologies that would preclude or inhibit competitors from
entering our markets. Our current and future competitors may develop or offer
services that have significant price, substantive, creative or other advantages
over the services we provide. If they do so and we are unable to respond
satisfactorily, our business and financial condition will likely be adversely
affected. See "The Company - Competition."
WE MAY NOT BE ABLE TO GENERATE ENOUGH CASH TO SUPPORT OUR OPERATIONS
We may not be able to generate enough cash from our operations to
support our targeted level of operations. If our plans change, our assumptions
prove to be inaccurate or we are otherwise unable to generate sufficient
revenues, income or cash flows, we may require additional funds to maintain our
operations. In any case we will require more capital to achieve our business
objectives. If such funds are unavailable we may have to substantially curtail
operations or cease operations altogether. If we do require additional funds we
will have to seek additional equity or debt financing, bank loans, or other
financing to sustain our planned expansion and growth. Such financing may not be
available. Even if it is, it may be on terms that are materially adverse to your
interests with respect to dilution of book value, dividend preferences,
liquidation preferences, or other terms.
We do not have any current commitments for additional financing and we
cannot guarantee that we would be able to obtain additional financing if we
needed it. If our operations require additional financing and we are unable to
obtain it on reasonable terms, we could be forced to restructure, file
bankruptcy, sell assets or cease operations, any of which could put your
investment dollars at significant risk. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
WE MAY NOT BE ABLE TO ADEQUATELY EXPAND OUR SUBSCRIBER BASE BECAUSE MANY OF OUR
COMPETITORS OFFER FREE FINANCIAL INFORMATION
We must expand our subscriber base to be successful. We have put
measures in place to expand our subscriber base and we will continue to do so,
but these measures may be ineffective at generating subscriptions, our
competitors may be more successful than we are in attracting customers, or the
number of Internet users seeking or willing to pay for financial information may
not increase or may decrease. Any of these would be to our detriment. Moreover,
many of our competitors offer financial information for free and could continue
to do so at an increasing rate. Our current and potential subscribers may be
unwilling to pay for our service if they feel they can receive comparable
information for free. If we cannot expand our subscriber base, we will have
little, if any, financial success. See "The Company - Our Business Strategy."
MANY OF OUR COMMENTATORS MAY HAVE COMPETING WEB SITES
Many of our commentators have their own web sites on which they provide
financial information. Specifically, Elaine Garzarelli; Dorsey, Wright &
Associates; Tom Taulli; Mark Leibovit; E*Offering and Mastrapasqua & Associates
all currently have competing web sites, with the latter four offering free
information. If current or potential future subscribers were to turn to these
sites for financial information in lieu of JagNotes.com, our business and
financial condition could be adversely affected.
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WE MAY NOT BE SUCCESSFUL AT BUILDING BRAND AWARENESS OR BUILDING STRATEGIC
RELATIONSHIPS
Our growth and success depends in part on our ability to build
awareness of the JagNotes.com name. The JagNotes.com name has only limited
recognition within the financial community and little if any recognition among
the general public. Our ability to build our subscriber base, offer new services
or otherwise expand the business will be limited if we cannot increase that
recognition. We cannot guarantee that we will be successful in doing so. See
"The Company - Our Business Strategy."
WE MAY EXPERIENCE DIFFICULTIES IN DEVELOPING NEW AND ENHANCED SERVICES AND
FEATURES FOR OUR WEB SITE
We believe that our Web site will be more attractive to subscribers if
we introduce additional or enhanced services in the future in order to retain
our current users and attract new users. For example, we are considering the
introduction of the following products and services in the future:
o a fixed income section that will provide commentary and data on
corporate and government bonds;
o additional specialized commentators, including those who specialize
in providing bear market perspectives and identifying investment
opportunities in turnaround companies;
o an educational corner that will provide an ongoing series of
market-related seminars and training sessions intended to improve
the skills of investors and traders;
o web sites serving Europe, Latin America and Asia which will be
structured in a fashion similar to our U.S. site but will offer
content specific to the region; and
o technological enhancements to our web site such as the greater use
of audio to deliver information to investors over the Internet.
If we introduce a service that is not favorably received, our current
users may not continue using our service as frequently. New users could also
choose a competitive service over ours.
We may also experience difficulties that could delay or prevent us from
introducing new services. Such difficulties may include the inability to hire
and retain qualified commentators and the lack of financing to expand our
overseas operations. We may also encounter technological problems in enhancing
our web site. Furthermore, these services may contain errors that are discovered
after the services are introduced. We may need to significantly modify the
design of these services on our Web site to correct these errors. Our business
could be adversely affected if we experience difficulties in introducing new
services or if these new services are not accepted by users.
WE MAY NOT SUCCESSFULLY ATTRACT OR MANAGE ACQUISITIONS AND STRATEGIC ALLIANCES
We currently intend to evaluate acquisitions, strategic alliances,
partnerships or joint ventures, as a means of acquiring additional sources of
content for our subscribers. Pursuing such transactions will entail a number of
risks and difficulties. We compete with a wide variety of information providers
and there may be competition for content providers. We can offer no guarantee
that we will be able to locate suitable candidates for alliances or acquisition.
If we are able to do so, we will require a high level of managerial skill to
successfully evaluate and implement these transactions. We have little
experience evaluating and implementing transactions of this type, and we cannot
guarantee that we will be able to successfully pursue this strategy.
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WE MAY NOT BE ABLE TO SUCCESSFULLY ESTABLISH A FOREIGN MARKET
As part of our growth strategy we are actively pursuing expansion into
European, Latin American, Asian and other foreign markets, but we have little or
no experience in such markets. Although we anticipate commencing operations in
Europe by the end of 1999 and in Latin America soon after that, we cannot
guarantee that we will be able to successfully implement our foreign growth
strategy or that we can otherwise successfully expand into foreign markets.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH
Our business strategy requires us to rapidly grow our business. We may
not be able to do so, however, and if we do, that growth will put a strain on
our financial, managerial, technical and operational resources. Growth on this
scale will demand that we rapidly and successfully expand our staff and
operations and will require a high level of managerial skill. We have little
experience in managing this sort of expansion. If we fail to successfully do so,
our business and your investment will likely suffer.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS
We have certain intellectual property rights including, among others:
o The JagNotes name;
o Subscriber lists and related information;
o Content and information provider lists and related information;
o Proprietary web site content; and
o Licensed commentators= content.
To protect our rights to our intellectual property, we rely on a
combination of trademark and copyright law, trade secret protection,
confidentiality agreements and other contractual arrangements with our
employees, affiliates, clients, strategic partners and others. The protective
steps we have taken may be inadequate to deter misappropriation of our
proprietary information. We may be unable to detect the unauthorized use of, or
take appropriate steps to enforce, our intellectual property rights. Effective
trademark, copyright and trade secret protection may not be available in every
country in which we offer or intend to offer our services. Failure to adequately
protect our intellectual property could harm our brand, devalue our proprietary
content and affect our ability to compete effectively. Further, defending our
intellectual property rights could result in the expenditure of significant
financial and managerial resources, which could materially adversely affect our
business, results of operations and financial condition.
WE MAY HAVE TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS AND
LIBEL AND DEFAMATION CLAIMS, WHICH MAY CAUSE SIGNIFICANT OPERATIONAL
EXPENDITURES
Parties may assert claims against us that we have violated a patent or
infringed a copyright, trademark or other proprietary right belonging to them.
Parties could also bring libel, defamation or similar claims based on the
content published on our web site. Much of the content on our web site comes
from third parties, so to protect ourselves against such claims, our license
agreements with third party content providers generally require that the content
providers defend, indemnify and hold us harmless with respect to any claim by a
third party that the licensed content they have provided infringes on any
proprietary right. Agreements with our commentators generally require
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them to defend, indemnify and hold us harmless with respect to any third party
claim for libel or defamation in connection with our commentators= work product.
However, we cannot assure you that these measures will be adequate to protect us
from such claims. Any such claims, whether meritorious or not, could result in
the expenditure of significant financial and managerial resources on our part,
which could materially adversely affect our business, results of operations and
financial condition.
FAILURE TO MAINTAIN OUR REPUTATION FOR TRUSTWORTHINESS MAY REDUCE THE NUMBER OF
OUR READERS, WHICH MAY HARM OUR BUSINESS
It is very important that we maintain our reputation as a trustworthy
provider of financial news and commentary. The occurrence of events, including
our misreporting a news story or the non-disclosure of stock ownership by one or
more of our commentators, could harm our reputation for trustworthiness. These
events could result in a significant reduction in the number of our readers,
which could materially adversely affect our business, results of operations and
financial condition.
WE DEPEND ON KEY PEOPLE IN MANAGEMENT AND OPERATIONS
We depend on our president=s and other key employee=s contacts within
the professional financial community for certain information that we provide to
our subscribers. Accordingly, our success will be largely dependent on our
ability to retain our president and other existing executive officers. We have
not entered into written or formal employment agreements with any of these
people, nor do we have key person life insurance policies on any of our key
personnel. Furthermore, our business strategy calls for rapid growth of the
business. We need to attract and retain additional qualified managers, officers
and other key personnel in the future in order to successfully manage this
planned growth. We cannot guarantee that we will be able to do so. If we lose
the services of any of our key personnel or are unable to attract, hire, train
and retain qualified officers, managers and operating, marketing and financial
personnel, our business, and your investment, could be adversely affected. See
"Business" and "Management."
WE MAY NOT BE ABLE TO ATTRACT AND RETAIN ANALYSTS AND COMMENTATORS
Our success will in large part depend on our ability to attract and
retain the services of top analysts and commentators. Competition for these
professionals is intense and we expect it to become more so. As of the date of
this prospectus, we have contracts with the following analysts and commentators:
Dan Dorfman; Elaine Garzarelli; Mastrapasqua & Associates, Inc.; Vince Boening;
Seth Tobias; Ralph Bloch; Tom Taulli; Dorsey, Wright & Associates, Inc.; Mark
Leibovit; L. Douglas Lee; E*Offering Corp.; Kate Bohner; Stephen Langan;
Douglass A. Kass and Dane C. Andreef, and we intend to enter into similar
agreements with additional commentators in the future. Typically, these
contracts run for one year and are renewable at our option for an additional one
year term. None of our commentator contracts run for less than one or more than
two years. We cannot guarantee that we will be able to maintain and/or renew
these contracts, nor can we guarantee that we will be able to attract additional
or replacement commentators and analysts now or in the future. If we are unable
to do so, our business could suffer.
WE MAY FACE DIFFICULTIES CONCERNING CONTINUED AVAILABILITY OF OUR SOURCES OF
INFORMATION FOR CERTAIN PRODUCTS
Certain products that we offer through our site, including JagNotes and
the Rumor Room, rely on information from independent third party sources. We do
not maintain written agreements with these sources to provide this information,
so we cannot guarantee that any of these sources will continue to provide the
information necessary to maintain these products on our site. If information
from these sources is altered, curtailed or
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discontinued this could adversely affect the viability of these products. This,
in turn, could decrease the demand for our site or otherwise materially
adversely affect our business.
WE MAY SUFFER CASH FLOW SHORTAGES AS WE TRANSITION TO INTERNET-BASED
SUBSCRIPTIONS
Our current institutional and retail subscribers pay a higher
subscription rate than our retail Internet subscribers will pay. We expect our
current retail subscribers to convert to the cheaper Internet-based pricing
structure, which could result in a reduction in short term revenues. It is also
possible that a portion of our institutional subscriber base will attempt to
discontinue service under their current fee structure and re-subscribe at the
lower Internet retail rate, which also could result in a reduction in revenues.
SYSTEM SLOWDOWNS OR FAILURES COULD HURT OUR BUSINESS
In order for our business to be successful, we must provide
consistently fast and reliable access to our web site. Unfortunately, slowdowns,
breakdowns or failures in our computer and communication systems, or of the
Internet generally, are often beyond our control and could jeopardize access to
our site at any time. In addition, heavy traffic on our site or on the Internet
generally could severely slow access to, and the performance of, our site.
Repeated system slowdowns will likely impair our ability to service and maintain
our existing subscriber base and attract new subscribers. Failures of or damage
to our computer or communications systems could render us unable to operate our
site or even our business for extended periods of time.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OURSELVES AGAINST SECURITY RISKS
All Internet businesses are subject to electronic and computer security
risks. We have taken steps to protect ourselves from unauthorized access to our
systems and use of our site, but we cannot guarantee that these measures will be
effective. If our security measures are ineffective, unauthorized parties could
alter, misappropriate, or otherwise disrupt our service or information. If such
unauthorized parties were able to access certain of our, or our customers',
proprietary information, including subscribers' credit card numbers, we would
face significant unexpected costs and a risk of material loss, either of which
could adversely affect our business.
OUR BUSINESS IS DEPENDENT ON THE CONTINUED PUBLIC INTEREST IN THE STOCK MARKET
The recent success of the stock market has generated unprecedented
public interest in the stock market and investing. Our success as retail
financial information providers depends upon the continued maintenance or growth
of this interest. A number of factors that are out of our control could lead to
a depressed stock market which would likely decrease the public's interest in
investment and financial information. If this were to happen, it is likely that
we would lose a significant percentage of our then current and potential
subscriber base.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY THE YEAR 2000 PROBLEMS OF OTHER
PARTIES
We believe that we are Year 2000 compliant (see the "Year 2000
Readiness Disclosure" on page 18). Nevertheless, we cannot guarantee that our
subscribers, potential subscribers, advertisers, vendors and others on whom we
depend to successfully operate our business are Year 2000 compliant. If any of
these parties, including a significant number of our subscribers, suffer
disruptions or difficulties as a result of the Year 2000 problem, our business
could be adversely affected in the short or long term.
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A LARGE PERCENTAGE OF OUR STOCK IS OWNED BY RELATIVELY FEW PEOPLE, INCLUDING
OFFICERS AND DIRECTORS
As of the date of this prospectus, our officers and directors
beneficially owned or controlled a total of 3,087,500 shares, or approximately
22% of our outstanding common stock. See "Security Ownership of Certain
Beneficial Ownership and Management." If you purchase shares covered by this
prospectus, you may be subject to certain risks due to the concentrated
ownership of our common stock. For example, these stockholders could, if they
were to act together, affect the outcome of other stockholder votes which could,
among other things, affect elections of directors, delay or prevent a change in
control or other transaction that might be beneficial to you as a stockholder.
A LARGE NUMBER OF OUR SHARES ARE ELIGIBLE FOR FUTURE SALE
We had 13,996,290 shares of common stock outstanding on July 31, 1999.
Of these, approximately 5,804,650 are freely tradeable and approximately
8,191,640 shares (including 1,838,390 of the shares covered by this prospectus)
are "restricted securities" under Rule 144 of the Securities Act of 1933. An
additional 900,130 shares underlying options and warrants (630,120 of which are
covered by this prospectus) will be restricted securities if and when they are
issued. Restricted securities may be sold only if they are registered under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available. Generally, shareholders may sell restricted
securities without registration after having held them for one year and subject
to certain volume limitations.
Approximately 3,500,000 of the currently outstanding restricted
securities may be eligible for resale on or after March, 2000 and approximately
1,665,390 currently outstanding restricted securities may be eligible for resale
on or after April and May 2000. Up to 900,130 shares underlying options and
warrants will be eligible for resale from time to time following their issuance
and expiration of the one year holding period described above. If these shares
are sold by our current or future shareholders, the market price for our stock
could decrease. Furthermore, the mere prospect of such sales may have a
depressive effect on the market price of our stock.
THE MARKET FOR OUR STOCK IS LIMITED
Our stock is traded on the Nasdaq OTC Bulletin Board, but there was
only very limited and sporadic trading activity prior to March 26, 1999. Trading
activity since that time has fluctuated and at times been limited. We cannot
guarantee that a consistently active trading market for our stock will develop
at any time in the future, especially while we remain on the OTC Bulletin Board.
See "Market for Common Stock and Related Stockholder Matters.
OUR STOCK - AND TECHNOLOGY AND INTERNET STOCKS GENERALLY - HAVE BEEN AND MAY
CONTINUE TO BE VOLATILE
The market for our stock has been and is likely to continue to be
highly volatile and subject to wide price fluctuations. These price variations
are the result of many factors, most of which are beyond our control.
Furthermore, Internet and technology related stocks generally have been subject
to wide fluctuations in price and volume that often appear to be unrelated to
the operating success of these companies. Such volatility can present risks for
investors. Moreover, such volatility often leads to securities litigation
brought by investors who are seeking to recoup losses resulting from rapid and
significant drops in price and/or volume. While we are not aware of any pending
or threatened suit or basis therefor, such suits are costly and we could be
adversely affected if such a suit were brought against us.
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<PAGE> 17
NOTE REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this prospectus are forward-looking
statements within the meaning of the federal securities laws. Generally,
forward-looking statements can be identified by the use of terms like "may,"
"will," "expect," "anticipate," "plan," "hope" and similar words, although this
is not a complete list and some forward-looking statements may be expressed
differently. Our discussions relating to the Year 2000 problem, our business
strategy, our competition, and the future of the Internet, among others, contain
such statements. Our actual results may differ materially from those contained
in our forward-looking statements for a variety of reasons including those
expressly set forth under "Risk Factors" or as otherwise detailed from time to
time in our filings with the SEC.
