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As filed with the Securities and Exchange Commission on July 2, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
BONUSBOULEVARD, INC.
(Exact name of small business issuer as specified in its charter)
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<S> <C> <C>
New York 7375 13-4064085
(State or jurisdiction (Primary standard industrial (I.R.S. Employer
of incorporation) classification code number) Identification Number)
</TABLE>
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55 West 19th Street, 4th Floor, New York, New York 10011
(212) 414-2115
(Address and telephone number of principal executive offices and
principal place of business)
------------------------------
David Brous, Jr.
55 West 19th Street, 4th Floor, New York, New York 10011
(212) 414-2115
(Address and telephone number of agent for service)
-------------------------
Copy to:
Sarah Hewitt, Esq.
J. Chistopher Giancarlo, Esq.
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street, New York, New York 10036
(212) 944-1515
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
-------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=============================================================================================================================
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Maximum Aggregate Amount of
to be Registered Registered Offering Price Per Share Offering Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Non-Voting Common Stock, 7,500,000 $0.0001 $750.00 $.21
$0.0001 par value
- -----------------------------------------------------------------------------------------------------------------------------
Class A Non-Voting Common Stock, 12,500,000 $0.05 $625,000.00 $173.75
$0.0001 par value
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Total 20,000,000 $625,750.00 $173.96
=============================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457 (o) under the Securities Act of 1933, as amended.
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.
================================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 2, 1999
PROSPECTUS
20,000,000 SHARES
BONUSBOULEVARD, INC.
CLASS A REDEEMABLE CONVERTIBLE NON-VOTING COMMON STOCK
BonusBoulevard, Inc., hereby offers up to 20,000,000 shares of Class A
redeemable, convertible, non-voting common stock, par value $.0001 per share.
The securities are being distributed by us to new members of our online shopping
mall. We are offering the shares subject to various conditions set forth
elsewhere in this prospectus.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7.
We are offering up to 20,000,000 shares of our Class A redeemable,
non-voting common stock to persons that become members of our online shopping
mall. Of these shares, we will distribute up to 5,500,000 to new members,
1,000,000 as rewards to members for referrals of new members and 1,000,000
shares to the first 200,000 members to make a purchase in any amount through our
online shopping mall. We will distribute these 7,500,000 shares for deemed
consideration of $0.0001 per share, or a total of $750. We will also distribute
up to 12,500,000 shares to members for making purchases through our shopping
mall by redeeming, for shares, the discounts we grant to them for making
purchases. We will receive a maximum of up to $.05 per share, or a total of
$625,000, for shares granted upon redemption of discounts.
No Class A shares being offered through this prospectus are being listed on
any stock exchange.
-----------------
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<CAPTION>
Per Share Total
Price to the Non-Cash Proceeds to
Public BonusBoulevard
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<S> <C>
$0.0001(1) $ 750(1)
$0.0500(2) $625,000(2)
Total -- $625,750
</TABLE>
- -----------------------
(1) 7,500,000 shares will be distributed to members for a deemed consideration
of $0.0001 per share.
(2) 12,500,000 shares will be distributed to members for a deemed consideration
of $0.0500 per share.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
____________ , 1999
RED HERRING LEGEND:
The Information In This Prospectus Is Not Complete And May Be Changed. We May
Not Sell These Securities Until The Registration Statement Filed With The
Securities And Exchange Commission Is Effective. This Prospectus Is Not An Offer
To Sell These Securities And Is Not Soliciting An Offer To Buy These Securities
In Any State Where The Offer Or Sale Is Not Permitted.
<PAGE>
TABLE OF CONTENTS
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Page Page
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Prospectus Summary.................. 3 Plan of Distribution...................... 43
Risk Factors........................ 7 Shares Eligible For Future Sale............ 44
Capitalization...................... 21 Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities............................. 44
Dividend Policy..................... 22 Legal Matters.............................. 46
Dilution............................ 22 Experts.................................... 46
Plan of Operation................... 23 Index To Financial Statements............. F-1
Business............................ 26
Management.......................... 37
Certain Transactions................ 39
Principal Shareholders.............. 40
Description of Capital
Stock............................ 40
</TABLE>
We are not making an offer of these securities in any state where the offer
is not permitted. You should not assume that the information in this prospectus
or the prospectus supplement is accurate as of any date other than the date on
the front of the document.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Risk Factors," "Plan of Operation,"
"Business," and elsewhere in this prospectus constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties, and
other factors that may cause our or our industry's results, levels of activity,
performance, or achievements to be significantly different from any future
results, levels of activity, performance, or achievements expressed or implied
by such forward-looking statements. Such factors include, among others, those
listed under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "intends," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or the negative
of such terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance, or achievements. We do not assume responsibility for the
accuracy and completeness of the forward-looking statements. We do not intend to
update any of the forward-looking statements after the date of this prospectus
to conform them to actual results.
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information that we describe more fully elsewhere
in this prospectus. You should carefully read the entire prospectus, including
the risk factors and the financial statements and related notes.
BONUSBOULEVARD, INC.
BonusBoulevard, Inc., a New York corporation, is a development stage
company in the process of establishing an Internet-based shopping mall. Through
our shopping mall, web users that register as our members will be able to make
purchases from a carefully selected group of retailers. Our business is intended
to capitalize on the extraordinary growth in online retailing which is currently
taking place and projected to continue. The number of Americans, for example,
that made at least one purchase online was 16.8 million in 1998 and is expected
to increase to approximately 36 million in 1999.
We will offer our members access to particular retailers through links from
our web site to those of our affiliated retailers. We will not carry any
inventory or make any sales directly to our members. We will select retailers to
participate in our online shopping mall only if they conduct retail sales on
line and offer quality merchandise that is popular among online shoppers.
We will enter into affiliate relationships with our participating
retailers, or retail affiliates. These relationships will entitle us to receive
commissions from our retail affiliates on purchases made by our members through
our web site. If our members shop at a retailer's web site without linking to
that web site through ours, we will not be eligible for any commissions.
To attract Internet users to become members of our shopping mall and make
purchases through our affiliated retailers, we will offer members rewards, or
discounts, for each purchase made by them through our web site. These rewards
will be expressed as BBBucks. Members who shop through our web site will earn
BBBucks equal to the dollar amount of any discounts on purchases. We expect that
the amount of BBBucks earned by our members on most purchases made will be 5% of
the purchase price, excluding sales tax and handling fees. Information relating
to member purchases, including the amount of BBBucks earned, will be posted in
our members' online accounts. Each member's account information will be
accessible to that member through our web site and will be protected by security
measures that are standard in the industry.
BBBucks will be redeemable by members, at their option, in cash, gift
certificates or charitable donations. Members will also be eligible to redeem
BBBucks for up to 12,500,000 of our Class A shares, on a first come, first
served basis, as described elsewhere in this prospectus.
We will compete for customers with all forms of retailing, both online and
offline. Online, we will compete for members with direct retailers, that sell
merchandise directly from their own web sites and with aggregators, that provide
consumers access to a network of direct retailers linked electronically to the
aggregators' web sites.
BUSINESS STRATEGY
Competition for customers and retail affiliates by online retailers is
currently intense and expected to remain intense. In order to capitalize on the
growth of online retailing, we have developed a strategy with the following key
elements:
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Attract and retain retailers offering quality merchandise by:
--Offering free logos at our web site for our retail affiliates;
--Promoting each of our retail affiliates at our web site exclusively in
that retailer's main product category;
--Making discounts, or BBBucks, available to our members directly from
us, not from our retailers; and
--Extending our membership base by, among other things, distributing
stock as described in this prospectus.
Attract and retain members by:
--Developing a web site that is easy to use and understand and that
provides information quickly and easily;
--Providing BBBucks which can be redeemed for cash, gift certificates or
charitable donations;
--Maintaining current and frequently updated information at our web
site, including information about member accounts;
--Keeping confidential all information about our members;
--Sponsoring the stock distribution described in this prospectus; and
--Taking standard security measures to protect member account
information.
WEB SITE DESIGN AND DEVELOPMENT
InfoStream Solutions, LLC, is designing our web site, www.BonusBlvd.com,
and developing related software. We have agreed to compensate InfoStream with a
combination of cash and securities. InfoStream is a privately-held company with
extensive experience in the design and implementation of computer systems and
software technologies for businesses in a variety of industries.
We will be the sole owner of the web site design and all related software
developed by InfoStream.
MISCELLANEOUS
This prospectus contains product names, trade names and trademarks of other
organizations, which are the property of their respective owners.
We began pre-incorporation activities in February 1999 and were
incorporated in the State of New York on June 10, 1999. Our principal executive
offices are located at 55 West 19th Street, 4th Floor, New York, New York 10011,
and our telephone number at this address is (212) 414-2115. We maintain a web
site at www.BonusBlvd.com. The web site is currently under development and
should be operational before the shares in this offering are distributed.