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<PAGE> 18
SELECTED FINANCIAL DATA
The consolidated statement of operations data for the year ended July
31, 1999 and the consolidated balance sheet data as of July 31, 1999 have been
derived from JagNotes' financial statements which have been audited by J.H.
Cohn, LLP, independent public accountants and included elsewhere herein. The
consolidated statement of operations data for the year ended July 31, 1998 have
been derived from JagNotes' financial statements which have been audited by
Stephen R. Russo, CPA, independent certified public accountant, and included
elsewhere herein.
CONSOLIDATED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
Fiscal Year Ended July 31,
-----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Subscription Revenues $ 800,716 $ 932,553
Cost of Revenues $ 515,758 $ 112,362
Operating Expenses $1,187,183 $ 782,692
Net Income (Loss) $ (915,292) $ 2,649
Basic Earnings (Loss) per Share $ (.10) $ --
Basic Weighted Average Common Shares Outstanding 9,237,693 3,500,000
</TABLE>
CONSOLIDATED BALANCE SHEET DATA
Fiscal Year
Ended
July 31, 1999
-------------
Total Assets $7,109,241
Total Liabilities $ 414,617
Stockholders' Equity $6,694,624
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<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements and the notes to those statements that appear
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 the 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".
RESULTS OF OPERATIONS
YEAR ENDED JULY 31, 1999 AS COMPARED TO YEAR ENDED JULY 31, 1998
Subscription Revenues:
Subscription revenue is derived from annual, semi-annual, quarterly and
monthly subscriptions relating to our product "Jag Notes." Jag Notes is a daily
consolidated investment report that summarizes newly issued research, analyst
opinions, upgrades, downgrades and analyst coverage changes from various
investment banks and brokerage houses. Until May 1999, JagNotes were faxed to a
limited audience of financial professionals at an average monthly charge of
$150. During the year ended July 31, 1999 we were in the process of completing
the development of our web site and changing our focus to also include the
retail investor. As a result of this change in focus, our revenues showed a
temporary decline for the year ended July 31, 1999 of approximately $132,000, or
approximately 75 subscribers, to approximately $801,000, or approximately 430
subscribers, from approximately $933,000, or 505 subscribers for the year ended
July 31, 1998. In periods subsequent to July 31, 1999, we expect our revenues
and subscriptions to increase as a result of retail subscriptions to our web
site. Such subscriptions cost $9.95 per month or $99.95 per year. At July 31,
1999, we had approximately 3100 subscriptions to our web site, of which
approximately 30% are annual subscriptions.
Cost of Revenues:
Cost of revenues includes the cost to transmit the product over
telephone and fax lines, on-line service charges for our web site, costs in
connection with the development and maintenance of our web site and payments to
commentators for their reports that are posted on the web site. During the year
ended July 31 1999, cost of revenues increased approximately $404,000 to
approximately $516,000 from approximately $112,000 for the year ended July 31,
1998.
The primary cause of this increase is the introduction of the on-line
services and the cost of the commentators who write reports for our web site.
The major components of this increase are:
(i) A $158,000 non-cash charge for the amortization of unearned
compensation associated with the issuance of common stock and
stock options to the commentators for services during the year
ended July 31, 1999;
(ii) Approximately $113,000 of cash advanced to the commentators
which pertains to services performed during the year ended
July 31, 1999; and
(iii) Approximately $85,000 expensed in connection with the on-line
services and the development and maintenance of the web site.
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<PAGE> 20
The balance of the increase is attributable to an overall increase in
the number of telephone and fax lines. It is our intention to continue to
attract additional commentators for the web site. Accordingly, in periods
subsequent to July 31, 1999, the cost of revenues will likely continue to
increase.
From August 1, 1999 through October 15, 1999, we entered into
consulting agreements with another four commentators. Each agreement has an
initial term of one year and is renewable at our option for another year. The
aggregate consideration we paid in connection with these agreements consisted of
cash payments of $110,000 and the issuance of options to purchase 70,000 shares
of common stock at $2.00 per share. These options expire at various dates
through August 2009. To the extent that these options were granted at or below
market value, we will incur a non-cash charge to compensation expense and a
corresponding increase to additional paid-in capital.
Selling Expenses:
Selling expenses consist primarily of advertising and other promotion
expenses. During the year ended July 31, 1999, our selling expenses increased by
approximately $254,000 to approximately $292,000 from $38,000 for the year ended
July 31, 1998. The primary reasons for this increase are an increase in
travel-related expenses and advertising costs incurred in promoting our new
focus and web page.
General And Administrative Expenses:
General and administrative expenses consist primarily of compensation
and benefits for the officers, other compensation, occupancy costs, professional
fees and other office expenses. General and administrative expenses increased
approximately $150,000 during the year ended July 31, 1999 from approximately
$745,000 for the year ended July 31, 1998 to $895,000. The increase in general
administrative expenses is primarily attributable to an approximately $191,000
increase in professional fees from approximately $10,000 for the year ended July
31, 1998 to approximately $201,000 for the year ended July 31, 1999. The
increase in professional fees results from attorneys' fees relating to general
corporate matters such as reviewing and negotiating contracts with consultants
and other parties, as well as outside accounting and attorneys' fees in
connection with various filings with the Securities and Exchange Commission. In
addition, we incurred the following costs for the year ended July 31, 1999 that
were not included during the year ended July 31, 1998:
(i) Approximately $32,000 paid to various consultants and other
non-employees who provided administrative services;
(ii) Approximately $26,000 relating to investor relations; and
(iii) Approximately $43,000 in occupancy costs.
These increases were offset by the following:
(i) A decrease of approximately $87,000 in salaries; and
(ii) A decrease of approximately $40,000 in the amount contributed to
the our profit sharing plan.
The other items that make up the general and administrative expenses
were fairly consistent between the periods being presented.
Operating Income:
As a result of the above, we incurred an operating loss of
approximately $902,000 for the year ended July 31, 1999 as compared to an
operating profit of approximately $37,000 for the year ended July 31, 1998.
16
<PAGE> 21
LIQUIDITY AND CAPITAL RESOURCES
From inception through April 1999, we funded our operations through
capital invested by our founders. During March and April 1999, we raised
approximately $7,560,000, net of approximately $708,000 in fees, through two
private placements. The first private placement resulted in the sale of
4,990,000 shares of common stock which raised $940,000. The second private
placement resulted in the sale of 555,130 units at $13.20 per unit with each
unit consisting of three shares of common stock and one common stock warrant.
The common stock warrant entitles the holder to purchase within two years of
issuance one share of common stock for $14 per share. This private placement
raised approximately $6,620,000. As of July 31, 1999, we had working capital of
approximately $6,437,000.
During the year ended July 31, 1999, we entered into agreements with
eleven commentators to write reports for our web site. Each of these agreements
is for a one year period and is renewable for an additional year at our option.
Aggregate consideration paid in connection with these agreements consisted of
cash payments of $564,000, the issuance of 120,000 shares of common stock and
the grant of options to purchase 335,000 shares of common stock at $2.00 per
share. These options expire at various dates through July 2009. In connection
with these agreements as they relate to the issuance of common stock and stock
options, we have recorded unearned compensation of approximately $1,678,000,
which is based on the estimated fair value of the common stock and options as
computed in accordance with FASB-123 "Accounting for Stock Based Compensation."
The unearned compensation will be amortized as a non-cash charge to operations
on a straight-line basis over the life of the applicable agreements. In
addition, of the 120,000 shares of common stock issued, 100,000 shares were
effectively contributed to the Company by one of its stockholders. Accordingly,
the total outstanding shares of common stock was only increased by 20,000 shares
from 13,976,290 shares to 13,996,290 shares.
During the year ended July 31, 1999, we used approximately $1,253,000
in our operations. The major uses of this cash were to fund the following:
(i) $564,000 in payments made to our commentators, which are
included in Other Current Assets;
(ii) Our net cash loss for the year; and
(iii) Sundry advances and other prepaid expenses which are included in
Other Current Assets on July 31, 1999.
During the year ended July 31, 1999, the Company used approximately
$235,000 in investing activities of which approximately $259,000 was spent on
purchased software costs. These expenditures were offset somewhat by
approximately $24,000 of shareholder advances that were repaid during the year.
Cash provided by financing operations was approximately $7,560,000 for
the year ended July 31, 1999 as compared to none in the year ended July 31,
1998. The approximate $7,560,000 was the net proceeds from the private
placements which were completed during March and April 1999.
Our operations did not generate or utilize any significant amount of
cash during the year ended July 31, 1998.
We believe that the net proceeds from the aforementioned offerings,
together with our current cash, will be sufficient to meet our anticipated needs
for working capital and capital expenditures for at least the next twelve
months. We currently anticipate that our capital expenditures will approximate
on a short term basis $115,000 in order to complete our web site. Thereafter, if
the cash generated from operations is not sufficient to fund our liquidity
requirements or planned growth, we may need to raise additional funds through
public or private financing, strategic relationships or other arrangements.
There can be no assurance that such additional funding or strategic alliances,
if needed, will be available on terms attractive to us or at all. The failure to
raise capital when needed could materially adversely affect our business,
results of operations and financial condition.
17
<PAGE> 22
We do not believe that our business is subject to seasonal trends or
inflation. On an ongoing basis, we will attempt to minimize any effect of
inflation on our operating results by controlling operating costs and, whenever
possible, seeking to insure that subscription rates reflect increases in costs
due to inflation.
YEAR 2000 READINESS DISCLOSURE
We are in the process of implementing and executing a Year 2000
assessment with the objective of having all of our significant business systems
functioning properly with respect to the Year 2000 issue before January 1, 2000.
This process includes (1) evaluating our information technology's time and date
dependent code (2) obtaining assurances or warranties from third-party vendors
and licensors of material hardware, software and services that are related to
the delivery of our service and (3) evaluating the need for, and preparing and
implementation if required, of a contingency plan.
To date, our assessment has determined that our material internally
developed software and systems are Year 2000 compliant. As of the date of this
prospectus, we have requested assurances from all of our third party vendors and
licensors regarding the Year 2000 readiness of their material hardware, software
and services. To date, such third parties have informed us that the products
used are compliant. All material commercial software on which we depend is
either year 2000 compliant or will be updated to be compliant in the normal
course of business. Based on our assessment, we have determined that a
contingency plan in the event that we are unable to achieve Year 2000 compliance
is unnecessary and we do not expect to incur material costs relating to such a
plan.
We are not currently aware of any operational issues or costs
associated with preparing our systems for the Year 2000. None the less we may
experience material unexpected costs caused by undetected errors or defects in
the technology used in our systems or because of the failure of a material
vendor to be Year 2000 compliant.
Notwithstanding our Year 2000 compliance efforts, the failure of a
material system or vendor, or the Internet generally, to be Year 2000 compliant
could harm the operation of our systems or prevent or delay the delivery of our
service being offered, or produce other unforeseen material adverse
consequences.
We are also subject to external Year 2000-related failures or
disruptions that might generally affect industry and commerce, such as utility
or transportation company Year 2000 compliance failures and related service
interruptions. All of these factors could materially effect our business,
results of operations and financial condition.
18
<PAGE> 23
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our common stock has been traded in the over-the-counter market on the
OTC Bulletin Board under the symbol JNOT since approximately March 26, 1999.
Prior to that date, the stock was traded under the symbol PFSS with only limited
and sporadic trading.
The following table reflects quarterly high and low bid prices of
JagNotes' common stock for the last calendar year as reported by the OTC
Bulletin Board. The average daily trading volume during this period was
approximately 93,381 shares, with a high daily volume of 1,335,700 shares and a
low of 3,300 shares. Such prices are inter-dealer quotations without retail
mark-ups, mark-downs or commissions, and may not represent actual transactions.
High Low
------- ------
1999
First Quarter* $17.375 $12.75
Second Quarter** $15.875 $5.750
Third Quarter*** $10.187 $5.375
Fourth Quarter**** $ 6.375 $5.875
- --------------------
* As described above, first quarter information is limited to the
period from March 26 through March 31, 999
** Second quarter information covers the period from April 1, 1999
through June 30, 1999.
*** Third quarter information covers the period from July 1, 1999
through September 30, 1999.
**** Fourth quarter information covers the period from October 1,
1999 through October 18, 1999.
As of October 18, 1999, there were approximately 179 stockholders of
record of the JagNotes' common stock. On October 18, 1999, the closing bid price
for the JagNotes' common stock was $6.375.
JagNotes has never paid any cash dividends on its common stock and
anticipates that, for the foreseeable future, no cash dividends will be paid on
its common stock. Payment of future cash dividends will be determined by our
Board of Directors based upon conditions then existing, including our financial
condition, capital requirements, cash flow, profitability, business outlook and
other factors. In addition, our future credit arrangements may restrict the
payment of dividends.
19
<PAGE> 24
THE COMPANY
OUR BUSINESS GENERALLY
We have been providing financial and investment information within the
investment community since 1989. In May 1999, we began offering our services to
the general public for the first time through our web site. At www.JagNotes.com,
our subscribers access timely financial data and reports and commentary from the
financial community.
From 1989 to 1992, we operated as an unincorporated business entity. In
1992, we incorporated in the State of New Jersey as New Jag, Inc. On December
14, 1993, JagNotes, Inc. merged with and into us, and we changed our name to
JagNotes, Inc. We operated as JagNotes, Inc. until March 1999 when we were
acquired by Professional Perceptions, Inc., a Nevada corporation, which
subsequently changed its name to JagNotes.com, Inc. JagNotes, Inc. remained a
wholly-owned subsidiary of JagNotes.com, Inc. until August 16, 1999 when it
merged with and into JagNotes.com, Inc. JagNotes.com, Inc. is qualified to
transact business in the State of New Jersey. We have one wholly-owned operating
subsidiary named JagNotes-Euro.com, Ltd., a corporation organized under the laws
of England.
Until recently, we targeted only a limited audience of financial
professionals and we did not engage in organized sales and marketing efforts. As
discussed in more detail below, in 1999 we decided to change our focus by
expanding onto the Internet and targeting retail subscribers with the hope of
rapidly expanding our subscriber base and our business.
We derive our revenues primarily from the sale of subscriptions to our
web site. To build brand awareness, we have already engaged in limited
advertising on the Internet and in print media. We anticipate implementing the
following additional marketing efforts by the end of 1999:
o Traditional media marketing, including advertisements in newspapers
and on television and radio;
o Internet marketing, including banner advertising and promotional
arrangements with other leading brand marketers and media
companies;
o Infomercials for our various product offerings; and
o Strategic alliances with high-traffic Internet portals, including
content syndication and revenue-sharing arrangements.
We believe that the increased brand awareness that will result from
these marketing efforts will help us attract additional Internet traffic,
subscribers, strategic partners, advertisers and talented employees.
OUR INDUSTRY GENERALLY
The growth of the Internet has changed the way investors seek
information and manage their portfolios. Individual investors are increasingly
seeking access to information that was formerly available only to financial
professionals. Professional investors who have traditionally relied on print and
other media for information are demanding faster information and greater
accessibility. As more and more investors begin to trade online, we expect the
demands for financial information over the Internet to increase significantly.
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<PAGE> 25
It was recently estimated that 25% of retail stock trades in the U.S.
are executed on the Internet while an estimated 760 U.S. households per hour are
accessing the Internet for the first time.(1) An even more recent report by
Credit Suisse First Boston Corp. indicated that online trading of securities
grew 47.3% during the first quarter of 1999, the industry's single highest
sequential growth rate in history. The use of the Internet to research
securities may even exceed its use for trading. The latest U.S. Trust Survey of
Affluent Americans has concluded that while one-third of the most affluent 1% of
Americans trade online, two-thirds of them use computers to research
investments, exceeding the percent that uses the Internet for shopping or travel
planning.
OUR PRODUCTS
We offer our subscribers certain investor information products that we
believe make our web site attractive to active investors. These products fall
into three categories:
o Commentaries from experienced, respected and high profile
journalists, money managers, analysts and other Wall Street
professionals.
o The delivery of breaking news and potentially market moving
information.
o Select financial data targeted at the active investor and trader.
Commentaries
The commentaries on our web site are provided by experienced, respected
and high profile journalists, money managers, analysts and other Wall Street
professionals. Their reports range from analysis of individual stock and
industry sector performance to analysis of broad market and economic matters in
general. In many cases our commentators also provide and analyze detailed
financial and technical data. We believe that these commentaries will provide
our subscribers with the type of insights into financial matters that previously
were available only to institutional investors and traders or high net-worth
individuals. We select our commentators so as to offer our subscribers a broad
range of analysis to appeal to their broad range of investment and trading
styles. The topics of these commentaries vary daily. Although we have no set
criteria for choosing our commentators, we look to hire individuals who:
o are well respected by members of the Wall Street community,
including traders, economists, investment banks and other
institutional investors;
o have experience either as a journalist, money manager or financial
analyst and/or have an educational background in business, finance
or economics; and
o have the ability to attract and retain subscribers for our web
site.
Several of our commentators provide similar services to investors
either through their own web sites or through web sites, television programs,
newspapers and magazines owned and operated by other companies. In some cases
our commentators provide their services for free on their own web sites. See the
risk factors titled "We may not be able to adequately expand our subscriber base
because many of our competitors offer free financial information" and "Many of
our commentators may have competing web sites" on page 7 for further
information.
- ------------------------
(1) Win Treese, The Internet Index, February 28, 1999 at
www.openmarket.com/intindex/99-02.htm.
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<PAGE> 26
As of the date of this prospectus, the following commentators provide
technical analysis and commentary for our web site:
Elaine Garzarelli B Ms. Garzarelli has been engaged in quantitative
analysis of the stock market for over twenty years. Her education and training
is in economics and statistics and she holds a doctorate from Drexel
University. Ms Garzarelli uses her proprietary "Sector Analysis" methodology to
predict industry earnings and general market movements. Ms. Garzarelli is
presently the president of Garzarelli Capital, Inc. and Garzarelli.com and she
also manages money through her Chicago-based firm, Garzarelli Investment
Management. Ms Garzarelli is also a frequent guest on ABC Good Morning America,
CNBC, The Nightly Business Report, CNN's MoneyLine, and Fox Business News.
Ms. Garzarelli provides reports, based on her quantitative analysis,
each Friday.
Seth Tobias - During his thirteen years of Wall Street experience, Mr.
Tobias has worked on both the buy and sell side. Since January, 1996, Mr. Tobias
has managed the Circle T Partners family of hedge funds. Preceding the formation
of Circle T Partners, Mr. Tobias held positions as a futures trader, equity
sales trader and assistant portfolio manager at JRO Associates.
Mr. Tobias provides his market reports on Monday-Thursday of each week.
Ralph Bloch - Mr. Bloch has been involved in technical analysis of the
stock market for over forty years. He began his career at Merrill Lynch and is
presently Senior Vice President and Chief Market Analyst at Raymond James &
Associates, Inc. Mr. Bloch has lectured at the University of Florida, New York
University Graduate School and Fairleigh Dickinson University. Mr. Bloch is also
routinely quoted by prominent news organizations such as Reuters, the Dow Jones
Wire, U.S. News and World Report, The Wall Street Journal, Barron's, Investor's
Business Daily, and various foreign publications.
Mr. Bloch provides daily market recap reports.
Mastrapasqua & Associates - Mastrapasqua & Associates is an
independently owned money management firm located in Nashville, TN. The firm
manages approximately $650 million, which is equally divided between high net
worth individuals and institutions. The firm was started in 1993 with an
investment style focused on growth at reasonable prices. The two principals who
write the weekly reports for our site are:
Frank Mastrapasqua - Mr. Mastrapasqua began his career in the academic
world as faculty member at Northeastern University and at the
University of Houston where he was a department chair and professor of
finance. After serving as chief economist to American General Capital
Management, Faulkner, Dawkins and Sullivan and L.F. Rothschild,
Unterberg, Towbin, in 1981, he joined Smith Barney where he was Senior
Vice President, Chief Economist and Director of Fixed Income Research.
He subsequently joined J.C. Bradford & Co. in 1986 as Partner, Director
of Research and Chief Investment Strategist.
Tad Trantum - Mr. Trantum, President and Co-Founder of Mastrapasqua &
Associates, worked as an analyst on Wall Street with H.C. Wainwright &
Co. and L.F. Rothschild, Unterberg, Towbin. He was appointed by
President Carter to serve as a Commissioner for the Interstate Commerce
Commission in 1979. He subsequently served as President and CEO of a
regional railroad, before becoming a Partner and Senior Security
Analyst with J.C. Bradford & Co. in 1987.
Mr. Mastrapasqua provides capital market reports and Mr. Trantum
provides a sector report, both on Monday each week.
Dorsey, Wright & Associates, Inc. - Dorsey, Wright & Associates is a
privately owned registered investment advisory firm that provides management of
equity portfolios for investors and investment research services on a worldwide
basis for institutions and broker-dealers.
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<PAGE> 27
Thomas J. Dorsey - Mr. Dorsey, the firm's president, founded Dorsey,
Wright & Associates in January 1987. He previously worked nine years at Wheat,
First Securities where he developed and managed their Risk Management & Options
Strategy department, before which he was an account executive at Merrill, Lynch.
Mr. Dorsey conducts Risk Management seminars across the country on
behalf of the major stock exchanges in the United States for industry
professionals as well as individual investors. He has written numerous articles
on equity market and options analysis for such publications as The Wall Street
Journal, Barron's, Technical Analysis of Stocks and Commodities Magazine, and
Futures Magazine. He is also the author of Point & Figure Charting, The
Essential Application for forecasting and tracking market prices as well as a
member of the Philadelphia Stock Exchange Board of Advisors.
Watson H. Wright B Mr. Wright, the firm's secretary and treasurer,
worked as an account executive at Wheat, First Securities, and its Options
Strategy department, where he became Vice President and assistant Director,
before leaving to help found Dorsey, Wright & Associates.
Dorsey, Wright & Associates will provide several "Point and Figure"
charts, each of which sets forth technical information about a corporation and
its publicly traded securities, along with custom commentary each weekday.
Thomas Taulli - Mr. Taulli is an analyst with Edgar-Online and is the
author of the book "Investing in IPO's" (Bloomberg Press). Mr. Taulli has
written for numerous publications including, Forbes.com, Bloomberg Personal
Investor, MSN Investor, Gomez.com, CMP's TechWeb, ZDII and Registered
Representative. Mr. Taulli has also been quoted extensively in the Wall Street
Journal, USA Today, Los Angeles Times, Washington Post and Barron's and has
appeared on CNBC, Bloomberg TV and CNN.
Mr. Taulli will provide IPO reports on Tuesday and Thursday each week.
Mark Leibovit - Since 1979 Mr. Leibovit has published his VRS
newsletter which provides information on short swing, high performance stock
trades and intra-day market timing based on his proprietary trading program. In
1999, Mr. Leibovit founded vrtrader.com which provides various products based
upon Mr. Leibovit's "Volume Reversal"(TM) methodology. In the mid 1970's, Mr.
Leibovit was a market maker on the Midwest Options Exchange and the Chicago
Board Options Exchange. Mr. Leibovit also served as an "Elf" on Louis Rukeyser's
"Wall Street Week" for seven years and has also been a frequent guest on PBS'
"The Nightly Business Report with Paul Kangas," CNBC, CNN, the Business News
Network and other radio and television programs.
Mr. Leibovit will provide market reports based on his "Volume
Reversal"J methodology on Monday B Thursday, with updates of those reports
issued twice daily.
L. Douglas Lee - Mr. Lee is Chief Economist at Washington Analysis
Corporation, which he joined in 1984. Prior to assuming his present position, he
served as Chief U.S. Economist for HSBC Securities. Prior to that, he was also
Chief U.S. Economist for NatWest USA. From 1981-1983 Mr. Lee was a senior
economist at Data Resources Inc. and manager of their Defense Information
Service. Before that he served as senior economist and research director for the
Joint Economic Committee of Congress. Mr. Lee has published numerous articles,
is quoted frequently in national newspapers and magazines, and appears regularly
on CNBC, CNN, Nightly Business Report, and in other media.
Mr. Lee will provide daily early morning reports focusing on various
economic indicators and their potential effect on the market, various sectors
and industries and individual companies.
E*Offering - E*Offering is an online investment banking firm funded in
part by E*TRADE Group Inc. and Sandy Robertson, founder and former CEO of
Robertson Stephens & Co. It provides full-service investment research and
capital markets capabilities to institutional and individual investors.
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E*Offering will provide market reports that will be authored, on a
rotating basis, by its team of analysts.
Kate Bohner - Ms. Bohner is a former reporter for CNBC Business News,
where she covered high-profile personalities for the network Her "Power File"
segment on the daily CNBC show Power Lunch took a look at the comings and goings
of figures from the worlds of business, media, entertainment, fashion and
sports. Prior to working with CNBC, Ms. Bohner was an associate editor with
Forbes, where she wrote "The Informer" column and a correspondent for CNNfn,
where she contributed to the "Big Buzz" segment.
Ms. Bohner provides financial news reports and special feature reports
on Tuesday, Thursday and Friday of each week.
Stephen Langan - Mr. Langan is currently the Chief Market Strategist at
Donald & Co. Prior to joining Donald & Co., Mr. Langan held positions as a
specialist in major market index options and as a market maker. During this time
Mr. Langan began building his own stock trading system and in 1993 he started
"TrendWatch," a market advisory service whose customers included floor
specialists, market makers and high net worth individuals. Mr. Langan has
appeared on CNBC, CNNfn, Bloomberg Television and radio. He has also been quoted
in USA Today, Investors Business Daily, The New York Times and other
publications.
Mr. Langan will provide reports on short-term market volatility each
weekday.
Douglas A. Kass - Mr. Kass has been involved in the investment business
since 1972 and is currently the President of DAK Management Corporation, which
manages several investment partnerships. Prior to forming DAK Management, Mr.
Kass was Senior Portfolio Manager at Omega Advisors, a New York-based investment
partnership with over $3 billion in assets. Mr. Kass co-authored "Citibank" with
Ralph Nader and the Center for the Study of Responsive Law. He has been quoted
in the Wall Street Journal, Barron's, Forbes, Business Week, USA Today and
Investor's Business Daily and has appeared on CNBC, Lou Dobb's Moneyline on CNN
and on PBS' Nightly Business Report. Mr. Kass has also been the subject of a
cover story in Barron's and has authored several articles for that publication.
Mr. Kass provides reports on Sunday of each week and will be a part of
a new feature of the site called "The Bear Cave," where Mr. Kass and other
commentators will express their market views from a short-side or "bear"
perspective.
Dane C. Andreef - Mr. Andreef is currently the General Partner and
Portfolio Manager of Andreef Equity, L.P., and the Managing Director and
Portfolio Manager of Andreef Overseas, LTD. Prior to establishing his own funds,
Mr. Andreef was an associate at Granite Capital International Group and prior to
that a telecommunications analyst at Furman Selz.
Mr. Andreef provides reports on investment opportunities in turnaround
companies on Sunday and Wednesday of each week.
Securities Law Compliance Policy
To ensure impartiality and prevent any conflict-of-interest or
appearance of conflict, our employees and our breaking news journalists, such as
Dan Dorfman and Kate Bohner, are not permitted to own individual stocks (though
they may, and most will, own equity in JagNotes) except in one case through a
blind account which is controlled by a representative of Salomon Smith Barney
Inc. Our outside commentators are not subject to this policy, but they disclose
to us their current positions in any of the stocks that they write about or
otherwise take steps to insure the integrity of their work.
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<PAGE> 29
Breaking News and Market Moving Information
To meet investors' demand for more timely and market moving information
we offer our subscribers three targeted products:
Streetside with Dan Dorfman - For more than 30 years Dan Dorfman has
covered Wall Street in print and on television. His credentials include
reportage for CNN, CNBC, the Wall Street Journal, USA Today, Esquire and New
York and Money magazines. In January 1996, Mr. Dorfman's employment with Money
Magazine was terminated because he declined to disclose the sources for his
columns to Money's managing editor. In 1996 Mr. Dorfman took a leave of absence
from his employment with CNBC as a result of a stroke. Prior to this leave of
absence, and while Mr. Dorfman was still doing a daily broadcast at CNBC, CNBC
retained an independent law firm to conduct an extensive investigation of
alleged improper conduct by Mr. Dorfman. Based upon this investigation, CNBC and
its investigators concluded that Mr. Dorfman did not engage in any conduct that
violated any law or internal corporate policy. Mr. Dorfman chose not to return
to his position at CNBC following his leave of absence. His recovery from the
stroke is continuing.
Mr. Dorfman's column appears each weekday at 1:00 p.m.
JagNotes - JagNotes is a daily consolidated investment report that
summarizes newly issued research, analyst opinions, upgrades, downgrades and
analyst coverage changes from various investment banks and brokerage houses.
Each morning we gather this information, then compile and release it in a
concise, easy to read format before the markets open. We believe that this
early, convenient access to potentially market moving information gives our
subscribers access to some of the information traditionally available when the
market opens to institutional investors, professional traders and high net worth
individuals.
The Rumor Room - Because rumors can move equities, we have established
the "Rumor Room" where we post rumors about various stocks that have been heard
on the street. When we hear rumors, we post the information in the Rumor Room
and indicate the date and time of the rumor. We also attempt to contact the
company or companies involved in the rumors for a comment and post the results
of this inquiry with the rumor. While we realize that rumors are inherently
unreliable as indicated by a cautionary note introducing this portion of our
site, we believe that every trader and investor - large and small - should have
access to this information to determine its usefulness.
The Rumor Room is available to our subscribers and updated throughout
the day.
Select Financial Data
To complement our other investor information products, we also provide
our subscribers with access to various financial data that we believe is
attractive to the active investor. This data is housed in an area of the site we
refer to as the "Trading Center." It includes information such as Quotes, Splits
& Dividends, OTC Short Interest, Charting, Insider Buying & Selling and other
similar publically available data that is typically useful to the active
investor or trader.
SUBSCRIPTIONS
Most of the content on our web site is accessible only to paid
subscribers. Subscriptions are offered at the rate of $9.95 per month, or $99.95
per year. We have offered free trial subscriptions at times in the past and may
do so in the future.
We also maintain our original JagNotes fax-based service for a number
of mostly institutional subscribers. Through this service, we provide these
subscribers faxed copies of our daily consolidated investment report, JagNotes,
which is updated two or three times every weekday morning before the stock
market opens. We also allow these subscribers access to our Internet-based
information by providing them with a specified number of access codes. The price
for this combined service is $2,000 per year.
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The content of our web site contains all of the information provided in
the faxed reports as well as the commentaries described above and other product
offerings which do not appear in our faxed reports. Unlike the daily investment
report, the information contained on our web site is updated up to three times
throughout each weekday. The various commentaries are updated pursuant to a
schedule set forth on our web site.
We intend to continue providing our combined fax/Internet service in
the future primarily to institutional subscribers. We believe that many
financial institutions are willing to pay a higher price for this combined
service because they consider a faxed report to be a more efficient means of
receiving the information or because their employees do not have direct Internet
access.
ADVERTISING REVENUE
While we expect the primary source of our revenue to be subscriptions,
we may supplement this with advertising and sponsorship-based revenue. Since we
have not yet implemented the marketing plan described below, we have also
elected not to begin selling advertising and sponsorship on the site. We have,
therefore, not realized any advertising revenue. When we implement our marketing
plan, we intend to aggressively pursue advertisers and sponsors for the site.
Financial service companies which have an Internet presence will initially be
the primary target of our advertising and sponsorship effort.
OUR BUSINESS STRATEGY
Our goal is to position JagNotes as a leading Internet-based worldwide
financial research and information provider. In time, we hope that JagNotes will
become a primary financial information resource for institutional investors and
the general public alike.
The success of our business depends on our ability to expand our
subscriber base. We plan to continue to service and grow the institutional
segment of our business, but we recognize that retail subscribers represent our
largest potential market and are the key to our development.
We will use an integrated marketing model to attract new subscribers
and will employ a mix of communications media. Our goal is to increase name
awareness in the retail market and increase visits by potential subscribers with
a view to ultimately generating new subscribers. Specific avenues we are
exploring to attract new subscribers include:
o Expanding on and improving web site content (see below)
o Web-based marketing and promotions including targeted banner
advertisements on search engines, web portals and financial web
sites
o Offering free trial subscriptions
o Traditional media marketing and public relations
o Using our good reputation among financial professionals to attract
new subscribers to our web site
o Co-promoting services through financial institutions, particularly
those who currently subscribe to JagNotes
o Pursuing distribution arrangements with third party information
providers that service financial institutions and individual
investors
o Pursuing strategic alliances with, or acquisition of, existing
web-based information providers and other media companies
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<PAGE> 31
Additional facets of our business strategy include:
Web Site Development. Our goal is to develop www.JagNotes.com into a
comprehensive source for financial information and analysis which is
the primary source of such information and analysis for our
subscribers. In addition to the existing content, we plan to continue
to improve and expand the features of our site to provide greater value
to our subscribers. Additional features we plan to offer include:
o A fixed income section that will provide commentary and
data on corporate and government bonds
o Additional specialized commentators, including those who
specialize in providing "bear" market perspectives and
identifying investment opportunities in "turnaround"
companies
o An educational corner that will provide an ongoing series
of market-related seminars and training sessions intended
to improve the skills of investors and traders
Build Brand Awareness. We believe that we can leverage the strength of
the JagNotes name to gain access into new markets and revenue sources
by increasing our name recognition in the financial community while
creating and expanding name recognition among the general public.
Leverage the Reputation of our Commentators. Because most of our
commentators are high profile individuals in the financial world, we
plan to use their association with JagNotes as a marketing tool. Many
of our commentators are frequent guests on television and radio
financial programs and we expect that this exposure should further
enhance the reputation of our commentators and our site.