Nothing contained on such web site should be construed as a part of this
prospectus.
This prospectus includes statistical data regarding the Internet industry.
Such data is taken or derived from information published by sources including
Jupiter Communications, LLC, Ziff-Davis Inc., Forrester Research, Inc. and Nua
Ltd. Although we believe that the data is generally indicative of the matters
reflected therein, the data may be imprecise and investors are cautioned not to
place undue reliance on it.
4
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THE OFFERING
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<S> <C>
Shares Offered to the Public: 20,000,000 shares of Class A redeemable, convertible,
non-voting common stock, par value $.0001 per share. We
are distributing up to 5,500,000 Class A shares to the
first 5,500,000 members of our online shopping program
and up to another 1,000,000 Class A shares to members
for referring new members to our web site at the rate
of one share per new member referred. We will
distribute up to another 1,000,000 Class A shares in
lots of five shares to each of the first 200,000
members who make a purchase, in any amount, through our
online shopping mall. We will issue up to another
12,500,000 Class A shares to members upon their
redemption of BBBucks as described elsewhere in this
prospectus.
Class A Shares Outstanding Prior to Offering: None
Class A Shares Outstanding After Offering: 20,000,000 shares
Expenses of the Offering: $90,000 (estimated)
Net Proceeds to Company: $0.00 cash proceeds. With respect to 12,500,000 of the
Class A Shares in this offering, we will receive the
equivalent of up to $.05 per share issued upon
redemption by members of BBBucks accrued as discounts
in their accounts, as we would otherwise be obligated
to pay out such BBBucks to members in cash, gift
certificates or charitable donations in the same
amount. This will yield non-cash proceeds of
$625,000. We will also receive deemed consideration of
$0.0001 per share for each of the remaining 7,500,000
shares to be distributed in this offering, yielding
additional non-cash proceeds of $750.
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5
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SUMMARY FINANCIAL INFORMATION
You should read the summary financial information presented below as of
June 29, 1999, and for the period from inception on February 1, 1999 to June 29,
1999. We derived the summary financial information from our audited financial
statements appearing elsewhere in this prospectus. You should read this summary
financial information in conjunction with our plan of operation, financial
statements and related notes to the financial statements, each appearing
elsewhere in this prospectus.
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<CAPTION>
PERIOD FROM
FEBRUARY 1, 1999 (INCEPTION)
THROUGH JUNE 29, 1999
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<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues $ --
Gross profit..................................... --
Selling, general & administrative expenses....... 9,695
Net loss......................................... (9,695)
Weighted average shares outstanding.............. 80,000,000
<CAPTION>
As of June 29, 1999
Actual As Adjusted
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<S> <C> <C>
SELECTED BALANCE SHEET DATA:
Cash ............................................. $ 100 $ 100
Working capital (deficiency)...................... (43,908) (43,908)
Total assets...................................... 72,044 22,044
Total debt........................................ 45,000 85,000
Total shareholders' equity........................ 27,044 562,044
</TABLE>
The adjusted balance sheet data reflects the issuance of 20,000,000 Class A
shares in this offering, after deducting estimated offering expenses.
6
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and other
information in this prospectus before deciding to become a holder of our Class A
common stock. If any of the following risks actually occurs, our business and
financial results could be negatively affected to a significant extent.
RISKS RELATED TO OUR OPERATIONS
WE HAVE NO OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US.
We began our business in February 1999, and we have not generated any
revenue to date. We have been devoting our efforts to various organizational
activities. Our organizational activities include entering into an arrangement
for the development of our proprietary web site design and preliminary
negotiations with prospective retail affiliates. As a result, we have no
operating history that you can use to evaluate us. Our business must be
considered in light of the risks, expenses, and problems frequently encountered
by companies in the early stages of development, particularly companies, like
ours, in new and rapidly evolving markets such as Internet commerce.
WE HAVE AN ACCUMULATED DEFICIT AND NO REVENUES AND EXPECT FUTURE LOSSES.
We have an accumulated deficit of $9,695.00, and we expect negative cash
flow and operating losses to continue for the foreseeable future. We expect our
operating costs to increase, but because we have no operating history, we have
no meaningful financial historical data to use as a basis for determining future
operating expenses. The principal costs of expanding our business will include:
--substantial direct and indirect marketing, advertising and promotional
costs;
--costs incurred in connection with hiring staff to meet our anticipated
growth; and
--costs incurred to accommodate changes in technology.
As a result, we expect that it will take some time before we begin generating
net income.
If net operating revenue does not grow at the rate we anticipate, and we
are unable to adjust our operating expenses accordingly, then our business and
financial results could be substantially and adversely affected. We cannot
assure you that we will ever achieve or sustain profitability.
Our anticipated operating expenses are based in part on our expectations as
to future revenue from sales commissions to be paid by our affiliated retailers
on sales generated by our online shopping program, as well as the anticipated
growth in our membership. We cannot assure you that we have accurately predicted
our net revenue, particularly in light of the intense competition for consumers
among online shopping networks and direct retailers.
WE CANNOT PREDICT OUR SUCCESS BECAUSE OUR BUSINESS MODEL IS UNPROVEN.
Our success depends on continued growth in the use of the Internet for the
purchase of merchandise and services. Although Internet commerce has grown
substantially and is projected to increase, we cannot be certain that this
growth will continue to increase at the present rate, or at all. Critical issues
concerning the increased use of the Internet, including security, reliability,
cost, ease of access and quality of service, remain unresolved and are likely to
affect further development of electronic commerce generally, as well as the
market for our online shopping mall.
7
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The success of our business will ultimately depend on acceptance of our
online shopping mall by retail affiliates and Internet users. Our success will
also depend on our ability to compete with other online retailers, including
aggregators and direct retailers, on the basis of quality and range of
merchandise and membership rewards. As we have not yet begun operations and have
no members or retail affiliates, we cannot reliably predict the future success
of our business.
OUR BUSINESS AND BUSINESS PROSPECTS WILL SUFFER SIGNIFICANTLY IF INFOSTREAM DOES
NOT COMPLETE OUR WEB SITE DESIGN ADEQUATELY AND ON TIME.
InfoStream is currently developing our web site design, which includes the
design of all software required to operate our online shopping mall during the
first six months of operations, as described in this prospectus. Under our
agreement with InfoStream, InfoStream is required to complete our web site
design in fully operational form no later than September 30, 1999. The timely
completion and proper performance of our web site is critical to our business
and our ability to attract members and retailers alike. Any failure by
InfoStream to complete our web site design on time with all features operating
properly will substantially hurt our business and business prospects. Even if
InfoStream completes our web site design on time, any subsequent system failure
that interrupts its functioning or the functioning of any of its features, or
decreases response time will impair our ability to attract and retain members
and retailers, and disrupt purchasing through our online shopping mall and
consequently reduce our revenues.
WE WILL RELY HEAVILY ON OUR PROPRIETARY WEB SITE DESIGN.
We will use the web site design and related software developed for us by
InfoStream in substantially all aspects of our online shopping mall, including
all connections to members, retail affiliates and tracking services. Reliability
and efficiency of our system remains untested because our system is under
development. Our agreement with InfoStream requires InfoStream to make
adjustments and modifications to our web site for a period of six months after
the web site begins to operate. If, during this six-month period or later on,
InfoStream or another third party is unable to modify our web site as may be
necessary to accommodate increased traffic or increases in the volume of
information processed through our systems from members, retailers and tracking
services, we could experience system disruptions, slow response times, impaired
quality and speed of downloading information and delays in updating member
accounts. Any of these events could have a substantial negative effect on our
business and financial results.
OUR ABILITY TO ATTRACT AND RETAIN MEMBERS DEPENDS ON FACTORS WE CANNOT CONTROL.
Our success will depend, to a great extent, on our ability to attract and
retain members. Our ability to attract and retain members will depend, in turn,
on a number of factors, many of which are beyond our control. These factors
include:
--our ability to attract enough quality retail affiliates;
--competition from direct retailers and other aggregators and web sites
offering similar merchandise, lower prices, free stock and/or additional
rewards;
--the date on which we commence operations, particularly if our web site
design is not fully operational on the expected delivery date;
--the extent to which our web site design, when developed, is easy for
members and prospective members to use and understand;
8
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--the success of our promotional activities, including the distribution of
stock in this offering;
--our ability to fund advertising and other promotional activities;
--the quality of customer support and services provided to members by our
retail affiliates;
--whether our discount percentage on all purchases remains competitive with
the discounts offered by other online retailers and aggregators; and
--the date by which we commence operations, since prospective members may
make purchases from our competitors during any delay in the start of our
operations.
Because of these and other factors, we cannot accurately predict our
membership growth rate or our future revenues.