Develop New Geographic Markets. Our Internet presence allows us to
access investors and financial information seekers worldwide. To take
advantage of the unlimited reach of the Internet, we plan to establish
web sites serving three key geographic regions:
o Europe
o Latin America
o Asia
These regional web sites will be structured in a fashion similar to our
U.S. site, but will offer content specific to the region. These sites
will focus on:
o Commentaries from experienced, respected and high profile
journalists, money managers, analysts and other financial
professionals from the region.
o The delivery of breaking news and potentially market
moving information from the region.
o Select financial data from local markets targeted at the
active investor and trader.
o Educational content intended to make regional subscribers
better informed about various investment matters.
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All of our subscribers will have access to our U.S. and regional sites.
We have not yet determined the subscription rates for our regional
sites but we anticipate that these subscription rates will be in line
with the rate presently being charge charged through our U.S. site, but
the amount and method of compensation may vary from market to market.
Educational content will be a particularly important component of our
regional sites because online investing has not yet penetrated these
regional markets to the extent it has in the U.S.
In July 1999 we established JagNotes-Euro.com, Ltd., which has been
incorporated in England as a wholly owned subsidiary of JagNotes.com
Inc. We anticipate commencing the European operations of
JagNotes-Euro.com by the end of 1999. We have retained a public
relations firm to promote JagNotes-Euro.com to overseas investors and
are in the process of interviewing potential Managing Director
candidates. Following our entrance into the European market, we intend
to establish an office in Latin America by the end of the 1999 and
eventually to commence operations in Asia during the year 2000. Our
estimated costs for establishing our international sites is
approximately $4 million.
Pursue acquisitions and/or strategic alliances. We believe that we can
effectively grow our business by pursuing strategic acquisitions,
affiliations, partnerships, joint ventures or other relationships with
strategic partners. We are currently pursuing alliances with investment
firms, online brokerage houses, market news providers, web portals and
cable television networks in an effort to obtain additional content,
expand our name recognition and increase our subscriber base.
We have reached an as yet undocumented understanding to purchase,
subject to a due diligence review, a 7% interest in the company which
owns the vrtrader.com web site for $300,000. Mark Leibovit, who is one
of our commentators, owns this company. The vrtrader.com web site
provides technical market information. As of the date of this
prospectus, we do not have any other current agreements or negotiations
under way.
We believe that we currently have sufficient funds to implement our
business strategy for at least the next twelve months. Thereafter, if the cash
generated from operations is not sufficient to fund our liquidity requirements
or planned growth, we may need to raise additional funds through public or
private financing, strategic relationships or other arrangements. There can be
no assurances that we will be able to do.
Note: These are our strategies, goals and targets. We believe in them,
but we cannot guarantee that we will be successful in implementing them or that,
even if implemented, they will be effective in creating a profitable business.
In addition we are dependent on having sufficient cash to carry out our
strategy. Please read "Risk Factors" beginning on page 6 before making any
investment decision.
COMPETITION
Providing financial information and analysis over the Internet is a
relatively new business, but it is already intensely competitive. An increasing
number of web-based financial information providers are competing for
subscribers, customers, advertisers, content providers, analysts, commentators
and staff.
We provide a variety of categories of information to our subscribers,
including daily financial news, technical analysis of stock activity and
selected financial data of corporations. Each of these components of our
business competes to a different degree with the following information sources:
o Online financial news and information providers including
TheStreet.com, MarketWatch.com and The Motley Fool
o Traditional media sources such as The Wall Street Journal, Barrons,
CNNfn, and CNBC, many or most of whom also have an Internet
presence
o Terminal-based financial news providers including Bloomberg,
Reuters and Dow Jones
o Online brokerage firms such as E*Trade, Charles Schwab or DLJ
Direct
o Internet giants such as Yahoo, Go Network and America Online
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Because there is not a readily defined market in which we compete, we
cannot predict which information source or sources will be our primary
competition in the future. However, we expect competition from each of the above
information sources to intensify and increase in the future. Many of our current
and potential competitors have greater name recognition, larger financial,
technical or marketing resources, and more extensive customer bases than we do,
all of which could be leveraged to gain market share to our detriment.
The barriers to entry into our business are relatively low - i.e., it
is not difficult for new competitors to enter the market. Much of the
information we provide is publicly available and we do not have any patented or
otherwise protected technologies that would preclude or inhibit competitors from
entering our markets. Our current and future competitors may develop or offer
services that have significant price, content, creative or other advantages over
the services we provide.
In order for us to successfully compete in this business, we will need
to reliably provide valuable services at a competitive price to a large
subscriber base. We believe that a successful implementation of our business
strategy will allow us to do so and to compete successfully as a leading
financial and investment information provider.
WEB-SITE TECHNICAL INFORMATION
We own three web servers, which are the computer systems on which all
content for our web site is maintained and through which we operate our web
site. Our primary server is maintained by Exodus Communications and is located
in their Jersey City, New Jersey facility. Our two back-up servers are
maintained by Above.net and PC Communications and are located in San Jose,
California and Jersey City, New Jersey.
Our U.S. web site was designed by Muffin-Head, a unit of DVCI
Technologies. They also handle ongoing design matters for the site and assist us
in placing content on the site.
EMPLOYEES
As of July 31, 1999, we had 8 employees. As of that date, we had not
entered into employment agreements with any of our employees.
FACILITIES
We lease an office suite located in an office building at 2421 Atlantic
Avenue, Suite 103, Manasquan, NJ 08736. The space houses 8 employees and is
approximately 815 square feet. This space houses all of our executive and
administrative personnel and related administrative equipment. This office does
not house the servers for the site, which are housed at separate locations as
indicated above (see "Web Site Technical Information"). We have over two years
remaining on our lease for this office space. We believe that we will be able to
obtain a suitable replacement for this space on commercially reasonable terms if
our lease is not renewed.
JagNotes-Euro.com, Ltd., our wholly owned subsidiary, leases a full
service office suite located at 60 Lombard Street, Suite 3.16, London EC3. We
have leased this space on a short-term basis and will determine whether to renew
this lease or to rent a larger facility after we commence our European
operations.
LEGAL PROCEEDINGS
There are no currently pending law suits or similar administrative
proceedings and, to the best of our knowledge, there is presently no basis for
any suit or proceeding.
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We are presently making arrangements through our insurance broker,
Marsh & McLennan, to obtain Internet Professional Liability insurance coverage.
We expect this coverage to cover risks relating to:
o copyright and trademark infringement and libel, slander and
defamation claims arising out of our advertising, broadcasting,
publishing and web site content; and
o web site set up including programming, design, installation and
consulting services.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
Shortly after the registration statement that contains this prospectus
becomes effective, we will be required to file annual, quarterly and special
reports, proxy statements and other information with the SEC. You can read and
copy any of this information at the SEC's public reference rooms in Washington,
D.C., New York, and Chicago. Please call the SEC at (800) SEC-0330 if you would
like further information on the public information rooms. This information is
also available from the SEC's web site at http://www.sec.gov.
In the future we intend to distribute annual reports containing audited
financial statements and other information to our stockholders after the end of
each fiscal year. We do not intend to regularly distribute quarterly reports to
our stockholders, but we will gladly send them to you upon your written request
to our Corporate Secretary.
MANAGEMENT AND EXECUTIVE COMPENSATION
MANAGEMENT
Following is certain information about our executive officers and
directors. We have not entered into employment agreements with any of our
executive officers.
Gary Valinoti, age 41, was a co-founder of JagNotes.com, Inc. and has
served as its President and Chief Executive Officer since it was formed in
March, 1999. Mr. Valinoti is also a member of JagNotes' Board of Directors. From
August 1992 B March, 1999 Mr. Valinoti served as President, and as a member of
the Board of Directors, of JagNotes, Inc., the company that produced the
JagNotes fax service throughout that period. Prior to his involvement with
JagNotes, Inc., Mr. Valinoti held positions with various firms in the securities
industry including Mosely, Hallgarten, Estabrook & Weeden where he was involved
in institutional and currency trading, and started the firm's arbitrage
department. Mr. Valinoti attended Wagner College.
Thomas J. Mazzarisi, age 42, has served as JagNotes' Executive Vice
President and General Counsel since it was formed in March, 1999 and is also a
member of the JagNotes' Board of Directors. From 1997 until joining JagNotes Mr.
Mazzarisi practiced law from his own firm in New York, specializing in
international commercial transactions. From 1988 until 1997, Mr. Mazzarisi was a
Senior Associate at the law firm of Coudert Brothers where he also specialized
in international commercial transactions. Prior to joining Coudert Brothers, Mr.
Mazzarisi was Deputy General Counsel of the New York Convention Center
Development Corporation. Mr. Mazzarisi is a graduate of Fordham University where
he received a B.A. in Political Economy and was elected to Phi Beta Kappa. Mr.
Mazzarisi received his J.D. from Hofstra University School of Law.
Stephen R. Russo, age 38, has served as JagNotes' Chief Financial
Officer since it was formed in March, 1999. Since 1984, Mr. Russo has also
served as President of Stephen R. Russo & Co., Certified Public Accountants.
From 1981-1984 Mr. Russo served as Senior Staff Accountant for Edwin Weinberg &
Associates, where he was responsible for certified audits of corporate accounts,
as well as corporate and individual tax matters. Mr. Russo is a graduate of St.
Thomas Aquinas College where he received a B.S. in Accounting. Mr. Russo is a
member of the New York State Society of Certified Public Accountants, the
American Institute of Certified Public Accountants and the Rockland County
Business Association.
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Jeffrey Goss, age 38, was a co-founder of JagNotes.com, Inc. and has
served as its Vice President since it was formed in March, 1999. From August
1992 B March, 1999 Mr. Goss served as a Vice President, and member of the Board
of Directors, of JagNotes, Inc., the company that produced the JagNotes fax
service throughout that period. Prior to his involvement with JagNotes, Inc. Mr.
Goss held positions with various firms in the securities industry including
First Montauk Securities where he was an account representative. Mr. Goss also
worked in the accounting department of Chase Manhattan Bank. Mr. Goss is a
graduate of Mount Saint Mary's College.
Stephen J. Schoepfer, age 40, is our Executive Vice President and Chief
Operating Officer and is on our Board of Directors. Prior to joining JagNotes,
he was a Financial Advisor with the investment firm of Legg Mason Wood Walker.
Prior to joining Legg Mason, Mr. Schoepfer served as a Financial Advisor and
Training Coordinator at Prudential Securities. Mr. Schoepfer attended Wagner
College.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information regarding
compensation paid to our Chief Executive Officer and certain executive officers
for services rendered during the fiscal years ended July 31, 1998 and 1999.
Except as listed in the table below, no executive officer holding office in
fiscal year 1999 received total annual salary and bonus exceeding $100,000. No
officers have been awarded any stock options, stock appreciation rights or other
long term or incentive compensation not reflected below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Name and Fiscal Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
------------------ ------ -------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gary Valinoti, President 1999 $110,550 -- -- --
and director 1998 $110,550 -- -- --
Jeffrey Goss, Secretary 1999 $110,550 -- -- --
and Vice President 1998 $110,550 -- -- --
Anthony Salandra (Mr. 1999 $110,550 -- -- --
Salandra served as President 1998 $110,550
and director of JagNotes,
Inc. during fiscal year
1999, but is no longer
employed by JagNotes.).
Barry Belzer, (Mr. Belzer 1999 $110,550 -- -- --
served as Secretary and 1998 $110,550
director of JagNotes, Inc.
during fiscal year 1999, but
is no longer employed by
JagNotes).
</TABLE>
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We are in the process of expanding our staff and, accordingly, we
expect that our executive compensation expenses will increase in the future.
DIRECTOR COMPENSATION
We currently do not compensate our directors.
1999 LONG-TERM INCENTIVE PLAN
In October, 1999 the Board of Directors approved the 1999 Long-Term
Incentive Plan. The purpose of the plan is to allow us to attract and retain
officers, employees, directors, consultants and certain other individuals and to
compensate them in a way that provides additional incentives and enables such
individuals to increase their ownership interests in JagNotes. Individual awards
under the plan may take the form of::
o either incentive stock options or non-qualified stock options;
o stock appreciation rights;
o restricted or deferred stock;
o dividend equivalents;
o bonus shares and awards in lieu of JagNotes= obligations to pay
cash compensation; and
o other awards, the value of which is based in whole or in part upon
the value of the common stock.
The plan will generally be administered by a committee appointed by the
board of directors, except that the board will itself perform the committee=s
functions under the plan for purposes of grants of awards to directors who serve
on the committee. The board may also perform any other function of the
committee. The committee generally is empowered to select the individuals who
will receive awards and the terms and conditions of those awards, including
exercise prices for options and other exercisable awards, vesting and forfeiture
conditions, performance conditions, the extent to which awards may be
transferable and periods during which awards will remain outstanding. Awards may
be settled in cash, shares, other awards or other property, as the committee may
determine.
The maximum number of shares of common stock that may be subject to
outstanding awards under the plan will not exceed 15% of the aggregate number of
shares of common stock outstanding effective at the time of such grant. The
number of shares deliverable upon exercise of incentive stock options is limited
to 2,096,444. The plan also provides that no participant may be granted in any
calendar year options or other awards that may be settled by delivery of more
than 500,000 shares, and limits payments under cash-settled awards in any
calendar year to an amount equal to the fair market value of that number of
shares as of the date of grant or the date of settlement of the award, whichever
is greater. There are currently a total of 37,500 shares of common stock
subject to outstanding options granted under the plan. Each of the foregoing
options has an exercise price of $2.00 per share.
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The plan will remain in effect until terminated by the board of
directors. The plan may be amended by the board of directors without the consent
of JagNotes' stockholders, except that any amendment, although effective when
made, will be subject to stockholder approval if required by any Federal or
state law or regulation or by the rules of any stock exchange or automated
quotation system on which JagNotes' common stock may then be listed or quoted.
The number of shares reserved or deliverable under the plan, the annual
per-participant limits, the number of shares subject to options automatically
granted to non-employee directors, and the number of shares subject to
outstanding awards are subject to adjustment in the event of stock splits, stock
dividends and other extraordinary corporate events.
JagNotes generally will be entitled to a tax deduction equal to the
amount of compensation realized by a participant through awards under the plan,
except no deduction is permitted in connection with incentive stock options if
the participant holds the shares acquired upon exercise for the required holding
periods; and deductions for some awards could be limited under the $1.0 million
deductibility cap of Section 162(m) of the Internal Revenue Code. This
limitation, however, should not apply to awards granted under the plan during a
grace period of approximately one year following the effectiveness of this
registration statement, and should not apply to certain options, stock
appreciation rights and performance-based awards granted thereafter if JagNotes
complies with certain requirements under Section 162(m).
EMPLOYMENT CONTRACTS
We have not entered into employment agreements with any of our officers
or employees.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Articles of Incorporation provide that we shall indemnify our
officers, directors, employees and agents to the full extent permitted by Nevada
law. Our Bylaws include provisions to indemnify our officers and directors and
other persons against expenses (including judgments, fines and amounts paid for
settlement) incurred in connection with actions or proceedings brought against
them by reason of their serving or having served as officers, directors or in
other capacities. We do not, however, indemnify them in actions in which it is
determined that they have not acted in good faith or have acted unlawfully or
not in JagNotes' best interest. In the case of an action brought by or in the
right of JagNotes, we shall indemnify them only to the extent of expenses
actually and reasonably incurred by them in connection with the defense or
settlement of these actions and we shall not indemnify them in connection with
any matter as to which they have been found to be liable to JagNotes, unless the
deciding court determines that, notwithstanding such liability, that person is
fairly entitled to indemnity in light of all the relevant circumstances.
We do not currently maintain director's and officer's liability
insurance but we may do so in the future.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors and officers pursuant to the foregoing
provisions, or otherwise, we have 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.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the common stock as of October 18, 1999 by (i) each
person known by JagNotes to be the beneficial owner of more than five percent of
the common stock, (ii) each executive officer and director of JagNotes, and
(iii) all executive officers and directors of JagNotes as a group. See also
"Management and Executive Compensation."
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address of Beneficial Owner Beneficially Owned(1) of Class(2)
- ------------------------------------ --------------------- -----------
<S> <C> <C>
Gary Valinoti (President, CEO and Director) 2,045,500(3) 14.6%
2421 Atlantic Avenue, Suite 103
Manasquan, New Jersey 08736
Stephen Russo (Chief Financial Officer) 14,000(4) x
2421 Atlantic Avenue, Suite 103
Manasquan, New Jersey 08736
Jeffrey J. Goss (Vice President and 800,000 5.7%
Corporate Secretary)
2421 Atlantic Avenue, Suite 103
Manasquan, New Jersey 08736
Thomas Mazzarisi (Executive Vice President, 100,000 x
General Counsel and Director)
2421 Atlantic Avenue, Suite 103
Manasquan, New Jersey 08736
Stephen Schoepfer (Executive Vice President, 75,000 x
Chief Operating Officer and Director)
2421 Atlantic Avenue, Suite 103
Manasquan, New Jersey 08736
All executive officers and directors as a 3,087,500 22.0%
group (5 persons)
S.A.C. Capital Associates, LLC(5) 900,000 6.4%
777 Long Ridge Road
Stamford, Connecticut 06902
Anthony Salandra 800,000 5.7%
6 Renee Court
Woodcliff Lake, New Jersey 07675
Barry Belzer 800,000 5.7%
1 Johnson Terrace
Middletown, New Jersey 07748
</TABLE>
- ---------------
x Less than one percent.
34
<PAGE> 39
(1) Includes, for the following persons, the following number of shares which
the beneficial owner has the right to acquire within 60 days from options,
warrants or otherwise: S.A.C. Capital Associates, LLC (225,000).
(2) Based on 13,996,290 shares outstanding, plus the number of shares which the
beneficial owner has the right to acquire within 60 days, if any, as
indicated in footnote (1) above.
(3) Includes 900,000 shares owned by members of Mr. Valinoti's immediate family.
(4) Includes 4,000 shares owned by members of Mr. Russo's immediate family.
(5) Pursuant to an investment management agreement, S.A.C. Capital Advisors, LLC
has voting and investment power with respect to the shares of JagNotes'
stock held by S.A.C. Capital Associates, LLC. Steven A. Cohen is the
Managing Member, President and Chief Executive Officer of S.A.C. Capital
Advisors and, accordingly, Mr. Cohen has voting and investment power with
respect to the shares of JagNotes' stock held by S.A.C. Capital Associates,
LLC. Mr. Cohen does not have voting or investment power with respect to any
other shares of JagNotes' stock.
35
<PAGE> 40
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of JagNotes' common stock by the selling stockholders as of
October 18, 1999 and as adjusted to reflect the sale of the shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned
after Offering (Assuming
Maximum Number of Sale of All Shares Covered
Number of Shares Shares to Be Sold by this Prospectus)(3)
Beneficially Owned Pursuant to this --------------------------
Name Prior to Offering(1) Prospectus(2) Number Percent(4)
- ---- -------------------- ----------------- -------- ----------
<S> <C> <C> <C> <C>
S.A.C. Capital Associates, LLC (5) 675,000 900,000 0 0
Stephen Gluck 11,400 15,200 0 0
Circle T International, Ltd.(6) 86,400 103,200 9,000 x
Circle T Partners L.P.(6) 169,000 200,000 19,000 x
xGreene Street Partners (7) 125,010 166,680 0 0
William Monness 6,150 8,200 0 0
Joseph P. DeMatteo (8) 3,075 4,100 0 0
Joseph P. DeMatteo IRA (8) 3,075 4,100 0 0
Robert F. Dall 12,510 16,680 0 0
Stanley L. Cohen 200,010 266,680 0 0
ASC Capital Partners (7) 125,010 166,680 0 0
Peter Zecca Jr 1,140 1,520 0 0
Alexander A. Zecca 1,140 1,520 0 0
Brian and Vicki Warner 25,020 33,360 0 0
Neil Crespi 25,020 33,360 0 0
Thomas Dering 11,400 15,200 0 0
Warren R. Marcus 12,510 16,680 0 0
Lappin Capital Management L.P.(9) 10,500 14,000 0 0
Apex Limited Partners L.P.(10) 45,600 60,800 0 0
</TABLE>
36
<PAGE> 41
<TABLE>
<CAPTION>
Shares Beneficially Owned
after Offering (Assuming
Maximum Number of Sale of All Shares Covered
Number of Shares Shares to Be Sold by this Prospectus)(3)
Beneficially Owned Pursuant to this --------------------------
Name Prior to Offering(1) Prospectus(2) Number Percent(4)
- ---- -------------------- ----------------- -------- ----------
<S> <C> <C> <C> <C>
AIG Trading Group Inc.
Deferred Compensation
Plan Trust 12,510 16,680 0 0
FBO Andrew Kaplan
AIG Trading Group Inc.
Deferred Compensation
Plan Trust 37,500 50,000 0 0
FBO Jonas Paul Littman
AIG Trading Group Inc.
Deferred Compensation
Plan Trust 50,010 66,680 0 0
FBO Bradford Klein
Paul C. Orwicz 6,000 8,000 0 0
Delaware Charter
Guarantee & Trust TTEE 6,600 8,800 0 0
FBO Brett Fialkoff SEP IRA
David Ganek 22,500 30,000 0 0
John M. Fenlin 6,300 8,400 0 0
L. Gregory Rice 3,000 4,000 0 0
Mastrapasqua & Associates, Inc.(11)* 20,000 20,000 0 0
Dorsey, Wright & Associates, Inc.(12)* 0 65,000 0 0
Seth Tobias (6)* 100,000 100,000 0 0
Canella Response Television, Inc.(13)* 0 10,000 0 0
Robert E. Heyman 3,000 3,000 0 0
International Marketing Specialists, Inc.(14) 5,250 5,000 250 X
International Marketing Specialists, Inc.
Pension Plan(14) 30,000 29,000 1,000 X
Morton J. Nussbaum IRA(14) 16,000 16,000 0 0
TOTAL 1,867,640 2,468,520 29,250 X
</TABLE>
- ------------------
x Less than one percent.
* The following selling stockholders are commentators on our web site (see
"The Company - Commentators"): Dorsey, Wright & Associates, Mastrapasqua &
Associates, Inc. and Seth Tobias. Cannella Response Television, Inc. is a
consultant for JagNotes.
(1) This column does not include shares which may be acquired upon exercise of
options or warrants.
(2) This column includes, for the following persons, the following number of
shares which may be acquired upon exercise of warrants: S.A.C. Capital
Associates, LLC (225,000); Stephen Gluck (3,800); Circle T International,
Ltd. (25,800); Circle T Partners, L.P. (50,000); Greene Street Partners
(41,671); William Monness (2,050); Joseph P. DeMatteo (1,025); Joseph P.
DeMatteo IRA (1,025); Robert F. Dall (4,170); Stanley L. Cohen (66,670);
ASC Capital Partners (41,670); Peter Zecca Jr. (380); Alexander A. Zecca
(380); Brian and Vicki Warner (8,340); Neil Crespi (8,340); Thomas Dering
(3,800); Warren R. Marcus (4,170); Lappin Capital Management L.P. (3,500);
Apex Limited Partners L.P. (15,200); AIG Trading Group, Inc. (4,170); AIG
Trading Group, Inc. (12,500); AIG Trading Group, Inc. (16,670); Paul C.
Orwicz (2,000); Delaware Charter Guarantee & Trust TTE FBO Brett Fialkoff
SEP IRA (2,200); David Ganek (7,500); John M. Fenlin (8,400); L. Gregory
Rice (1,000).
This column also includes, for the following persons, the following number
of shares which may be acquired upon exercise of options: Dorsey, Wright &
Associates, Inc. (65,000), Cannella Response Television, Inc. (10,000).
37
<PAGE> 42
(3) Assumes the sale of all shares covered by this prospectus. There can be no
assurance that any of the selling stockholders will sell any or all of the
shares of common stock offered by them hereunder.
(4) Based on 13,996,290 shares outstanding.
(5) Pursuant to an investment management agreement, S.A.C. Capital Advisors,
LLC has voting and investment power with respect to the shares of
JagNotes' stock held by S.A.C. Capital Associates, LLC. Steven A. Cohen is
the Managing Member, President and Chief Executive Officer of S.A.C.
Capital Advisors and, accordingly, Mr. Cohen has voting and investment
power with respect to the shares of JagNotes' stock held by S.A.C. Capital
Associates, LLC. Mr. Cohen does not have voting or investment power with
respect to any other shares of JagNotes' stock.
(6) Seth Tobias has voting and investment power with respect to shares of
JagNotes' stock held by Circle T International, Ltd., Circle T Partners,
L.P. and by Mr. Tobias individually. Mr. Tobias is the President of Circle
T International, Ltd. and a General Partner of Circle T Partners, L.P.,
and does not have voting or investment power with respect to any other
shares of JagNotes' stock.
(7) Adam S. Cohen has voting and investment power with respect to shares of
JagNotes' stock held by Greene Street Partners and ASC Capital Partners.
Mr. Cohen is a General Partner of Green Street Partners and the President
of ASC Capital Partners and not have voting or investment power with
respect to any other shares of JagNotes' stock.
(8) Joseph P. DeMatteo beneficially owns shares held by Joseph P. DeMatteo IRA
as well as shares held by him individually.
(9) Lawrence B. Lappin has voting and investment power with respect to shares
of JagNotes' stock held by Lappin Capital Management. Mr. Lappin is a
General Partner of Lappin Capital Management and does not have voting or
investment power with respect to any other shares of JagNotes' stock.
(10) Devin Wate has voting and investment power with respect to shares of
JagNotes' stock held by Apex Limited Partners, L.P. Mr. Wate is the
Managing Director of Apex Limited Partners, L.P. and does not have voting
or investment power with respect to any other shares of JagNotes' stock.
(11) Frank Mastrapasqua and Thomas A. Trantum have voting and investment power
with respect to shares of JagNotes' stock held by Mastrapasqua &
Associates, Inc. Neither Mr. Mastrapasqua nor Mr. Trantum have voting or
investment power with respect to any other shares of JagNotes' stock.
(12) Thomas J. Dorsey and Watson H. Wright have voting and investment power
with respect to shares of JagNotes' stock held by Dorsey, Wright &
Associates, Inc. Neither Mr. Dorsey nor Mr. Wright have voting or
investment power with respect to any other shares of JagNotes' stock.
(13) Frank Cannella, Jr. has voting and investment power with respect to shares
of JagNotes' stock held by Cannella Response Television, Inc. Mr. Cannella
is the president of Cannella Response Television, Inc. and does not have
voting or investment power with respect to any other shares of JagNotes'
stock.
(14) Morton J. Nussbaum has voting and investment power with respect to shares
of JagNotes' stock held by International Marketing Specialists, Inc.,
International Marketing Specialists, Inc. Pension Plan, and Morton J.
Nussbaum IRA. Mr. Nussbaum is the President of International Marketing
Specialists, Inc. and the trustee of International Marketing Specialists,
Inc. Pension Plan. Mr. Nussbaum individually owns an additional 250 shares
of JagNotes' stock not covered by this prospectus, which are the only
other shares of JagNotes' stock as to which he has voting or investment
power.
38
<PAGE> 43
PLAN OF DISTRIBUTION
We are registering the shares covered by this prospectus on behalf of
the selling stockholders. As used in this prospectus, "selling stockholders"
includes donees, pledgees, transferees or other successors-in-interest selling
shares received after the date of this prospectus from a selling stockholder as
a gift, pledge, partnership distribution or other non-sale related transfer. The
shares covered by this prospectus will be offered and sold by the selling
stockholders for their own accounts. We will not receive any of the proceeds
from the sale of shares pursuant to this prospectus. We have agreed to bear the
expenses of the registration of these shares, including legal and accounting
fees. We estimate these expenses to be approximately $200,000. The selling
stockholders will bear all brokerage commissions and any similar selling
expenses attributable to the sale of shares covered by this prospectus.
The selling stockholders may offer and sell these shares from time to
time in transactions in the over-the-counter market or in negotiated
transactions, at market prices prevailing at the time of sale or at negotiated
prices. Such transactions may or may not involve brokers or dealers. The selling
stockholders have advised JagNotes that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares, nor is there an underwriter
or coordinating broker acting in connection with the proposed sale of shares by
the selling stockholders. Sales may be made directly to purchasers or to or
through broker-dealers which may act as agents or principals. Broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders or the purchasers of shares for whom such
broker-dealers may act as agent or to whom they may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions).
The selling stockholders and any broker-dealers acting in connection
with the sale of the shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Act, and any commissions received by
broker-dealers and any profit realized by them on the resale of shares as
principals may be deemed underwriting compensation under the Act. Certain
selling stockholders have may a relationship with JagNotes beyond that of a
stockholder. The selling stockholders and the nature of these relationships are
indicated in the selling stockholder table beginning on page 35 of this
prospectus.
Because the selling stockholders may be deemed to be "underwriters," we
have informed them of the need for delivery of copies of this prospectus. We
have also informed the selling stockholders that the anti-manipulative rules
contained in Regulation M under the Securities Exchange Act of 1934, as amended,
may apply to their sales in the market and have furnished each selling
stockholder with a copy of these rules.
Selling stockholders may also use Rule 144 under the Act to sell the
shares in open market transactions if they meet the criteria and conform to the
requirements of such rule.
Upon our being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
covered by this prospectus through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, we
will file a supplement to this prospectus, if required, pursuant to Rule 424(b)
under the Act, disclosing (i) the name of each such selling shareholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out in this prospectus and (vi) other facts material to the transaction. In
addition, upon being notified by a selling shareholder that a donee, pledgee,
transferee or other successor-in-interest intends to sell more than 500 shares,
we will file a supplement to this prospectus.
39
<PAGE> 44
DESCRIPTION OF SECURITIES
COMMON STOCK
JagNotes' Articles of Incorporation authorize the issuance of
100,000,000 shares of common stock, $.00001 par value, of which 13,996,290
shares were outstanding as of July 31, 1999.
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders and are not entitled to
cumulate their votes in the election of directors. Holders of shares of common
stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion, from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of JagNotes, the holders of shares of common stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities.
Holders of common stock have no preemptive or other subscription rights, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such shares.
OPTIONS
As of the date of this prospectus, there were options outstanding to
purchase:
o An aggregate of 100,000 shares of JagNotes' common stock at $16.25
per share at any time prior to June 29, 2000;
o An aggregate of 235,000 shares of JagNotes' common stock at $2.00
per share , subject to certain vesting requirements, at any time
prior to June or July 2009, provided, however, that certain of
these options will expire prior to June 2009 upon the termination
of certain contracts with JagNotes; and
o An aggregate of 70,000 shares of JagNotes' common stock at $2.00
per share at any time prior to August 26, 2009.
WARRANTS
As of the date of this prospectus, there were warrants outstanding to
purchase, at any time prior to May 3, 2001, 555,130 shares of common stock at
$14.00 per share.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for JagNotes' common stock is American
Securities Transfer and Trust, Inc., 938 Quail Street, Suite 101, Lakewood,
Colorado 80215-5513.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for
JagNotes by Day & Campbell, LLP, 3070 Bristol Street, Suite 450, Costa Mesa,
California 92626. As of the date of this prospectus, a member of the firm owned
a total of 168,700 shares of JagNotes' common stock.
40
<PAGE> 45
EXPERTS
JagNotes' consolidated financial statements as of July 31, 1999 and for
the year then ended have been audited by J.H. Cohn LLP, independent public
accountants, and have been included in this prospectus in reliance upon the
report of J.H. Cohn LLP (which is also included in this prospectus) and upon
their authority as experts in accounting and auditing.
JagNotes' consolidated financial statements as of July 31, 1998 and for
the year then ended have been audited by Stephen R. Russo, CPA, independent
certified public accountant, and have been included in this prospectus in
reliance upon his report (which is also included in this prospectus) and upon
his authority as an expert in accounting and auditing.
In April 1999 Stephen Russo, CPA, resigned as JagNotes' independent
public accountant in order to join JagNotes as its Chief Financial Officer. In
addition, as of the date of this prospectus, Mr. Russo was the beneficial owner
of 14,000 shares of JagNotes' common stock. The report issued by Mr. Russo on
JagNotes' financial statements for the fiscal year ended July 31, 1998 did not
contain any adverse opinion or disclaimer of opinion and was not qualified as to
audit scope or accounting principles, nor were there any material disagreements
with the former accountant on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure during these
years.
At JagNotes' request, Mr. Russo has furnished JagNotes with a letter
addressed to the Securities and Exchange Commission stating that he agrees with
the foregoing statements. This letter is attached as an exhibit to the
registration statement that contains this prospectus.
JagNotes engaged J.H. Cohn LLP as its new independent public
accountants in April, 1999. JagNotes did not consult with any other accounting
firm regarding the application of accounting principles to a specified
transaction, either contemplated or proposed, or the type of opinion that might
be rendered regarding JagNotes' financial statements, nor did it consult with
J.H. Cohn LLP with respect to any accounting disagreement or any reportable
event, at any time prior to the appointment of such firm.
OTHER INFORMATION
This prospectus is part of a registration statement on Form SB-2 that
we have filed with the SEC. Certain information is contained in the registration
statement that is not contained in this prospectus. Please consult the
registration statement for further information.
You should rely only on the information contained in this prospectus.
We have not authorized any person to provide any other information. You should
not assume that the information in this prospectus or any supplement is accurate
as of any date other than the date on the front of this prospectus or any
supplement. This prospectus is neither offering to sell nor seeking an offer to
buy any securities other than the shares covered by this prospectus, nor is this
prospectus offering to sell or seeking an offer to buy securities in any
unlawful way.
41
<PAGE> 46
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Index to Financial Statements
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports of Independent Accountants F-2/3
Consolidated Balance Sheet
July 31, 1999 F-4
Consolidated Statements of Operations
Years Ended July 31, 1999 and 1998 F-5
Consolidated Statements of Stockholders' Equity (Deficiency)
Years Ended July 31, 1999 and 1998 F-6
Consolidated Statements of Cash Flows
Years Ended July 31, 1999 and 1998 F-7
Notes to Consolidated Financial Statements F-8/14
</TABLE>
* * *
F-1
<PAGE> 47
Reports of Independent Accountants
To the Board of Directors and Stockholders
JagNotes.com Inc.