RELIANCE ON AFFILIATIONS WITH RETAILERS.
We will be dependent on our affiliated retailers for most of our revenue
and for all product and service fulfillment. We will not sell any products or
services directly to members, as we have no fulfillment operations or facilities
of our own. Instead, we will provide an electronic link from our members to our
retail affiliates. Only our retail affiliates will sell products or services
through our online shopping mall.
The success of our business, consequently, will be dependent upon the
quality of our retail affiliates and their merchandise. We will need to
establish and maintain affiliations with a broad array of quality retailers in
order to offer our members the most popular products and services. We cannot
assure you that we will successfully establish a sufficient number of these
affiliations or that we will be able to maintain affiliations with retailers on
terms satisfactory to us or our members. Although we plan to monitor the types
of products and services our members and prospective members seek to purchase
online and to offer links to retailers selling these products and services
online, we cannot assure you that our decisions in this regard will be accurate.
In addition, the unanticipated termination of our affiliation with any retailer
could have a substantial, negative effect on our results of operations, even if
we establish a relationship with another retailer offering substantially
equivalent products. To the extent that our retail affiliates do not have
inventories or are otherwise unable to fill members' orders, our business and
financial results may be substantially adversely affected.
Our ability to build a substantial membership base on a timely basis will
depend upon the ability of our affiliated retailers to supply the requested
products and services in the ordinary course of business. The failure of our
retail affiliates to meet their commitments to our members would have a
substantial, adverse effect on our business and financial results.
OUR ABILITY TO ATTRACT AND RETAIN RETAIL AFFILIATES OFFERING QUALITY MERCHANDISE
DEPENDS ON FACTORS WE CANNOT CONTROL.
Our success depends, to a great extent, on our ability to attract and
retain retailers offering the types of merchandise and services in demand by
online customers. Our ability to attract and retain such retailers will depend
on a number of factors, many of which are beyond our control. These factors
include:
--our ability to attract and retain a significant number of members;
--the amount our members spend;
--competition for retailers from other online aggregators and others; and
9
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--the ease with which our web site design, when developed, interfaces with
the web sites and software systems of participating retailers, tracking
services and others.
We cannot assure you that we will be able to establish or maintain
relationships with quality retail affiliates. Even if we are able to establish
and maintain these relationships, we cannot assure you that we will be able to
do so on terms favorable to us or in the numbers we need to become profitable.
In addition, our failure to affiliate with a large number of quality online
retailers shortly after we begin operations may result in our members and
prospective members shopping online with our competitors. Our failure to
affiliate with a sufficient number of quality retailers in a timely manner could
have a substantial negative effect on our business and financial results.
OUR QUARTERLY OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY AND MAY BE
BELOW EXPECTATIONS OF INVESTORS AND ANALYSTS.
Our revenues and expenses, and in particular our quarterly revenues,
expenses and operating results, may fluctuate significantly due to a variety of
factors, many of which are outside of our control. These factors include:
--the seasonal nature of consumer spending;
--the pace at which Internet users become members of our shopping program;
--the rate at which we enter into affiliate relationships with online
retailers;
--changes in commission rates paid to us by our retail affiliates;
--price competition in electronic commerce;
--capital expenditures and costs related to expanding and improving our web
site design;
--our ability to protect our web site from power loss and software-related
system failures;
--changes in our operating expenses including, in particular, costs of
personnel, marketing, advertising and promotion;
--the introduction of rewards by us or our competitors; and
--economic conditions specific to the Internet and retail industries, as well
as general economic and market conditions.
Because of the potential for significant fluctuations in our quarterly
results, you should not rely on quarter-to-quarter comparisons of our future
results of operations as an indication of subsequent performance.
INVESTORS MAY SUFFER SUBSTANTIAL DILUTION FROM OTHER TRANSACTIONS.
In the future, we may issue options, warrants, or additional stock in
connection with our efforts to expand our membership or our group of retail
affiliates. Shareholders could face additional dilution from our future issuance
of securities.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH AS PLANNED.
To manage our anticipated growth, we must:
--implement and continually improve our operational, financial and management
information systems;
--hire, train and retain additional qualified personnel;
--expand and upgrade core technologies; and
10
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--effectively manage relationships with our members, retail affiliates, their
tracking services and other third parties.
Our expansion could place a significant strain on our services and support
operations, sales and administrative personnel, and other resources.
Our web site design, when completed by InfoStream, may not be adequate to
meet our growth plans, even though our contract with InfoStream requires
InfoStream to provide us with adequate controls and procedures for our
operations. This potential inadequacy could result in our inability to provide
our services on a timely basis and a consequent loss of members and revenues. We
cannot assure you that our systems, procedures or controls will be adequate to
support our operations or services. Nor can we assure you that our management
will be capable of fully exploiting the market for our services. Our failure to
manage growth effectively could have a substantial, negative effect on our
business and financial results.
IF WE DO NOT CONTINUALLY UPGRADE OUR TECHNOLOGY, WE MAY NOT BE ABLE TO COMPETE
IN OUR INDUSTRY.
We will need to expand and upgrade our web site on a continuing basis, as
our membership and affiliate program expand. We are totally dependent on the
services of third parties, such as InfoStream, to upgrade our technology and
ensure a high level of service and reliability. We cannot assure you that
services of these parties will be available, or adequate for our purposes, when
we need them. Our inability to secure adequate services from these third
parties, when needed, could have a substantial, negative effect on our business
and financial results.
OUR NETWORK MAY BE VULNERABLE TO SECURITY RISKS.
Although our agreement with InfoStream requires InfoStream to include
standard security measures in our web site design, our online system may
nevertheless be vulnerable to unauthorized access, computer viruses and other
disruptions. The web sites of our retail affiliates, their tracking service or
our members may be similarly vulnerable. Internet service providers have in the
past experienced and may experience in the future interruptions in service as a
result of the accidental or intentional actions of Internet users. We have no
control over the security measures that Internet service providers or our retail
affiliates, members, or web site visitors adopt, although we regard the security
measures adopted by online retailers as one factor in deciding whether to
affiliate with them. Unauthorized access could also potentially jeopardize the
security of confidential information, such as member account information stored
in computer systems maintained by us, our retail affiliates or their tracking
services. These events may result in liability to us or harm to our members or
retail affiliates.
Eliminating computer viruses and alleviating other security problems may
require interruptions, delays or cessation of service to our members, which
could have a substantial adverse effect on our business and financial results.
In addition, the threat of these and other security risks may deter prospective
visitors from becoming members or deter members from shopping through our online
mall. These deterrents could have a substantial adverse effect on our business
and financial results.
Our security measures will be designed to prevent any physical or
electronic break-ins and attacks on our facilities and system and to minimize
the effect of any such event if it were to occur. Any security breach, however,
could result in interruptions, delays or cessations in service which could have
a substantial adverse effect on our business and financial results. Although we
will have business interruption insurance covering interruptions of our
operations resulting from physical damage to our
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property, we will not have data loss insurance to cover losses from, and
recovery and data reconstruction costs related to, certain security breaches on
our web site, if no interruption has occurred. In addition, in the event of an
interruption of our operations, our business interruption insurance may not be
sufficient to cover our expenses resulting from any such occurrence. This could
also damage our reputation and the value of the BonusBoulevard brand name.
OUR SERVICES ARE SUSCEPTIBLE TO DISRUPTIONS DUE TO PHYSICAL CAUSES.
Our systems and operations are also vulnerable to damage or interruption
from fire, flood, power loss, telecommunications failures and similar events.
Any such interruptions or delays at our facilities would have a substantial
adverse effect on our business and financial results. We have no formal disaster
recovery plan, and any business interruption insurance we may obtain may not
adequately compensate us for losses that may occur. The occurrence of any or all
of these events could also damage our reputation and brand name, thus impairing
our business substantially.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS FOR PRODUCTS SOLD BY AFFILIATED
RETAILERS THROUGH OUR WEB SITE.
Members may sue us if any product sold to them by our affiliated retailers
through our web site fails to perform properly or injures the user. Liability
claims could require us to spend significant time and money in litigation and/or
pay significant damages. As a result, any of these claims, whether or not valid
or successfully prosecuted, could have a substantial, adverse effect on our
business and financial results.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE AND IT MAY NOT BE AVAILABLE ON
ACCEPTABLE TERMS.
We currently have no revenue and do not expect to generate any revenues
until some time after we commence operations following the development of our
web site. We anticipate that commissions from our affiliated retailers on
purchases by our members, together with funds contributed by our Chief Executive
Officer and the Chief Operating Officer and the proceeds from the financing of
our accounts receivable will satisfy our working capital requirements for at
least the next 12 months. After that, we may need to raise additional funds in
order to finance our operations while we develop our membership base and
relationships with retailers. We cannot assure you that financing will be
available on terms favorable to us, or at all. If adequate funds are not
available on acceptable terms, we may be forced to curtail or cease our
operations. Even if we are able to continue our operations, the failure to
obtain financing could have a substantial adverse effect on our business and
financial results, and we may need to delay full deployment of our online
shopping program.
WE FACE RISKS FROM POTENTIAL YEAR 2000 PROBLEMS.
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. As a result, software
that records only the last two digits of the calendar year may not be able to
distinguish whether "00" means 1900 or 2000. This may result in software
failures or errors. We believe that our products and internal systems will be
year 2000 compliant.
Our systems will be built upon multiple layers of third party software and
hardware components. A system failure that originates in one or more of these
layers may affect the performance and accuracy of computations carried out by
our systems as a whole. No assurances have been given to us by our affiliated
retailers or other parties regarding year 2000 compliance.
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<PAGE>
Any failure of our material systems or those of our retail affiliates or
the Internet to be year 2000 compliant would have material adverse effect on our
business and financial results. Such consequences would include difficulties in
operating our web site effectively, communicating with our retail affiliates or
conducting other fundamental aspects of our business. We are currently assessing
the year 2000 readiness of the software, computer technology and other services
that we may use. At this time, we have not yet developed a contingency plan to
address situations that may result if we or our retail partners or their
tracking services are unable to achieve year 2000 compliance. The cost of
developing and implementing such a plan, if necessary, could be material. We
also depend on year 2000 compliance of the computer systems and financial
services used by consumers. A significant disruption in the ability of consumers
to reliably access the Internet or portions of it or to use their credit cards
would adversely affect demand for our services and, consequently, our business
and financial results.
WE MAY BECOME SUBJECT TO RISKS OF INTERNATIONAL OPERATIONS.
Certain prospective retail affiliates currently have non-U.S. customers. If
these retailers enter into affiliate relationships with us, their customers may
purchase goods and services through our online shopping mall. In addition, we
may, in the future, consider opportunities for international expansion by
entering affiliate relationships with online retailers based overseas.
International operations would subject us to the risks of conducting business
internationally, including:
--Foreign currency fluctuations, which could result in reduced revenues or
increased operating expenses;
--Inability to locate qualified foreign retail affiliates;
--The burdens of complying with a variety of foreign laws and trade
standards;
--Tariffs and trade barriers;
--Difficulty in accounts receivable collection;
--Potentially longer payment cycles;
--Foreign taxes;
--Unexpected changes in regulatory requirements including the regulation of
Internet access; and
--Uncertainty regarding liability for information retrieved and replicated in
foreign countries.
If we expand internationally, we will also be subject to general geopolitical
risks, such as changes in diplomatic and trade relationships. We cannot assure
you that the risks associated with international operations, if undertaken, will
not have a significant, adverse effect on our business and financial results.
RISKS RELATED TO THE MARKET FOR ELECTRONIC COMMERCE
GENERALLY AND ONLINE RETAILING IN PARTICULAR
THE VIABILITY OF OUR BUSINESS DEPENDS ON RELIABILITY AND CONTINUED DEVELOPMENT
OF THE INTERNET.
Like all other online businesses, our success depends on the reliability of
the Internet. Significant growth in the number of Internet users, its content,
and the frequency of use is expected to continue. We cannot assure you that the
Internet's infrastructure, in its current form, will be able to support the
continued growth of the Internet or that this continued growth will not have a
substantial
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adverse effect on the performance or reliability of the Internet as a medium for
commerce. We cannot assure you that the infrastructure required to maintain the
viability of the Internet as a medium for commerce will be developed or
implemented as Internet usage grows. The viability of the Internet could also
decline as a result of delays in the adoption of standards and protocols to
handle increased activity. Any resulting damage to the viability of the Internet
as a medium for commerce will have a substantial, adverse effect on our business
and financial results.
OUR SUCCESS IS DEPENDENT ON THE CONTINUED GROWTH OF ONLINE COMMERCE.
Our future success is substantially dependent upon continued growth in the
use of the Internet to purchase merchandise and services. Use of the Internet as
a means of commerce is at an early stage of development, and demand and market
acceptance for retail marketing over the Internet is uncertain. We will be
dependent on revenue from electronic commerce as our sole source of revenue. We
cannot predict the extent to which consumers will be willing to shift their
purchasing habits from traditional retailers to online retailers. The Internet
may not prove to be a viable commercial marketplace for a number of reasons,
including lack of acceptable security technologies, inconsistent quality of
service, and the lack of cost-effective, high-speed service. If Internet use
does not continue to grow or grows more slowly than expected, our business and
financial results may be adversely affected.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATIONS.
We are not currently subject to direct regulation by any government agency,
other than regulations applicable to businesses generally, and there are few
laws or regulations directly applicable to commerce on the Internet. Due to the
increasing popularity and use of the Internet, a number of legislative and
regulatory proposals are under consideration by federal, state, and local
governmental organizations. It is possible that a number of laws or regulations
will be adopted relating to such issues as user privacy, taxation, infringement,
pricing, quality of products and services and intellectual property ownership on
the Internet. The adoption of any such laws or regulations may decrease the
growth in the use of the Internet, and in turn decrease the demand for
electronic commerce, increase our costs of doing business, or otherwise have a
material adverse effect on our business and financial results. Any new
legislation or regulation, or new application or interpretation of existing laws
could have a material adverse effect on our business and financial results.
A PORTION OF OUR REVENUE MAY STEM FROM THE SALE OF USER INFORMATION.
We may in the future use for our own purposes or sell to third parties
compiled information including in many instances personal information obtained
from our members. Should a large number of our members instruct us that we
cannot transfer or sell their information to third parties, it may have a
material adverse effect on our revenue. Further, personal information of users
is restricted in many domestic and foreign jurisdictions, including the European
Union, with which the United States government is currently negotiating a data
privacy accord to permit information sharing across borders. If any such accord
results in substantial limitations on our right to sell or otherwise use any
such information, it may have a substantial adverse effect on our business.
Should we fail to abide by our own privacy policy, we could be subject to
lawsuits and liability from our members.
WE MAY BE REQUIRED TO COLLECT SALES TAX AND INCUR RELATED COSTS.
One or more states may seek to require out-of-state companies that engage
in online commerce, to collect and remit sales tax. If we were required by one
or more states to collect taxes on the sale or services through our online
shopping mall, we would incur related costs of modifying our software design
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<PAGE>
and additional personnel required to track and remit such taxes. Consequently
our business and financial results would be substantially and adversely
affected.
WE MAY BE HELD LIABLE FOR ONLINE CONTENT PROVIDED BY THIRD PARTIES.
Although InfoStream will represent to us that our web site design will not
infringe upon the proprietary rights of others, no assurance can be given that
such infringement claims will not be asserted against us. Such claims and any
resulting litigation may subject BonusBoulevard to significant liability for
damages, and result in invalidation of our proprietary rights. Claims and
litigation would also be time consuming and expensive to defend, and result in
the diversion of management time and attention, any of which might have a
significant adverse effect on our business and financial results.
In part, our business involves supplying information to Internet users,
members and retail affiliates via the Internet. Accordingly, we face the same
types of risks that apply to all businesses that publish or distribute
information, such as potential liability for defamation, libel, invasion of
privacy, copyright or trademark infringement and similar claims. A number of
third parties have claimed that they hold patents covering various forms of
online transactions or online technologies. In addition, our liability insurance
may not cover potential patent or copyright infringement claims and may not
adequately indemnify us for any liability that may be imposed.
THE LOSS OF THE SERVICES OF OUR CHIEF EXECUTIVE OFFICER OR OUR CHIEF OPERATING
OFFICER COULD IMPAIR OUR CHANCES FOR SUCCESS.
Our performance will be substantially dependent on the performance of David
Brous, Jr., Chief Executive Officer, and Jonathan F. Morgenstern, President and
Chief Operating Officer, and on the marketing personnel we intend to hire. The
loss of the services of either of our executive officers could have a
substantial adverse effect on our business and financial results.
WE DEPEND ON KEY PERSONNEL AND WILL REQUIRE ADDITIONAL SKILLED EMPLOYEES TO
EXECUTE OUR GROWTH PLANS.
Our potential for success depends significantly on our executive officers,
our Chief Executive Officer, David Brous, Jr., and Chief Operating Officer,
Jonathan Morgenstern. We do not carry key-man life insurance on either
executive, and do not have employment agreements that would assure us of their
services for a stated period of time. Given the early stage of our development
and our plans for rapid expansion, the loss of the services of either executive
or the services of any other key employees we may hire in the future would have
a substantial, adverse effect on our business. We believe that our future
success will depend in large part on our ability to attract and retain highly
skilled technical, marketing and management personnel. If we are unable to hire
the necessary personnel, the development of our business would likely be delayed
or prevented. Competition for these highly-skilled employees is intense. As a
result, we cannot assure you that we will be successful in retaining our key
personnel or in attracting and retaining the personnel we require for expansion.