We have audited the accompanying consolidated balance sheet of JagNotes.com Inc.
and Subsidiaries (formerly JagNotes, Inc.) as of July 31, 1999, and the related
consolidated statements of operations, stockholders' equity (deficiency) and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of JagNotes.com Inc. as
of July 31, 1999, and their results of operations and cash flows for the year
then ended, in conformity with generally accepted accounting principles.
J.H. COHN LLP
Roseland, New Jersey
October 8, 1999
F-2
<PAGE> 48
Report of Certified Public Accountant
To the Board of Directors and Stockholders
JagNotes.com Inc.
I have audited the accompanying consolidated statements of operations,
stockholders' equity (deficiency) and cash flows of JagNotes.com Inc. and
Subsidiary (formerly JagNotes, Inc.) for the year ended July 31, 1998. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
JagNotes.com Inc. and Subsidiary for the year ended July 31, 1998, in conformity
with generally accepted accounting principles.
Stephen R. Russo, CPA
Nanuet, New York
October 12, 1998
F-3
<PAGE> 49
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Consolidated Balance Sheet
July 31, 1999
Assets
<TABLE>
<CAPTION>
<S> <C>
Current assets:
Cash and cash equivalents $ 6,078,922
Accounts receivable 18,900
Other current assets 753,532
-----------
Total current assets 6,851,354
Equipment, net of accumulated depreciation of $17,484 2,603
Capitalized software development costs, net of accumulated
amortization of $16,084 243,280
Other assets 12,004
-----------
Total $ 7,109,241
===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 131,395
Deferred revenues 283,222
-----------
Total liabilities 414,617
-----------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.00001 per share; 13,996,290
shares issued and outstanding 140
Additional paid-in capital 9,311,565
Unearned compensation (1,519,738)
Accumulated deficit (1,097,343)
-----------
Total stockholders' equity 6,694,624
-----------
Total $ 7,109,241
===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 50
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Consolidated Statements of Operations
Years Ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Subscription revenues $ 800,716 $ 932,553
Cost of revenues 515,758 112,362
----------- ----------
Gross profit 284,958 820,191
----------- ----------
Operating expenses:
Selling expenses 292,261 38,115
General and administrative expenses 894,922 744,577
----------- ----------
Totals 1,187,183 782,692
----------- ----------
Income (loss) from operations (902,225) 37,499
Interest income 60,873
----------- ----------
Income (loss) before income taxes (841,352) 37,499
Provision for income taxes 73,940 34,850
----------- ----------
Net income (loss) $ (915,292) $ 2,649
=========== ==========
Basic net earnings (loss) per share $ (.10) $ --
=========== ==========
Basic weighted average common shares outstanding 9,237,693 3,500,000
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 51
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Consolidated Statements of Stockholders' Equity (Deficiency)
Years Ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock
----------------------- Additional
Number of Paid-in Unearned Accumulated
Shares Amount Capital Compensation Deficit Total
--------- --------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 1, 1997 3,500,000 $ 73,445 $ (184,700) $ (111,255)
Net income 2,649 2,649
--------- --------- ----------- -----------
Balance, July 31, 1998 3,500,000 73,445 (182,051) (108,606)
Shares effectively issued in
connection with reverse
acquisition 3,820,900 (73,372) $ 73,372
Sales of units of common stock
and warrants through private
placements, net of expenses
of $707,700 6,655,390 67 7,559,993 7,560,060
Effects of issuance of common
stock in exchange for
services 20,000 147,500 $ (147,500)
Effects of issuance of stock
options in exchange for
services 218,200 (218,200)
Effects of transfer of 100,000
shares of common stock by
executive officer in exchange
for services provided to the
Company 1,312,500 (1,312,500)
Amortization of unearned com-
pensation 158,462 158,462
Net loss (915,292) (915,292)
--------- --------- ---------- ----------- ----------- -----------
Balance, July 31, 1999 13,996,290 $ 140 $9,311,565 $(1,519,738) $(1,097,343) $ 6,694,624
========== ========= ========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE> 52
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Consolidated Statements of Cash Flows
Years Ended July 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ---------
<S> <C> <C>
Operating activities:
Net income (loss) $ (915,292) $ 2,649
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 17,059 1,336
Amortization of unearned compensation 158,462
Deferred income taxes 73,940 8,135
Changes in operating assets and liabilities:
Accounts receivable 44,654 1,967
Other current assets (753,532)
Other assets (12,004)
Accounts payable and accrued expenses 55,664 (10,652)
Deferred revenues 78,535 (6,335)
----------- --------
Net cash used in operating activities (1,252,514) (2,900)
----------- --------
Investing activities:
Net repayments of loans to officer 24,839 396
Software development costs capitalized (259,364)
----------- --------
Net cash provided by (used in) investing activities (234,525) 396
----------- --------
Financing activities - net proceeds from private placements of
units of common stock and warrants 7,560,060
-----------
Net increase (decrease) in cash and cash equivalents 6,073,021 (2,504)
Cash and cash equivalents, beginning of year 5,901 8,405
----------- --------
Cash and cash equivalents, end of year $ 6,078,922 $ 5,901
=========== ========
Supplemental disclosure of cash flow information:
Income taxes paid $ 32,785 $ 26,715
=========== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-7
<PAGE> 53
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 1 - Organization and business:
JagNotes.com Inc. ("JagNotes") was originally incorporated during
1997 in Nevada as Professional Perceptions, Inc. to develop
operations as a consultant to retailers. However, JagNotes never
generated any significant revenues or expenses in connection with
such operations and it was inactive at the time of the exchange of
shares described below.
JagNotes, Inc. ("JNI") and its predecessors have been providing
financial and investment information within the financial community
since 1989. It operated as an unincorporated business from 1989
until August 1992 when it was incorporated in New Jersey as NewJag,
Inc. Its name was changed to JagNotes, Inc. in December 1993. JNI
gathers and compiles information from contacts at financial
institutions and releases such information to subscribers on a
timely basis through facsimile transmissions and a web site,
www.JagNotes.com, which opened in April 1999. Subscribers receive
information about newly-issued research reports and analyst
opinions, upgrades, downgrades and coverage changes. Prior to 1999,
JNI's customers were primarily financial professionals. During
1999, JNI began to focus its marketing efforts on retail
subscribers. Management considers all of the financial services
provided to be within the same business segment.
As of March 16, 1999, JagNotes had 3,820,900 outstanding shares of
common stock, with a par value of $.00001 per share. Effective as
of that date, certain stockholders of JNI purchased a total of
2,900,000 of the outstanding shares of JagNotes' common stock and
JagNotes issued 3,500,000 shares of common stock to acquire all of
the 1,000 shares of common stock, which had no par value, of JNI
then outstanding (the "Exchange"). As a result, JNI became a
wholly-owned subsidiary of JagNotes, and JagNotes had 7,320,000
shares of common stock outstanding, of which 6,400,000 shares, or
87.4%, were owned by the former stockholders of JNI and 920,000,or
12.6%, were owned by the former stockholders of JagNotes. However,
since the former stockholders of JNI became the owners of a
majority of the outstanding common shares of JagNotes after the
Exchange and JagNotes had no significant operating activities or
assets and liabilities prior to the Exchange, the Exchange was
treated effective as of March 16, 1999 as a "purchase business
combination" and a "reverse acquisition" for accounting purposes in
which JagNotes was the legal acquirer and JNI was the accounting
acquirer. As a result, the assets and liabilities of the accounting
acquirer, JNI, continued to be recorded at their historical
carrying values as of March 16, 1999; however, common stock and
additional paid-in capital were adjusted as of March 16, 1999 to
reflect the $.00001 per share par value of the shares of the legal
acquirer, JagNotes, and all references to the number of shares of
common stock of JNI as of dates or for periods prior to the
Exchange have been restated to reflect the ratio of the number of
common shares of JagNotes effectively exchanged for common shares
of JNI. In addition, the accompanying consolidated financial
statements for the periods prior to March 16, 1999 are comprised,
effectively, of the historical financial statements of JNI.
The "Company" as used herein refers to JNI prior to March 16, 1999
and JagNotes together with JNI subsequent to that date.
F-8
<PAGE> 54
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 2 - Summary of significant accounting policies:
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Principles of consolidation:
As a result of accounting for the Exchange as a purchase
business combination and a reverse acquisition (see Note 1),
the accompanying consolidated financial statements include the
accounts of JagNotes as of July 31, 1999 and for the period
from March 16, 1999 to July 31, 1999, the accounts of JNI, its
wholly-owned subsidiary, as of July 31, 1999 and for the years
ended July 31, 1999 and 1998 and the accounts of
JagNotes-Euro.com, Ltd., its other wholly-owned subsidiary, as
of July 31, 1999 and for the period from July 8, 1999 (the date
of its inception) to July 31, 1999. All significant
intercompany accounts and transactions have been eliminated in
consolidation. On August 16, 1999, JNI was merged into
JagNotes.
Revenue recognition:
Fees for subscriptions are generally billed in advance on a
monthly, quarterly, semi-annual or annual basis. Revenues from
subscriptions are recognized ratably over the subscription
period. Subscription fees collected that relate to periods
subsequent to the date of the consolidated balance sheet are
included in deferred revenues.
Cash equivalents:
Cash equivalents consist of highly liquid investments with a
maturity of three months or less when acquired.
Equipment:
Equipment is stated at cost, net of accumulated depreciation.
Depreciation is provided using accelerated methods over the
estimated useful lives of the assets which range from five to
seven years.
Capitalized software costs:
The Company capitalizes the costs of purchased software which
is ready for service. Costs of purchased software are amortized
using the straight-line method over their estimated useful
lives which do not exceed three years.
Impairment of long-lived assets:
The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of ("SFAS 121"). Under SFAS 121, impairment losses on
long-lived assets, such as equipment and capitalized software
costs, are recognized when events or changes in circumstances
indicate that the undiscounted cash flows estimated to be
generated by such assets are less than their carrying value
and, accordingly, all or a portion of such carrying value may
not be recoverable. Impairment losses are then measured by
comparing the fair value of assets to their carrying amounts.
F-9
<PAGE> 55
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 2 - Summary of significant accounting policies (concluded):
Advertising:
The Company expenses the cost of advertising and promotions as
incurred. Advertising costs charged to operations amounted to
$182,597 and $27,198 for 1999 and 1998, respectively.
Income taxes:
The Company accounts for income taxes pursuant to the asset and
liability method which requires deferred income tax assets and
liabilities to be computed annually for temporary differences
between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts
in the future based on enacted tax laws and rates applicable to
the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected
to be realized. The income tax provision or credit is the tax
payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.
Net earnings (loss) per share:
The Company presents "basic" earnings (loss) per share and, if
applicable, "diluted" earnings per share pursuant to the
provisions of Statement of Financial Accounting Standards No.
128, Earnings per Share ("SFAS 128"). Basic earnings (loss) per
share is calculated by dividing net income or loss by the
weighted average number of shares outstanding during each
period. The calculation of diluted earnings per share is
similar to that of basic earnings per share, except that the
denominator is increased to include the number of additional
common shares that would have been outstanding if all
potentially dilutive common shares, such as those issuable upon
the exercise of stock options and warrants, were issued during
the period.
Diluted earnings per share has not been presented in the
accompanying consolidated statements of operations because: (i)
the Company did not have any potentially dilutive common shares
as of July 31, 1998 and (ii) the Company had a net loss in 1999
and, accordingly, the assumed effects of the exercise of all of
the Company's outstanding stock options and warrants and the
application of the treasury stock method would have been
anti-dilutive.
Recent accounting pronouncements:
The Financial Accounting Standards Board and the Accounting
Standards Executive Committee of the American Institute of
Certified Public Accountants had issued certain accounting
pronouncements as of July 31, 1999 that will become effective
in subsequent periods; however, management of the Company does
not believe that any of those pronouncements would have
significantly affected the Company's financial accounting
measurements or disclosures had they been in effect as of July
31, 1999 and/or during the years ended July 31, 1999 and 1998.
F-10
<PAGE> 56
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 3 - Loans receivable from officer:
Loans receivable from an officer, which totaled $24,839 at July 31,
1998, were noninterest bearing and repaid during 1999.
Note 4 - Income taxes:
As of July 31, 1999, the Company had net operating loss
carryforwards of approximately $538,000 available to reduce future
Federal taxable income which will expire in 2019. The Company did
not have any net operating loss carryforwards as of July 31, 1998
and 1997.
As of July 31, 1999 and 1998, the Company's deferred tax assets
consisted of the effects of temporary differences attributable to
the following:
<TABLE>
<CAPTION>
1999 1998
--------- -------
<S> <C> <C>
Deferred revenues, net $ 105,600 $56,365
Goodwill 11,200 17,575
Unearned compensation 63,300
Net operating loss carryforwards 214,800
--------- -------
394,900 73,940
Less valuation allowance (394,900)
--------- -------
Totals $ -- $73,940
========= =======
</TABLE>
Due to the uncertainties primarily related to the extent and timing
of the Company's future taxable income arising from the changes in
the nature of its business described in Note 1, the Company offset
its deferred tax assets by an equivalent valuation allowance as of
July 31, 1999.
In 1999 and 1998, the Company's provisions for income taxes
consisted of the following:
<TABLE>
<CAPTION>
1999 1998
-------- ---------
<S> <C> <C>
Federal:
Current $19,823
Deferred $57,280 6,300
-------- ---------
Totals 57,280 26,123
-------- ---------
State:
Current 6,892
Deferred 16,660 1,835
-------- ---------
Totals 16,660 8,727
-------- ---------
Totals $73,940 $34,850
======== =========
</TABLE>
F-11
<PAGE> 57
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 4 - Income taxes (concluded):
The provisions for income taxes differ from the amounts computed
using the Federal statutory rate of 34% as a result of the
following:
<TABLE>
1999 1998
----- ----
<S> <C> <C>
Tax at Federal statutory rate (34)% 34%
Increase (decrease) from effects of:
State income taxes, net of Federal income tax benefit 1 15
Valuation allowance 42
Nondeductible life insurance and other expenses 45
Other (primarily surtax exemptions) (1)
----- ----
Totals 9% 93%
===== ====
</TABLE>
Note 5 - Employee benefit plans:
The Company maintains a profit-sharing plan and a money purchase
plan for the benefit of all eligible employees. The Company's
contributions to these defined contribution plans are made on a
discretionary basis. The Company made no contributions to the plans
in 1999. Contributions aggregated approximately $51,000 in 1998.
Note 6 - Fair value of financial instruments:
The Company's material financial instruments at July 31, 1999 for
which disclosure of estimated fair value is required by certain
accounting standards consisted of cash and cash equivalents,
accounts receivable and accounts payable. In the opinion of
management, cash and cash equivalents, accounts receivable and
accounts payable were carried at values that approximated their
fair values at July 31, 1999 because of their liquidity and/or
their short-term maturities.
Note 7 - Other issuances of common stock and stock options:
During 1999, the Company received proceeds of $7,560,060, net of
related costs and expenses of $707,700, from the sale of 6,655,390
shares of common stock and 555,130 warrants to purchase shares of
common stock. The sales were made through private placements exempt
from registration under the Securities Act of 1933. Each warrant
entitles the holder to purchase one share of common stock at $14.00
per share through April 2000. All of the warrants sold remained
outstanding as of July 31, 1999.
F-12
<PAGE> 58
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 7 - Other issuances of common stock and stock options (concluded):
From March 1, 1999 through July 31, 1999, the Company entered into
consulting agreements with several investment analysts and
commentators. Each agreement has an initial term of one year and is
renewable at the option of the Company for an additional year.
During 1999, as part of the consideration paid or to be paid
pursuant to these agreements, (i) the Company issued a total of
20,000 shares of common stock with a fair value of approximately
$147,500 and options to purchase a total of 335,000 shares of
common stock at $2.00 per share that expire at various dates
through July 2009 with a fair value of approximately $218,200 to
the consultants; and (ii) an executive officer of the Company
transferred 100,000 shares of common stock with a fair value of
approximately $1,312,500 to one of the consultants. The fair value
of the options was determined using the minimum value method in
accordance with the guidance in Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation, using
the Black-Scholes option-pricing model and assuming a risk-free
interest rate of 6%, expected dividends of 0%, expected option
lives of five years and expected volatility of 0%. The transfer of
the shares by the executive officer to the consultant on behalf of
the Company has been accounted for, effectively, as a donation of
the shares to the Company's capital and the reissuance of the
shares as a payment for the services.
Accordingly, the Company recorded a total of $1,678,200 as unearned
compensation based on the fair value of the common shares and stock
options issued to the consultants by the Company and the executive
officer in 1999 which is being amortized to expense on a
straight-line basis over the initial one year term of each
consulting agreement. A total of $158,462 was amortized during 1999
and the balance of $1,519,738 has been reflected as a reduction of
stockholders' equity as of July 31, 1999.
Note 8 - Commitments and contingencies:
Concentrations of credit risk:
Financial instruments which subject the Company to
concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company maintains
cash and cash equivalents in bank deposit and other accounts
the balances of which, at times, may exceed Federally insured
limits. At July 31, 1999, the Company had balances in excess of
Federally insured limits in the amount of $5,978,922. Exposure
to credit risk is reduced by placing such deposits or other
temporary investments in high quality financial institutions.