WE FACE SIGNIFICANT COMPETITION IN THE ONLINE RETAILING INDUSTRY FOR VISITORS,
MEMBERS AND RETAILER AFFILIATES.
The market for the retail goods and services provided via the Internet is
new and rapidly evolving. Competition for online consumers is intense and
expected to increase significantly. We believe that the principal competitive
factors for companies seeking to develop Internet shopping malls are:
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<PAGE>
--number of members;
--functionality;
--quality of merchandise and retailers;
--discounts and rewards;
--brand recognition;
--member loyalty;
--broad demographic focus; and
--open access for visitors.
WE FACE COMPETITION FROM MORE ESTABLISHED COMPETITORS.
We could also face competition from all offline and online retailers,
including direct retailers, aggregators, Web directories, search engines,
content sites, commercial online service providers, sites maintained by Internet
service providers, traditional media companies and other entities that engage in
electronic commerce by developing their own networks of retail affiliates and
members or acquiring one of our competitors. We cannot assure you that our
competitors and potential competitors will not develop electronic commerce
networks that are equal or superior to ours or that will achieve greater market
acceptance.
Nearly all of our existing and potential competitors have longer operating
histories, greater experience in online retailing, greater name recognition,
larger customer bases and significantly greater financial, technical and
marketing resources than we do. Because of their greater resources, our
competitors are able to undertake more extensive marketing campaigns for their
brands and services, and make more attractive offers to potential employees,
retail affiliates, and others.
Our competitors may experience greater growth in online traffic than we do,
making their online retail programs more attractive to our retail affiliates,
some of whom might sever or decide not to renew their relationships with us. We
cannot assure you that we will be able to compete successfully against our
current or future competitors or that our business and financial results will
not suffer from competition.
WE MUST ESTABLISH AND MAINTAIN OUR BRAND NAME, BONUSBOULEVARD.
We believe that establishing and maintaining the BonusBoulevard brand name
will be critical to attracting members and retail affiliates and expanding
traffic at our web site. Brand recognition is particularly important given the
low barriers to entry into online retailing and the growing number of retail
networks, shopping malls and direct retailers. If visitors to our web site,
members and retailers do not perceive our service to be of high quality, or if
we alter or modify our brand image, introduce new services or enter into new
business ventures that are not favorably received by such parties, the value of
our brand name could be diluted, thereby decreasing the attractiveness of our
online shopping mall. We recently submitted applications to register our
servicemarks, BonusBoulevard, BonusBlvd.com and BBBucks with the United States
Patent and Trademark Office. We cannot assure you, however, that these service
marks will be registered to us.
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WE ARE HEAVILY DEPENDENT ON OUR PROPRIETARY TECHNOLOGY.
We regard the technology being developed by InfoStream as proprietary to
BonusBoulevard, and we will attempt to protect it by relying on trademark,
service mark and trade secret laws and other methods. We also intend to enter
into confidentiality agreements with our employees and consultants. Despite
these precautions, third parties may be able to copy or otherwise use our
proprietary information without authorization or develop similar technology
independently. We cannot assure you that the steps we take have prevented or
will prevent misappropriation or infringement of our proprietary information.
The web site design being developed for us may incorporate certain software
licensed by us from third parties. As our business matures and we enhance our
technology, we may require licenses for additional technology. We cannot assure
you that technology licenses from third parties will be available to
BonusBoulevard on commercially reasonable terms or at all. Our inability to
obtain any of these technology licenses could result in delays or reductions in
the introduction of new services or adversely affect the performance of our
existing program until equivalent technology is identified, licensed and
integrated.
RISKS RELATED TO THE OFFERING
WE WILL NOT RECEIVE ANY CASH PROCEEDS FROM THE DISTRIBUTION OF OUR CLASS A
SHARES.
We will receive no cash proceeds from the distribution of our Class A
shares pursuant to this prospectus. Of the total 20,000,000 Class A shares to be
distributed by us, 7,500,000 shares will be issued to new members for becoming
members, referring additional members or making initial purchases, in any
amount, through our online shopping mall. Although we will receive no cash
consideration for these shares, we will treat the distribution of these shares
as generating consideration of $0.0001 per share, or an aggregate of $750.00.
The remaining, 12,500,000 Class A shares will be granted to our members upon
their redemption of discounts earned on purchases made through our shopping
program. Class A Shares issued upon redemption of discounts will be deemed to be
issued at a price of $.05 per share payable solely through the redemption of
accrued discounts. As a result, the distribution of these Class A shares will
generate a reduction in our obligation to pay discounts to our members in an
aggregate amount of $625,000.00.
Even in the absence of cash proceeds of this offering, we currently
anticipate that we have sufficient funds to meet our working capital needs for
the next 12 months. After that, we may need to raise additional funds through a
private or public offering of our securities in order to fund our operations
while we build our membership. We cannot assure you that financing will be
available in amounts or on terms acceptable to us, or at all.
OUR REDEMPTION OF YOUR CLASS A SHARES MAY ADVERSELY AFFECT YOU.
BonusBoulevard is entitled to buy back the Class A shares if a liquidity
event occurs at any time during the three-year period following the effective
date of the registration statement of which this prospectus is a part.
Liquidity events are:
--a sale of all or substantially all of our assets;
--our merger into another entity other than a merger undertaken for the
purposes of changing the state of our incorporation;
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--the listing of any class of our common stock on a stock exchange; or
--our obtaining outside funding, whether privately or through a public
offering of securities, in the minimum amount of $500,000.
Even though we would be required to redeem the Class A shares for a redemption
price based on the market value of our company at the time of the liquidity
event, upon redemption of your shares, you will lose your right to convert your
shares into shares of our Class B common stock, which is not redeemable and has
voting rights, and your right to participate in any increase in the market value
of BonusBoulevard.
YOUR ABILITY TO SELL OR TRANSFER YOUR CLASS A SHARES IS SUBJECT TO SUBSTANTIAL
LIMITATIONS.
We have no current plans to list the Class A shares for trading on any
exchange, and there is a three-year prohibition on your right to sell or
otherwise transfer them, with certain limited exceptions, such as the right to
transfer the shares upon death of the holder. The three-year restriction on
transfer, which is referred to in this prospectus as a lock-up, begins at the
time of the effectiveness of the registration statement of which this prospectus
is a part.
WE WILL NOT LIST OUR NON-VOTING COMMON STOCK.
We have no current plans to list the Class A shares or any other
BonusBoulevard securities on any securities exchange, and our securities, do not
now, and may not, for some period of time, qualify for listing on any such
exchange. As a result, it will be difficult for you to dispose of your Class A
shares, even after the lock-up period expires, if they are not listed on a
securities exchange or quoted on the Over-The-Counter Bulletin Board.
OUR SECURITIES MAY BE CONSIDERED PENNY STOCKS
Regulations issued by the SEC under the Securities Exchange Act of 1934
impose additional requirements on broker-dealers when selling penny stocks to
persons other than established customers and accredited investors (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). The regulations define penny
stocks to include any non-Nasdaq equity security with a market price (as defined
in the regulations) of less than $5 per share, subject to certain exceptions.
Prior to any transaction in a penny stock, unless exempt, a broker-dealer must
deliver a disclosure schedule about the penny stock market prepared by the SEC.
Broker-dealers must also make disclosure concerning commissions payable to both
the broker-dealer and any registered representative and current quotations for
the securities. Finally, broker-dealers are required to send monthly statements
disclosing recent price information for the penny stock held in an account and
information on the limited market in penny stocks.
Under the penny stock regulations, a broker-dealer must make a special
suitability determination as to the purchaser and must have the purchaser's
written consent to the transaction prior to sale.
The foregoing penny stock restrictions will not apply to our securities if
such securities are listed on Nasdaq and have certain price and volume
information provided on a current and continuing basis or if we meet certain
minimum net tangible assets or average revenue criteria. We cannot assure you
that our securities will qualify for exemption from these restrictions. In any
event, even if our
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securities were exempt from such restrictions, we would remain subject to
Section 15(b)(6) of the Securities and Exchange Act of 1934. Under this section,
the SEC has authority to prohibit any person engaged in unlawful conduct while
participating in a distribution of a penny stock from associating with a
broker-dealer or participating in a distribution of a penny stock, if such
restriction is deemed by the SEC to be in the public interest.
If, upon expiration or earlier termination of the three-year lock-up of our
Class A shares, they qualify as a penny stock, the penny stock regulations may
adversely affect the ability of broker-dealers to sell these shares, and the
market for our Class A shares, if any, could be substantially and adversely
affected.
THE FUTURE SALE OF SHARES MAY HURT OUR MARKET PRICE.
If Class A shares are not redeemed by us and the lock-up period expires, a
market for these shares may develop. At such time, the market price of Class A
shares could decline if our executive officers, who hold all of the currently
outstanding Class B shares, sell a substantial number of such shares or the
perception develops that these sales could occur. Sales of Class B shares by our
executive officers could also make it more difficult for us to sell equity
securities in the future at a time and at a price that we deem appropriate.
RECIPIENTS OF CLASS A SHARES HAVE NO EFFECTIVE VOICE IN MANAGEMENT BECAUSE THEIR
SECURITIES HAVE NO VOTING RIGHTS AND MANAGEMENT HAS SUBSTANTIAL CONTROL.
Our two executive officers together own beneficially all of our issued and
outstanding Common Stock having voting rights. As a result, these shareholders
control BonusBoulevard, giving them the ability, among other things, to elect
all of our directors and approve significant corporate transactions.
CONCENTRATION OF OWNERSHIP OF OUR VOTING STOCK AND CERTAIN PROVISIONS OF NEW
YORK LAW ACT AS ANTI-TAKEOVER MEASURES WHICH MAY NOT BE BENEFICIAL TO YOU.
In addition to the concentration of voting stock ownership in our executive
officers, New York law could make it difficult for a third party to acquire us,
even if doing so might be beneficial to you or our other shareholders. The
ownership of all voting shares by our two executive officers may also have the
effect of delaying or preventing a change in control, impeding a merger,
consolidation, takeover or other business combination involving us or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, even if any of these transactions would
benefit you as holders of Class A shares.
OUR TEN LARGEST SHAREHOLDERS ARE LIABLE FOR UNPAID WAGES AND SIMILAR OBLIGATIONS
OF BONUSBOULEVARD.
Under Section 630 of the Business Corporation Law of New York, each of the
ten largest shareholders of a New York corporation, such as BonusBoulevard, is
personally liable for wages, salaries and debts owed by the corporation to
employees and servants of the corporation other than contractors; provided that
the corporation has no shares listed on a national securities exchange or
regularly quoted in an over-the-counter market by one or more members of a
national or affiliated securities association. If you receive a large enough
number of Class A shares and become one of our ten largest shareholders, you
will incur this liability. We will indemnify each of you against any losses or
expenses incurred under this statutory provision because you are a holder of our
Class A shares. If you incur liability under
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this statutory provision and we do not meet our obligation to indemnify you, you
may suffer a substantial financial loss.
YOU MAY INCUR SUBSTANTIAL DILUTION IF WE ISSUE SECURITIES IN THE FUTURE.
You will not incur dilution in net tangible book value per share in
connection with the offering. To the extent that we issue additional shares, or
issue options or warrants to purchase common stock and they are exercised in the
future, you may incur substantial dilution at that time.
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not paid any dividends on our common stock to date. We do not
intend to declare or pay dividends on our common stock, but to retain our
earnings, if any, for the operation and expansion of our business. Dividends
will be subject to the discretion of our board of directors and will be
contingent on future earnings, if any, our financial condition, capital
requirements, general business conditions and other factors that our board of
directors deems relevant.
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CAPITALIZATION
The following table sets forth: (i) the historical capitalization of
BonusBoulevard as of June 29, 1999; and (ii) as adjusted for: (a) the issuance
of 7,500,000 Class A shares for deemed consideration of $0.0001 per share and
the recognition of a charge to operations of $33,750 for promotional expenses;
and (b) the issuance of 12,500,000 Class A shares with an assigned value of $.05
per share based on the amount of cash which could have been received for the
BBBucks used to purchase such shares, net of offering costs of approximately
$56,250, which will be offset against additional paid-in-capital.
You should read this table in conjunction with our financial statements and the
related notes thereto, and the other financial information included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
As of June 29, 1999
---------------------------------------------------
Actual As Adjusted
<S> <C> <C>
Stockholders' equity:
Preferred stock, par value $0.0001 per share,
150,000,000 shares authorized; no shares issued and
outstanding actual and as adjusted..................... $ -- $ --
Class A common stock, par value $.0001 per share,
25,000,000 shares authorized; no shares issued and
outstanding actual; 20,000,000 shares issued and
outstanding as adjusted................................ -- 2,000
Class B common stock, par value $.0001 per share,
275,000,000 shares authorized; 80,000,000 shares
issued and outstanding actual and as adjusted.......... 8,000 8,000
Paid-in-capital 28,739 595,489
Accumulated deficit (9,695) (43,445)
------- --------
Total shareholders' equity 27,044 562,044
------- --------
Total capitalization $27,044 $562,044
======= ========
</TABLE>
USE OF PROCEEDS
We will not receive any cash proceeds from the offering. We will receive
the equivalent of $.05 for each share issued upon redemption by our members of
BBBucks accrued to their accounts, as we would otherwise be obligated to pay out
such BBBucks to members in cash, gift certificates or charitable donations in
the same amount. The aggregate non-cash proceeds we may receive in this fashion
is $625,000, or $.05 for each of the 12,500,000 Class A shares that may be
issued upon redemption of BBBucks. The remaining 7,500,000 Class A shares in
this offering are being distributed at a deemed consideration of $0.0001 per
share, or $750 of non-cash proceeds. The non-cash proceeds of this offering are
net of an estimated $90,000 of offering expenses attributable to the Class A
shares.
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DIVIDEND POLICY
To date, we have not declared or paid any dividends on our outstanding
Class B shares. We currently do not anticipate paying any cash dividends in the
foreseeable future on the Class B shares or the Class A shares, when issued
pursuant to this offering. Although we intend to retain our earnings to finance
our operations and future growth, our board of directors will have discretion to
declare and pay dividends in the future. Payment of dividends in the future will
depend upon our earnings, capital requirements and other factors which our board
of directors may deem relevant.
DILUTION
Our members who receive Class A shares in this offering will experience no
dilution since they will receive their shares for no cash consideration. Members
who purchase Class A shares by redeeming BBBucks will experience immediate and
substantial dilution in the net tangible book value of their Class A shares. The
difference between the initial public offering price per Class A share and the
net tangible book value per Class A share after this offering constitutes the
dilution per Class A share to the members. Net tangible book value per share is
determined by dividing the net tangible book value or total tangible assets less
total liabilities by the number of outstanding Class A shares. As of June 29,
1999, we had a net tangible book value of $27,044, or approximately $.00 per
share. If we give effect to the distribution of 7,500,000 of Class A shares for
no cash payment and 12,500,000 Class A shares redeemed for BBBucks as of June
29, 1999 at an assumed initial public offering price of $.05 per share, the pro
forma net tangible book value on that date would have been $562,044, or $.01 per
Class A share. This represents an immediate increase in the net tangible book
value of approximately $535,000 to existing shareholders and an immediate
dilution of $.04 per share to members receiving Class A shares in the offering
upon purchase of BBBucks.
The following table illustrates the per share dilution assuming the
distribution of 7,500,000 Class A shares for no monetary consideration and the
sale of 12,500,000 Class A shares purchased through redemption of BBBucks for
shares at a price of $.05 per share payable solely by a reduction of a member's
balance of accrued BBBucks.
<TABLE>
<S> <C>
Assumed initial public offering
price per share for Class A shares
purchased through the
redemption of BBBucks ............................. $ 0.05
Net tangible book value
per share as of June 29, 1999
and before this offering...........................$ 0.00
Increase in pro forma net tangible
book value per share attributable
to new investors ..................................$ 0.01
------
Pro forma net tangible book value
per Class A share after this offering.............. $ 0.01
------
Dilution per share to new investors
in this offering purchasing
Class A shares with BBBucks........................ $ 0.04
======
</TABLE>
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The following table summarizes on a pro forma basis, as of June 29, 1999,
the number shares of common stock purchased from us, the total consideration
paid, and the average price per share paid by existing shareholders and by new
investors.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
PER SHARE
NUMBER PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C> <C>
Existing shareholders....... 80,000,000 80% $ 36,739 5.6% $.00
New investors............... 20,000,000 20% 625,750 94.4% $.03
Total.................... 100,000,000 100% $662,489 100%
=========== === ======== ====
</TABLE>
PLAN OF OPERATION
The following discussion and analysis of our plan of operation should be
read in conjunction with, and is qualified in its entirety by, the more detailed
financial information contained in the summary financial information and our
financial statements and the notes thereto included elsewhere in this
prospectus. This prospectus contains forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from the
results discussed in the forward-looking statements. Factors that may cause or
contribute to such differences include those discussed under the heading "Risk
Factors" beginning at page 7 and those discussed elsewhere in this prospectus.