The Company performs ongoing credit evaluations of its
customers. Generally, the Company does not require any
collateral. The Company establishes an allowance for doubtful
accounts receivable based upon factors surrounding the credit
risk of customers, historical trends and other information.
Through July 31, 1999, losses arising from uncollectible
accounts had not been material.
Consulting agreements:
As of July 31, 1999, the Company was obligated to make cash
payments aggregating approximately $227,000 during the year
ending July 31, 2000 to consultants in conjunction with the
agreements described in Note 7.
Office lease:
During the year ended July 31, 1999, the Company leased office
space on a month-to-month basis. Total rent expense was
approximately $43,000 in 1999.
F-13
<PAGE> 59
JagNotes.com Inc. and Subsidiaries
(Formerly JagNotes, Inc.)
Notes To Consolidated Financial Statements
Note 8 - Commitments and contingencies (concluded):
Web site development costs:
As of July 31, 1999, the Company had contractual obligations
aggregating approximately $115,000 for services to be rendered
subsequent to that date in connection with the on-going
development of its web site.
Note 9 - Subsequent events:
From August 1, 1999 through October 8, 1999, the Company entered
into consulting agreements with several other investment analysts
and commentators (see Notes 7 and 8). Each agreement has an initial
term of one year and is renewable at the option of the Company for
another year. The consideration paid or to be paid by the Company
pursuant to these agreements will consist of cash payments
aggregating $110,000 and issuances of options to purchase 70,000
shares of the Company's common stock at $2.00 per share that will
expire at various dates through August 2009.
On October 1, 1999, the Board of Directors approved the 1999
Long-term Incentive Plan (the "Incentive Plan") which provides for
individual awards to officers, employees, directors, consultants
and certain other individuals that may take the form of: (1) stock
options, (2) stock appreciation rights and (3) certain other types
of awards for which the value is based in whole or in part upon the
fair market value of the Company's common stock. The number of
shares of common stock that may be subject to all types of awards
under the Incentive Plan may not exceed 15% of the aggregate number
of shares of the Company's common stock outstanding as of the date
of grant. The number of shares that may be subject to awards of
stock options is limited to 2,096,444.
* * *
F-14
<PAGE> 60
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation of JagNotes provide for the
indemnification of the directors, officers, employees and agents of JagNotes to
the fullest extent permitted by the laws of the State of Nevada. Section 78.7502
of the Nevada General Corporation Law permits a corporation to indemnify any of
its directors, officers, employees or agents against expenses actually and
reasonably incurred by such person in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (except for an action by or in right of the corporation) by reason
of the fact that such person is or was a director, officer, employee or agent of
the corporation, provided that it is determined that such person acted in good
faith and in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 78.751 of the Nevada General Corporation Law requires that the
determination that indemnification is proper in a specific case must be made by
(a) the stockholders, (b) the board of directors by majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding
or (c) independent legal counsel in a written opinion (i) if a majority vote of
a quorum consisting of disinterested directors is not possible or (ii) if such
an opinion is requested by a quorum consisting of disinterested directors.
Other Expenses of Issuance and Distribution.
Registration fee $ 6,276
Blue Sky fees and expenses 0
Legal fees and expenses 150,000
Accounting fees and expenses 30,000
Printing 14,000
Miscellaneous 0
--------
TOTAL $200,276
========
All of the above expenses except the SEC registration fee are
estimated. All of the above expenses will be paid by the Company.
Recent Sales of Unregistered Securities.
The Company has made the following sales of unregistered securities
within the last three years:
In May 1999 the Company closed a private sale of 1,665,390 shares of
common stock and 555,130 warrants to 27 accredited investors for cash
consideration of approximately $7,327,000 received in March and April of 1999.
The issuance of such securities was exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereof and Rule 506 of
Regulation D promulgated thereunder.
In May 1999 the Company issued 20,000 shares of its common stock to one
person in exchange for services. The issuance of such shares was exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) thereof
and/or Rule 506 of Regulation D promulgated thereunder.
II-1
<PAGE> 61
In March 1999 the Company (then known as Professional Perceptions,
Inc.) issued a total of 4,990,000 shares of common stock to 9 sophisticated
investors for cash consideration of $940,000. The issuance of such securities
was exempt from registration under the Securities Act of 1933 pursuant to Rule
504 of Regulation D promulgated thereunder.
In March 1999 the Company (then known as Professional Perceptions,
Inc.) issued 3,500,000 shares of common stock to the stockholders of JagNotes,
Inc. in exchange for all of the outstanding shares of JagNotes, Inc. The
issuance of such securities was exempt from registration under the Securities
Act of 1933 pursuant to Section 4(2) thereof and Regulation D promulgated
thereunder.
In March and April 1998 the Company (then known as Professional
Perceptions, Inc.) sold 720,900 shares of common stock to approximately 30
investors for cash consideration totaling approximately $70,000. The issuance of
such securities was exempt from registration under the Securities Act of 1933
pursuant to Rule 504 of Regulation D promulgated thereunder.
In December 1997 the Company (then known as Professional Perceptions,
Inc.) sold 3,100,000 shares of common stock to the three founders of the Company
in exchange for $5,275. The issuance of such securities was exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) thereof
and Regulation D promulgated thereunder.
Exhibits
--------
2.1 Agreement and Plan of Reorganization dated March 16, 1999
between Professional Perceptions, Inc. (now known as
JagNotes.com Inc.); Harold Kaufman, Jr., an officer, director
and principal stockholder thereof; NewJag, Inc.; and the
stockholders of NewJag, Inc.*
2.2 Agreement and Plan of Merger dated as of July 29, 1999 by and
among Jag Notes, Inc., a New Jersey corporation, and
JagNotes.com, Inc., a Nevada corporation.**
3.1 Articles of Incorporation of JagNotes.com Inc., as amended**
3.2 Bylaws of JagNotes.com Inc.**
5.1 Opinion of Day & Campbell, LLP
10.1 1999 Long Term Incentive Plan
16.1 Letter Regarding Change in Certifying Accountant*
21.1 List of Subsidiaries**
23.1 Consent of J.H. Cohn LLP
23.2 Consent of Stephen Russo, CPA
23.3 Consent of Day & Campbell, LLP, counsel for the Registrant,
included in Exhibit 5.1.
27 Financial Data Schedule
99.1 Articles of Merger of JagNotes, Inc. into JagNotes.com, Inc.
(including Certificate of Correction related thereto).**
- -------------------
* Previously filed as an exhibit to the Company's Registration Statement on
Form SB-2 filed on July 30, 1999.
** Previously filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form SB-2 filed on September 30, 1999.
II-2
<PAGE> 62
Undertakings
A. Supplementary and Periodic Information, Documents and Reports
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority in that
Section.
B. Item 512 Undertaking with Respect to Rule 415 Under the Securities
Act of 1933
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement; and
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
II-3
<PAGE> 63
C. Indemnification
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been informed 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 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.
D. Item 512 Undertaking with Respect to Rule 430A
The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, the registrant will treat 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 as part of
this registration statement as of the time it was declared
effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, the registrant will treat each
post-effective amendment that contains a form of prospectus as
a new registration statement for the securities offered in the
registration statement, and the offering of such securities at
that time as the initial bona fide offering thereof.
II-4
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Manasquan, State of New Jersey on October 26, 1999.
JAGNOTES.COM INC.
By: /s/ Gary Valinoti
---------------------------
Gary Valinoti, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Gary Valinoti October 26, 1999
- -----------------------------------------
Gary Valinoti, President, Chief Executive
Officer and Director
(Principal Executive Officer)
/s/ Stephen Russo October 26, 1999
- -----------------------------------------
Stephen Russo, Chief Financial Officer
(Principal Financial Officer)
/s/ Thomas Mazzarisi October 26, 1999
- -----------------------------------------
Thomas Mazzarisi, Executive Vice President
and Director
/s/ Stephen Schoepfer October 26, 1999
- -----------------------------------------
Stephen Schoepfer, Director
* Gary Valinoti, by signing his name hereto, does sign this Amendment to
Registration Statement on behalf of each of the indicated persons on the date
indicated pursuant to a power of attorney duly executed by such persons.
/s/ Gary Valinoti October 26, 1999
- -----------------------------------------
Gary Valinoti, Attorney-in-Fact
II-5
<PAGE> 65
EXHIBIT INDEX
Exhibits Description
-------- -----------
2.1 Agreement and Plan of Reorganization dated March 16, 1999
between Professional Perceptions, Inc. (now known as
JagNotes.com Inc.); Harold Kaufman, Jr., an officer, director
and principal stockholder thereof; NewJag, Inc.; and the
stockholders of NewJag, Inc.*
2.2 Agreement and Plan of Merger dated as of July 29, 1999 by and
among Jag Notes, Inc., a New Jersey corporation, and
JagNotes.com, Inc., a Nevada corporation.**
3.1 Articles of Incorporation of JagNotes.com Inc., as amended**
3.2 Bylaws of JagNotes.com Inc.**
5.1 Opinion of Day & Campbell, LLP
10.1 1999 Long Term Incentive Plan
16.1 Letter Regarding Change in Certifying Accountant*
21.1 List of Subsidiaries**
23.1 Consent of J.H. Cohn LLP
23.2 Consent of Stephen Russo, CPA
23.3 Consent of Day & Campbell, LLP, counsel for the Registrant,
included in Exhibit 5.1.
27 Financial Data Schedule
99.1 Articles of Merger of JagNotes, Inc. into JagNotes.com, Inc.
(including Certificate of Correction related thereto).**
- -------------------
* Previously filed as an exhibit to the Company's Registration Statement
on Form SB-2 filed on July 30, 1999.
** Previously filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form SB-2 filed on September 30, 1999.
<PAGE> 1
EXHIBIT 5.1
DAY &
CAMPBELL, LLP
- --------------------------------------------------------------------------------
Our File Number LAWYERS
09003
3070 Bristol
Suite 450
Costa Mesa, California 92626
(714) 429-2900
FAX # (714) 429-2901
October 26, 1999
JagNotes.com, Inc.
2421 Atlantic Ave.
Manasquan, New Jersey 08736
Re: Registration Statement on Form SB-2 (SEC File No. 333-84189)
Gentlemen:
You have requested our opinion as counsel for JagNotes.com, Inc., a
Nevada corporation (the "Company"), as to the matters set forth below in
connection with the registration under the Securities Act of 1933 on Form SB-2
of 2,468,520 shares of the Company's Common Stock, $.00001 par value (the
"Shares"), including an aggregate of 630,120 Shares (collectively, the "Warrant
and Option Shares") issuable upon exercise of outstanding warrants (the
"Warrants") or options (the "Options").
We have examined the Company's Registration Statement on Form SB-2
(Registration No. 333-84189) filed with the Securities and Exchange Commission
on July 30, 1999 (the "Registration Statement") and Amendments Number 1 and 2
thereto, filed on September 30, 1999 and October 26, 1999, respectively (the
"Amendments"). We have also examined the Articles of Incorporation of the
Company, as amended, the Bylaws and the minute books of the Company, and such
other documents as we deemed pertinent as a basis for the opinion hereinafter
expressed.
Based on the foregoing, it is our opinion that the Shares have been
duly authorized and are, or in the case of the Warrant and Option Shares, upon
exercise of the Warrants and Options in accordance with their respective terms
and against payment therefor, will be, validly issued, fully paid and
non-assessable.
We consent to the inclusion of our name in the Registration Statement
and the Amendments thereto under the caption "Legal Matters" and the filing of
this opinion as an exhibit to the Registration Statement and the Amendments
thereto.
This opinion is limited solely to the matter set forth herein and is
delivered to you only with regard to, and is intended for use solely in
connection with, the Registration Statement and the Amendments thereto.
Very truly yours,
DAY & CAMPBELL, LLP
<PAGE> 1
EXHIBIT 10.1
JAGNOTES.COM INC
1999 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of this 1999 Long-Term Incentive Plan (the "Plan")
of JagNotes.com Inc., a Nevada corporation (the "Company"), is to
advance the interests of the Company and its stockholders by providing
a means to attract, retain, motivate and reward directors, officers,
employees and consultants of and service providers to the Company and
its subsidiaries and to enable such persons to acquire or increase a
proprietary interest in the Company, thereby promoting a closer
identity of interests between such persons and the Company's
stockholders.
2. Definitions. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred
Stock, Stock granted as a bonus or in lieu of other awards, Dividend
Equivalents and Other Stock-Based Awards are set forth in Section 6 of
the Plan. Such awards, together with any other right or interest
granted to a Participant under the Plan, are termed "Awards." For
purposes of the Plan, the following additional terms shall be defined
as set forth below:
a. "Award Agreement" means any written agreement, contract, notice or
other instrument or document evidencing an Award.
b. "Beneficiary" shall mean the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
c. "Board" means the Board of Directors of the Company.
d. A "Change in Control" shall be deemed to have occurred if:
i. the date of the acquisition by any "person" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding
the Company or any of its subsidiaries or affiliates or any employee
benefit plan sponsored by any of the foregoing, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 30% or
more of either (x) the then outstanding shares of common stock of the
Company or (y) the then outstanding voting securities entitled to vote
generally in the election of directors; or
ii. the date the individuals who constitute the Board as of
the effective date of the Plan (the "Incumbent Board") cease for any
reason to constitute at least a majority of the members of the Board,
provided that any individual becoming a director subsequent to the
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effective date of this Agreement whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
(other than any individual whose nomination for election to Board
membership was not endorsed by the Company's management prior to, or at
the time of, such individual's initial nomination for election) shall
be, for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or
iii. the consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets, a reverse stock split of
outstanding voting securities, the issuance of shares of stock of the
Company in connection with the acquisition of the stock or assets of
another entity, provided, however, that a Change in Control shall not
occur under this clause (iii) if consummation of the transaction would
result in at least 70% of the total voting power represented by the
voting securities of the Company (or, if not the Company, the entity
that succeeds to all or substantially all of the Company's business)
outstanding immediately after such transaction being beneficially owned
(within the meaning of Rule 13d-3 promulgated pursuant to the Exchange
Act) by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting power
of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction.
e. "Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
f. "Committee" means the committee appointed by the Board to administer
the Plan, or if no committee is appointed, the Board.
g. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.
h. "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date shall be based upon the last
sales price or, if unavailable, the average of the closing bid and asked prices
per share of the Stock at the end of regular trading on such date (or, if there
was no trading or quotation in the Stock on such date, on the next preceding
date on which there was trading or quotation) as provided by one of such
organizations.
i. "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
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j. "Participant" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award under the Plan.
k. "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
l. "Stock" means the Common Stock, par value $.00001, of the Company
and such other securities as may be substituted for Stock or such other
securities pursuant to Section 4.
3. Administration.
a. Authority of the Committee. Except as otherwise provided below, the
Plan shall be administered by the Committee. The Committee shall have full and
final authority to take the following actions, in each case subject to and
consistent with the provisions of the Plan:
i. to select persons to whom Awards may be granted;
ii. to determine the type or types of Awards to be granted to
each such person;
iii. to determine the number of Awards to be granted, the
number of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price or purchase price, any
restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability or
settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including performance
conditions relating to Awards not intended to be governed by Section
7(f) and waivers and modifications thereof), based in each case on such
considerations as the Committee shall determine), and all other matters
to be determined in connection with an Award;
iv. to determine whether, to what extent and under what
circumstances an Award may be settled, or the exercise price of an
Award may be paid, in cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
v. to determine whether, to what extent and under what
circumstances cash, Stock, other Awards or other property payable with
respect to an Award will be deferred either automatically, at the
election of the Committee or at the election of the Participant;
vi. to determine the restrictions, if any, to which Stock
received upon exercise or settlement of an Award shall be subject
(including lock-ups and other transfer restrictions), may condition the
delivery of such Stock upon the execution by the Participant of any
agreement providing for such restrictions;
vii. to prescribe the form of each Award Agreement, which need
not be identical for each Participant;
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viii. to adopt, amend, suspend, waive and rescind such rules
and regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
ix. to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan
and any Award, rules and regulations, Award Agreement or other
instrument hereunder; and
x. to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board shall perform the
functions of the Committee for purposes of granting awards to directors who
serve on the Committee, and the Board may perform any function of the Committee
under the Plan for any other purpose, including without limitation for the
purpose of ensuring that transactions under the Plan by Participants who are
then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3. In any case in which the Board is performing a function
of the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board, except where the context otherwise requires.
b. Manner of Exercise of Committee Authority. Any action of the
Committee with respect to the Plan shall be final, conclusive and binding on all
persons, including the Company, subsidiaries of the Company, Participants, any
person claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any determination
shall be determined by the Committee, and any such determination may thereafter
be modified by the Committee (subject to Section 8(e)). The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.
Except as provided under Section 7(f), the Committee may delegate to officers or
managers of the Company or any subsidiary of the Company the authority, subject
to such terms as the Committee shall determine, to perform such functions as the
Committee may determine, to the extent permitted under applicable law.
c. Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants or any
executive compensation consultant, legal counsel or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, or any officer or employee of the Company acting on behalf
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of the Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
its behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.