OVERVIEW
We are a development stage company, which is establishing an online,
incentive-based shopping mall. Consumers who become our members will be able to
access our shopping mall through our web site, www.BonusBlvd.com. Our online
shopping mall will offer our members, access to a broad range of retailers
offering quality merchandise. Members will be able to earn discounts in the form
of BBBucks on most purchases they make through our online shopping program. Our
web site is currently under development and is expected to be operational before
the offering begins.
We began pre-incorporation activities on February 1, 1999 and were
incorporated on June 10, 1999, but we have not yet begun operating our shopping
mall. Since our inception, we have been engaged primarily in planning our
operations, negotiating agreements with prospective retail affiliates and
capital raising activities. As a result, we have no operating revenue to date.
CASH REQUIREMENTS AND ADDITIONAL FUNDING
As of June 29, 1999, our principal commitments consisted of our agreements
with our web site designer, InfoStream, and our counsel. Although we have no
material commitments for capital expenditures, we anticipate a substantial
increase in our capital expenditures consistent with anticipated growth in
operations, infrastructure and personnel. Additionally, we will continue to
evaluate expanding our sales and marketing programs. Our capital requirements
will depend on many factors, including:
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the rate of market acceptance of our online shopping program;
the amount of expenditures that will be needed for marketing and promoting
our shopping program and our brand name;
the costs required to maintain and upgrade our technology; and
potential changes in economic, regulatory or competitive conditions of our
planned business.
We believe that capital already contributed and to be contributed by our
current executive officers and directors, together with any accounts receivable
financing we may secure, will be sufficient to meet our anticipated needs for
working capital, capital expenditures and business development for the next 12
months. During this period, we will try to raise capital from third parties by
selling equity securities. The sale of additional equity securities, if
accomplished, may result in additional dilution to our shareholders. We cannot
assure you, however, that financing will be available in amounts or on terms
acceptable to us, or at all.
SUMMARY OF ADDITIONAL RESEARCH AND DEVELOPMENT
We do not believe that we will have significant research and development
expenses during the next 12 months. Even though we have retained InfoStream to
develop our web site design, this development will be achieved through
modifications of available technologies. Expenditures on activities of this type
do not constitute research and development expenses.
We have agreed to compensate InfoStream in a combination of cash and
securities, some of which may be redeemed by us under circumstances described
elsewhere in this prospectus. Through June 29, 1999, we have incurred costs of
$15,000 for our web site design, including related software and system
architecture. For a period of six months from the date of delivery of our web
site design in fully operational form, InfoStream is required to maintain,
monitor and make adjustments to our web site design and handle any disruptions
in the operation of the web site, at no additional cost to us.
Until we have sufficient funds to hire our own technical personnel, which
we expect to occur following ten months from the date our web site begins to
operate, we will be required to engage the services of a third party to develop
and implement any enhancements to our web site. We anticipate that the total
cost to us of such services will be $80,000.
EXPECTED PURCHASES OF SIGNIFICANT EQUIPMENT
Our significant equipment purchases are limited to computer hardware. Our
agreement with InfoStream and the cash and non-cash compensation described above
include the purchase of a single computer. This computer is required for the
development of our web site and thereafter, for operation of our web site. We
may purchase up to three more computers, at a cost of $6,000 each, within the
next 12 months. We will also purchase personal computers, at a cost of $1,500
per machine, for each additional employee we hire after June 1999.
SIGNIFICANT CHANGES IN NUMBER OF EMPLOYEES
As of June 29, 1999, we had two employees. We may hire up to nine
additional employees by the end of our first 12 months of operations. These
additional employees, if hired, may serve in any of the following capacities:
upper management; marketing and promotion; administration; and web site
technicians.
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NO PROCEEDS FROM THE SALE OF SHARES
We will not receive net cash proceeds from the sale of our Class A shares.
Up to 7,500,000 Class A shares will be distributed to members for deemed
consideration of $.0001 per share, or a total of $750. Up to 12,500,000 Class A
shares will be distributed to members that redeem their discounts, or BBBucks,
for shares, at the equivalent of $.05 per share. Since discounts accrued will
constitute liabilities owed by us to our members, the redemption by members of
accrued discounts for Class A shares will discharge this outstanding liability
to those members. If a member chooses to purchase shares with accrued discounts,
we will not be obligated to provide a gift certificate, a charitable donation or
cash upon such redemption, and that member's accrued discounts will be reduced
accordingly.
YEAR 2000 COMPLIANCE
We are currently assessing the year 2000 readiness of the software,
computer technology and other services we may use which may not be year 2000
compliant. At this time, we have not yet developed a contingency plan to address
situations that may result if we or any of our affiliated retailers or their
tracking services is unable to achieve year 2000 compliance. The cost of
developing and implementing such a plan, if necessary, could be substantial in
relation to our limited financial resources, particularly if such a plan is
needed during the first 12 months of operations of our shopping mall. We will
also depend on the year 2000 compliance of the computer systems and financial
services used by our members. A significant disruption in the ability of members
to access the Internet or any portions of it reliably or to use their credit
cards online would have a substantial adverse effect on the use of our shopping
program, our business and our financial results.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 is
effective for all fiscal periods beginning after June 15, 1999. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether
the derivative is designated as part of a hedge transaction and, if it is the
type of hedge transaction. We anticipate that due to our limited use of
derivative instruments, the adoption of SFAS No. 133 will not have a material
impact on our financial position or results of operations.
In April 1998, the American Institute of Certified Public Accountants, in
conjunction with the Financial Accounting Standards Board, issued SOP 98-5,
"Reporting on the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5, which is
effective for fiscal years beginning after December 15, 1998, provides guidance
on the financial reporting of start-up costs and organization costs. It requires
costs of start-up activities and organization costs to be expensed as incurred.
Because we have expensed these costs historically, we do not expect the adoption
of this standard to have a significant impact on our results of operations, cash
flows or financial position.
In March, 1998, the American Institute of Certified Public Accountants, in
conjunction with the Financial Accounting Standards Board, issued SOP No. 98-1,
"Accounting for Costs of Computer Software Developed or Obtained for Internal
Use" ("SOP 98-1"). SOP 98-1, which is effective for fiscal years beginning after
December 15, 1998, requires that computer software costs that are incurred in
the preliminary project stage (as defined) be expensed as incurred. Costs
incurred subsequent to this stage, meeting certain criteria, are to be
capitalized. Since most of these costs will be capitalized, we do not expect the
adoption of this standard to have a significant impact on our results of
operations, cash flows or financial position.
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BUSINESS
We are developing an Internet-based shopping mall through which consumers
will be able to make purchases from a carefully selected group of retailers that
offer the products and services most in demand among online shoppers. We will
offer discounts on merchandise purchased through our web site from our
affiliated retailers to those who register as members of our shopping program.
Accumulated discounts, or BBBucks, will be redeemable at the option of each
member of our shopping mall for rewards of cash, gift certificates, or
charitable donations. BBBucks will also be redeemable by members for up to
12,500,000 Class A shares on a first come, first served basis, as described
elsewhere in this prospectus. Our web site and related software are being
designed to feature ease of use, privacy and security. In developing our
shopping mall, we intend to capitalize on the extraordinary growth in consumer
shopping online that is currently taking place and is projected to continue over
the next several years.
OVERVIEW OF INTERNET-BASED RETAILING
GROWTH OF ONLINE RETAILING
Our online shopping mall is being developed to take advantage of the
enormous growth currently taking place in electronic consumer commerce. This
growth parallels the growth in Internet access generally. The number of
Americans with Internet access in November 1997 was 56 million, for example, or
approximately 21% of the U.S. population. This number grew to approximately 73
million, or 26% of the population, in October 1998 and then to approximately 93
million, or roughly 34% of the population, in April 1999.
Dramatic growth in online consumer purchasing is likewise predicted for
1999. In 1998, approximately 16.8 million Americans made at least one purchase
via the Internet. This figure is expected to increase more than two-fold in
1999, to 36 million. Similarly, the number of consumers making purchases during
the October through December holiday period is estimated to increase more than
three-fold, from 7.8 million in 1998, to approximately 24 million in 1999. Total
dollars spent by consumers shopping online during the 1999 holiday season is
expected to increase substantially from the estimated $3 to $4 billion consumers
spent during the 1998 holiday season. Estimates of subsequent growth in retail
purchases online are even more dramatic. Industry sources predict that by the
year 2002, over 63 million Americans, or approximately 24%, of American
consumers at least 14 years old, will be making purchases online.
INTERNET RETAIL CHANNELS
In order to meet this growing demand, both the number of retailers and the
variety of goods and services they offer have grown substantially. The primary
types of online retailers may be referred to as direct retailers and
aggregators.