4. Stock Subject to Plan.
a. Amount of Stock Reserved. The total amount of Stock that may be
subject to outstanding Awards, determined immediately after the grant of any
Award, shall not exceed 15% of the total number of shares of Stock outstanding
at the effective time of such grant. Notwithstanding the foregoing, the number
of shares that may be delivered upon the exercise of ISOs shall not exceed
2,096,444, provided, however, that shares subject to ISOs shall not be deemed
delivered if such ISOs are forfeited, expire or otherwise terminate without
delivery of shares to the Participant. If an Award valued by reference to Stock
may only be settled in cash, the number of shares to which such Award relates
shall be deemed to be Stock subject to such Award for purposes of this Section
4(a). Any shares of Stock delivered pursuant to an Award may consist, in whole
or in part, of authorized and unissued shares, treasury shares or shares
acquired in the market for a Participant's Account.
b. Annual Per-Participant Limitations. During any calendar year, no
Participant may be granted Awards that may be settled by delivery of more than
500,000 shares of Stock, subject to adjustment as provided in Section 4(c). In
addition, with respect to Awards that may be settled in cash (in whole or in
part), no Participant may be paid during any calendar year cash amounts relating
to such Awards that exceed the greater of the Fair Market Value of the number of
shares of Stock set forth in the preceding sentence at the date of grant or the
date of settlement of Award. This provision sets forth two separate limitations,
so that Awards that may be settled solely by delivery of Stock will not operate
to reduce the amount of cash-only Awards, and vice versa; nevertheless, Awards
that may be settled in Stock or cash must not exceed either limitation.
c. Adjustments. In the event that the Committee shall determine that
any recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Section 4(a), including shares reserved for ISOs, (ii) the number and kind
of shares of Stock specified in the Annual Per-Participant Limitations under
Section 4(b), (iii) the number and kind of shares of outstanding Restricted
Stock or other outstanding Award in connection with which shares have been
issued, (iv) the number and kind of shares that may be issued in respect of
other outstanding Awards and (v) the exercise price, grant price or purchase
price relating to any Award. (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding Award). In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including, without
limitation, cancellation of unexercised or outstanding Awards, or substitution
of Awards using stock of a successor or other entity) in recognition of unusual
or nonrecurring events (including, without limitation, events described in the
preceding sentence and events constituting a Change in Control) affecting the
Company or any subsidiary or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
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5. Eligibility. Directors, officers and employees of the Company and its
subsidiaries, and persons who provide consulting or other services to
the Company deemed by the Committee to be of substantial value to the
Company, are eligible to be granted Awards under the Plan. In addition,
persons who have been offered employment by the Company or its
subsidiaries, and persons employed by an entity that the Committee
reasonably expects to become a subsidiary of the Company, are eligible
to be granted an Award under the Plan.
6. Specific Terms of Awards.
a. General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service of the Participant. Except as expressly provided by the Committee
(including for purposes of complying with the requirements of the Nevada General
Corporation Law relating to lawful consideration for the issuance of shares), no
consideration other than services will be required as consideration for the
grant (but not the exercise) of any Award.
b. Options. The Committee is authorized to grant options to purchase
Stock (including "reload" options automatically granted to offset specified
exercises of Options) on the following terms and conditions ("Options"):
i. Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee.
ii. Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without limitation, cash,
Stock, other Awards or awards granted under other Company plans or
other property (including notes or other contractual obligations of
Participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by applicable
law), and the methods by which Stock will be delivered or deemed to be
delivered to Participants.
iii. Termination of Employment. The Committee shall determine
the period, if any, during which Options shall be exercisable following
a Participant's termination of employment relationship with the Company
and its subsidiaries. For this purpose, any sale of a subsidiary of the
Company pursuant to which it ceases to be a subsidiary of the Company
shall be deemed to be a termination of employment by any Participant
employed by such subsidiary, or, as applicable, termination of the
non-employee directorship by any Participant who serves on the board of
such subsidiary. Unless otherwise determined by the
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Committee, (i) during any period that an Option is exercisable
following termination of employment or termination of directorship, it
shall be exercisable only to the extent it was exercisable upon such
termination of employment or termination of directorship, and (ii) if
such termination of employment is for cause, as determined in the
discretion of the Committee, all Options held by the Participant shall
immediately terminate.
iv. Sale of the Company. All Options outstanding under the
Plan shall terminate upon the consummation of any transaction whereby
the Company (or any successor to the Company or substantially all of
its business) becomes a wholly-owned subsidiary of any corporation,
unless such other corporation shall continue or assume the Plan as it
relates to Options then outstanding (in which case such other
corporation shall be treated as the Company for all purposes hereunder,
and, pursuant to Section 4(c), the Committee of such other corporation
shall make appropriate adjustment in the number and kind of shares of
Stock subject thereto and the exercise price per share thereof to
reflect consummation of such transaction). If the Plan is not to be so
assumed, the Company shall notify the Participant of consummation of
such transaction at least ten days in advance thereof.
v. ISOs. The Committee shall have the authority to grant ISOs
under the Plan. If Stock acquired by exercise of an ISO is sold or
otherwise disposed of within two years after the date of grant of the
ISO or within one year after the transfer of such Stock to the
Participant, the holder of the Stock immediately prior to the
disposition shall promptly notify the Company in writing of the date
and terms of the disposition and shall provide such other information
regarding the disposition as the Company may reasonably require in
order to secure any deduction then available against the Company's or
any other corporation's taxable income. The Company may impose such
procedures as it determines may be necessary to ensure that such
notification is made. Each Option granted as an ISO shall be designated
as such in the Award Agreement relating to such Option.
c. Stock Appreciation Rights. The Committee is authorized to grant
stock appreciation rights on the following terms and conditions ("SARs"):
i. Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of Stock on the date
of exercise (or, if the Committee shall so determine in the case of any
such right other than one related to an ISO, the Fair Market Value of
one share at any time during a specified period before or after the
date of exercise), over (B) the grant price of the SAR as determined by
the Committee as of the date of grant of the SAR, which, except as
provided in Section 7(a), shall be not less than the Fair Market Value
of one share of Stock on the date of grant.
ii. Other Terms. The Committee shall determine the time or
times at which an SAR may be exercised in whole or in part, the method
of exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem
with any other Award, and any other terms and conditions of any SAR.
Limited SARs that may only
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be exercised upon the occurrence of a Change in Control may be granted
on such terms, not inconsistent with this Section 6(c), as the
Committee may determine. Limited SARs may be either freestanding or in
tandem with other Awards.
d. Restricted Stock. The Committee is authorized to grant Stock that is
subject to restrictions based on continued employment on the following terms and
conditions ("Restricted Stock"):
i. Grant and Restrictions. Restricted Stock shall be subject
to such restrictions on transferability and other restrictions, if any,
as the Committee may impose, which restrictions may lapse separately or
in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Except to
the extent restricted under the terms of the Plan and any Award
Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or
the right to receive dividends thereon.
ii. Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment or service (as determined
under criteria established by the Committee) during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company;
provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of
termination resulting from specified causes.
iii. Certificates for Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Stock are registered
in the name of the Participant, such certificates may bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, the Company may retain physical
possession of the certificate, in which case the Participant shall be
required to have delivered a stock power to the Company, endorsed in
blank, relating to the Restricted Stock.
iv. Dividends. Dividends paid on Restricted Stock shall be
either paid at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or the payment of such dividends shall be deferred
and/or the amount or value thereof automatically reinvested in
additional Restricted Stock, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant to
elect. Stock distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property
has been distributed, unless otherwise determined by the Committee.
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e. Deferred Stock. The Committee is authorized to grant units
representing the right to receive Stock at a future date subject to the
following terms and conditions ("Deferred Stock"):
i. Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected
by the Participant). In addition, Deferred Stock shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at
earlier specified times, separately or in combination, in installments
or otherwise, as the Committee may determine.
ii. Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment or service (as determined
under criteria established by the Committee) during the applicable
deferral period or portion thereof to which forfeiture conditions apply
(as provided in the Award Agreement evidencing the Deferred Stock), all
Deferred Stock that is at that time subject to such forfeiture
conditions shall be forfeited; provided, however, that the Committee
may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Deferred Stock will be waived in whole or in
part in the event of termination resulting from specified causes.
f. Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash under other plans or compensatory
arrangements.
g. Dividend Equivalents. The Committee is authorized to grant awards
entitling the Participant to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Stock ("Dividend Equivalents"). Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Stock, Awards or other
investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee may specify.
h. Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock issued
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards, or other property, as the Committee shall determine. Cash awards,
as an element of or supplement to any other Award under the Plan, may be granted
pursuant to this Section 6(h).
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7. Certain Provisions Applicable to Awards.
a. Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with or in substitution for any other
Award granted under the Plan or any award granted under any other plan of the
Company, any subsidiary or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Awards granted in addition to or in tandem with other
Awards or awards may be granted either as of the same time as or a different
time from the grant of such other Awards or awards.
b. Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
(i) the term of any ISO or an SAR granted in tandem therewith exceed a period of
ten years from the date of its grant (or such shorter period as may be
applicable under Section 422 of the Code), and (ii) the term of any Option
granted to a resident of the United Kingdom shall not exceed a period of ten
years from the date of its grant.
c. Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments or on a deferred basis. Such payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments denominated
in Stock.
d. Rule 16b-3 Compliance.
i. Six-Month Holding Period. Unless a Participant could
otherwise dispose of equity securities, including derivative
securities, acquired under the Plan without incurring liability under
Section 16(b) of the Exchange Act, equity securities acquired under the
Plan must be held for a period of six months following the date of such
acquisition, provided that this condition shall be satisfied with
respect to a derivative security if at least six months elapse from the
date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security.
ii. Other Compliance Provisions. With respect to a Participant
who is then subject to Section 16 of the Exchange Act in respect of the
Company, the Committee shall implement transactions under the Plan and
administer the Plan in a manner that will ensure that each transaction
by such a Participant is exempt from liability under Rule 16b-3, except
that such a Participant may be permitted to engage in a non-exempt
transaction under the Plan if written notice has been given to the
Participant regarding the non-exempt nature of
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such transaction. The Committee may authorize the Company to repurchase
any Award or shares of Stock resulting from any Award in order to
prevent a Participant who is subject to Section 16 of the Exchange Act
from incurring liability under Section 16(b). Unless otherwise
specified by the Participant, equity securities, including derivative
securities, acquired under the Plan which are disposed of by a
Participant shall be deemed to be disposed of in the order acquired by
the Participant.
e. Loan Provisions. With the consent of the Committee, and subject at
all times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a loan
or loans to a Participant with respect to the exercise of any Option or other
payment in connection with any Award, including the payment by a Participant of
any or all federal, state or local income or other taxes due in connection with
any Award. Subject to such limitations, the Committee shall have full authority
to decide whether to make a loan or loans hereunder and to determine the amount,
terms and provisions of any such loan or loans, including the interest rate to
be charged in respect of any such loan or loans, whether the loan or loans are
to be with or without recourse against the borrower, the terms on which the loan
is to be repaid and conditions, if any, under which the loan or loans may be
forgiven.
f. Performance-Based Awards. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder. The performance objectives for an Award subject to this
Section 7(f) shall consist of one or more business criteria and a targeted level
or levels of performance with respect to such criteria, as specified by the
Committee but subject to this Section 7(f). Performance objectives shall be
objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of
the Code. Business criteria used by the Committee in establishing performance
objectives for Awards subject to this Section 7(f) shall be selected from among
the following:
(1) Annual return on capital;
(2) Annual earnings or earnings per share;
(3) Annual cash flow provided by operations;
(4) Increase in stock price;
(5) Changes in annual revenues; and/or
(6) Strategic business criteria, consisting of one or more objectives
based on meeting specified revenue, market penetration, geographic
business expansion goals, cost targets, and goals relating to
acquisitions or divestitures.
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The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. Performance objectives may differ for
such Awards to different Participants. The Committee shall specify the weighting
to be given to each performance objective for purposes of determining the final
amount payable with respect to any such Award. The Committee may, in its
discretion, reduce the amount of a payout otherwise to be made in connection
with an Award subject to this Section 7(f), but may not exercise discretion to
increase such amount, and the Committee may consider other performance criteria
in exercising such discretion. All determinations by the Committee as to the
achievement of performance objectives shall be in writing. The Committee may not
delegate any responsibility with respect to an Award subject to this Section
7(f).
g. Acceleration upon a Change of Control. Notwithstanding anything
contained herein to the contrary, all conditions and/or restrictions relating to
the continued performance of services and/or the achievement of performance
objectives with respect to the exercisability or full enjoyment of an Award
shall lapse immediately prior to a Change in Control, provided, however, that
such lapse shall not occur if (i) it is intended that the transaction
constituting such Change in Control be accounted for as a pooling of interests
under Accounting Principles Board Opinion No. 16 (or any successor thereto), and
operation of this Section 7(g) would otherwise violate Paragraph 47(c) thereof,
or (ii) the Committee, in its discretion, determines that such lapse shall not
occur, provided, further, that the Committee shall not have the discretion
granted in clause (ii) if it is intended that the transaction constituting such
Change in Control be accounted for as a pooling of interests under Accounting
Principles Board Option No. 16 (or any successor thereto), and such discretion
would otherwise violate Paragraph 47(c) thereof.
8. General Provisions.
a. Compliance With Laws and Obligations. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing shares of
Stock issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.
b. Limitations on Transferability. Awards and other rights under the
Plan will not be transferable by a Participant except by will or the laws of
descent and distribution or to a Beneficiary in the event of the Participant's
death, shall not be pledged, mortgaged, hypothecated or otherwise encumbered, or
otherwise subject to the claims of creditors, and, in the case of ISOs and SARs
in tandem therewith, shall be exercisable during the lifetime of a Participant
only by such Participant or his guardian or legal representative; provided,
however, that such Awards and other rights (other than ISOs and SARs in tandem
therewith) may be transferred to one or more transferees during the lifetime of
the Participant to the extent and on such terms as then may be permitted by the
Committee.
12
<PAGE> 13
c. No Right to Continued Employment or Service. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee, director
or other person the right to be retained in the employ or service of the Company
or any of its subsidiaries, nor shall it interfere in any way with the right of
the Company or any of its subsidiaries to terminate any employee's employment or
other person's service at any time or with the right of the Board or
stockholders to remove any director.
d. Taxes. The Company and any subsidiary is authorized to withhold from
any Award granted or to be settled, any delivery of Stock in connection with an
Award, any other payment relating to an Award or any payroll or other payment to
a Participant amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.
e. Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such action shall be subject to the approval of the Company's stockholders
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; provided, however, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to him
(as such rights are set forth in the Plan and the Award Agreement). The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement
relating thereto; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
under such Award (as such rights are set forth in the Plan and the Award
Agreement). Notwithstanding the foregoing, the Board or the Committee may take
any action (including actions affecting or terminating outstanding Awards) to
the extent necessary for a business combination in which the Company is a party
to be accounted for under the pooling-of-interests method of accounting under
Accounting Principles Board Opinion No. 16 (or any successor thereto).
f. No Rights to Awards; No Stockholder Rights. No person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants and employees. No Award shall confer on
any Participant any of the rights of a stockholder of the Company unless and
until Stock is duly issued or transferred and delivered to the Participant in
accordance with the terms of the Award or, in the case of an Option, the Option
is duly exercised.
13
<PAGE> 14
g. Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company=s obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.
h. Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor any submission of the Plan or amendments thereto to the stockholders
of the Company for approval shall be construed as creating any limitations on
the power of the Board to adopt such other compensatory arrangements as it may
deem desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
i. No Fractional Shares. No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
j. Compliance with Code Section 162(m). It is the intent of the Company
that employee Options, SARs and other Awards designated as Awards subject to
Section 7(f) shall constitute "qualified performance-based compensation" within
the meaning of Code Section 162(m). Accordingly, if any provision of the Plan or
any Award Agreement relating to such an Award does not comply or is inconsistent
with the requirements of Code Section 162(m), such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements, and
no provision shall be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the performance objectives.
k. Governing Law. The validity, construction and effect of the Plan,
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Nevada, without giving
effect to principles of conflicts of laws, and applicable federal law.
l. Effective Date; Plan Termination. The Plan shall become effective as
of the date of its adoption by the Board, and shall continue in effect until
terminated by the Board.
14
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the inclusion in the Prospectus of this Amendment
No. 2 to the Registration Statement (No. 333-84189) on Form SB-2 of our report
dated October 8, 1999 on the consolidated financial statements of JagNotes.com
Inc. as of July 31, 1999 and for the year then ended. We also consent to the
related reference to our firm under the caption "Experts" in the Prospectus of
this Registration Statement.
/s/ J.H. COHN LLP
--------------------------
J.H. COHN LLP
Roseland, New Jersey
October 22, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the reference to Stephen R. Russo, CPA under the
captions "Experts," "Summary Financial Data" and "Selected Financial Data," and
to the use of my report dated October 12, 1998 with respect to the financial
statements of JagNotes.com Inc. and Subsidiary (formerly JagNotes, Inc.),
included in Amendment No. 2 to JagNotes.com Inc's Registration Statement on Form
SB-2 filed on or about the date hereof and the related Prospectus.
Stephen R. Russo, CPA
Manasquan, New Jersey
October 22, 1999
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<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1999
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