Direct retailers are companies that sell merchandise from their own web
sites directly to consumers. These retailers include companies with established
brand names, such as Amazon.com, Inc. and R.H. Macy & Co., Inc., and new
entrants, whose brand names have yet to be established. Direct retailers include
those that sell merchandise or services only on the Internet, such as CDNow,
Inc., as well as retailers that sell online and offline, such as Borders, Inc.
(which conducts online retail through an affiliate, Borders Online, Inc.) and
Staples, Inc.
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Aggregators, such as BonusBoulevard, do not sell merchandise directly to
consumers. Instead, aggregators provide consumers access to a network of direct
retailers. Aggregators offer access to their network through their own web
sites. These web sites are linked electronically to the web sites of the direct
retailers in an aggregator's network. Aggregators do not carry inventory or take
orders from their members. Instead, their members place orders with the direct
retailers participating in the network, and it is the participating retailers
that carry inventory, process purchase orders and ship goods to the aggregators'
members.
The primary types of aggregators include:
--Internet malls, which offer access to direct retailers, but may lack a
recognized brand name of their own. Internet malls include ShopNow.com and
Shops.com, which is maintained by Mall.com, Inc.;
--Portals, which are Internet companies that typically have powerful brand
names and exceptionally large numbers of online customers. Portals include
such well-known web sites as America On-Line, Yahoo! and Microsoft
Network. Because of the sheer size of each portal's user base, portals are
typically able to command multi-year tenancy fees from retailers. Tenancy
fees are fees payable by online retailers to owners of other web sites,
such as portals and Internet malls, that electronically link their web
sites to that of the retailer. These fees are payable whether or not any
sales are generated as a result of the linking of the web sites;
--Affiliate malls, such as BonusBoulevard, which are Internet malls that set
up revenue sharing arrangements with each direct retailer participating in
their online shopping malls. Some affiliate malls offer rewards to
consumers for purchases made or for completing surveys. Affiliate malls,
like Internet malls, may lack recognized brand names or offer a limited
variety of merchandise. Examples of affiliate malls are Mypoints.com and
ClickRewards; and
--Charity malls, which are affiliate malls that pass on a portion of their
commission revenues to charities.
RETAILER ADVERTISING AND MARKETING ONLINE
The market for online consumers is highly competitive. As a result, many
online retailers have relied on relatively expensive advertising and marketing
budgets to compete for customers. A substantial portion of a retailer's
advertising and marketing budget may be allotted to offline advertising through
print media and television, or to online tenancy fees paid to one or more
portals. Tenancy fees, which may cost as much as millions of dollars, are
payable by retailers over the life of the tenancy, whether or not the tenancy
actually generates revenue for the retailer. Tenancy relationships may have
certain drawbacks for retailers. The web sites of certain portals, for example,
may feature advertisements for competitors of a tenant-retailer, or portals may
offer competing products directly.
Affiliate relationships, on the other hand, involve a form of marketing
based on revenue sharing between a retailer and other web site owners known as
affiliates. When an affiliate relationship is established, the affiliate's web
site is linked electronically to the web site of a retailer. When prospective
customers visit the affiliate's web site, they may choose to be linked to, and
then may make purchases at, the retailer's web site. The retailer then pays the
affiliate a commission, which ordinarily equals a
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percentage of the amount of the purchases made. Such purchases are referred to
as sales generated by the affiliate for the retailer. Affiliate relationships
function as a form of both marketing and advertising because affiliates may
post, on their web sites, information about the retailers and their products in
a manner designed to entice visitors to hyperlink from the affiliate's web site
to those of the retailers for shopping. In contrast to tenancy fees, commissions
are payable by retailers to their affiliates only on revenues generated by the
affiliate relationship.
Because of their low cost relative to tenancy fees and other forms of
advertising, affiliate relationships have become commonplace on the Internet and
are sometimes used in conjunction with other online marketing tools. Amazon.com,
for example, is not only a direct retailer but also has approximately 230,000
affiliate relationships.
BUSINESS STRATEGY
BonusBoulevard's goal is to become a leading online shopping mall featuring
goods and services of quality retailers. We intend to achieve our goal by:
--OFFERING PRODUCTS MOST IN DEMAND. We intend to affiliate with retailers
offering the types of merchandise which are most commonly purchased online
and known as core products. Currently, core products include books,
CDs/music, clothing, computer hardware and software, videos and DVDs.
--BREADTH AND DEPTH IN PRODUCT OFFERINGS. In addition to core products, we
intend to offer as many types of products and as great a variety within
each product category as possible.
--OFFERING MERCHANDISE AND SERVICES OF LEADING RETAILERS. We intend to offer
the goods and services of a leading retailer in each category of products
most in demand by online shoppers. By leading retailers, we mean retailers
with well-respected brand names. Initially, such retailers will participate
in our online mall through affiliate relationships. Based on preliminary
discussions with many retailers, we believe that we can secure sufficient
participation by them to effect our business strategy.
--CONTINUALLY INVESTING IN WEB SITE INFRASTRUCTURE. We intend to invest in
our web site infrastructure on a continuing basis as needed for upgrades,
incorporating new features, and keeping pace with developments in Internet
technology.
--OFFERING SUBSTANTIAL REWARDS PROGRAM TO MEMBERS. We believe, that to be
successful, our online mall must offer substantial benefits to the online
consumer as compared to the benefits of buying online from other
aggregators or direct retailers. In order to achieve this, we intend to
offer the following benefits:
--REWARDS/DISCOUNTS. Under our rewards program, we will offer discounts
directly to consumers on most items available through our shopping
mall. Initially, we expect to offer a 5% discount on most purchases
made through us from affiliated retailers. The only exception will be
for retailers that pay comparatively low commission rates but sell
core products. In such instances, we may pass along to the consumer a
discount equal to the full amount of the commission we receive. We
believe that our discount percentage is competitive.
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--MEMBER ACCOUNTS & REDEMPTION OPTIONS. Under our rewards program, each
member will have a BonusBoulevard account, and discounts earned by
that member will be credited to the member's account in the form of
BBBucks. Members will have the option of redeeming their BBBucks in
cash, gift certificates or charitable donations. The first members to
attain certain spending levels will also be entitled to redeem BBBucks
for Class A shares, as described more fully elsewhere in this
prospectus.
--SIMPLICITY OF REWARDS PROGRAM. The percentage discount given to
consumers will be the same across as many product categories as
possible. Our rewards program should therefore be easy for consumers
to understand.
--ADOPTING FEATURES THAT ATTRACT AND RETAIN CUSTOMERS. In order to promote
shopping through BonusBoulevard, we intend to incorporate certain features
in our online shopping mall in addition to offering the most popular
products. In order to do so, we have included the following requirements in
the design specifications for our web site:
--EASE OF USE. The web site should be easy for consumers to use and
understand. We intend to affiliate only with those retailers whose web
sites are also easy to use.
--QUICK ACCESS TIME. Given that one of the main reasons consumers shop
online is to save time, all information on our web should be quickly
accessible.
--FREQUENT UPDATES. Our web site is to be updated frequently to provide
timely information concerning members' accounts, additional products
and services offered, newly added retailers, and special rewards.
--SECURITY AND PRIVACY. Information provided by consumers to
BonusBoulevard should have a level of security from outsiders which
meets industry standards. We will not make information provided to us
by consumers available to third parties without the consumers' prior
authorization.
--SPONSORING STOCK DISTRIBUTION. As a means of introducing a large number of
prospective customers to our online shopping mall, we intend to distribute
an aggregate of 20 million Class A shares. Of these shares, 7,500,000 will
be given to those who register as members, those members who refer other
members and as a reward for making an initial purchase through our web
site. The remaining 12,500,000 shares will be given to those who become
members of our mall and redeem discounts or BBBucks by achieving preset
spending levels and then redeeming those BBBucks for shares. In each case,
shares will be awarded on a first come, first served basis. We have adopted
this stock distribution plan program in light of the success other online
businesses have had using stock giveaways as a means of generating
substantial traffic at their web sites and enlisting members within
relatively short periods of time. All shares subject to our stock
distribution are being registered with the SEC pursuant to the Registration
Statement of which this prospectus is a part. See "Plan of Distribution."
--ADOPTING FEATURES THAT ATTRACT AND RETAIN QUALITY RETAILERS. After careful
consideration of the needs of online retailers, we plan to include the
following features in our online mall:
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--EXCLUSIVITY. We will grant each participating retailer the opportunity
to be promoted on an exclusive basis by us at our web site in the
affiliate's main product category. Retailers offering competitive
products will not be permitted to sell through BonusBoulevard or to
purchase advertising space at our web site.
--SIZE OF CUSTOMER BASE. By using the stock distribution plan set forth
in this prospectus and providing a quality online shopping experience
to consumers, we believe we will develop a substantial customer base
which will benefit participating retailers.
--DISCOUNTS OFFERED BY US, NOT RETAILERS. Retailers will not have to
offer or keep track of rebates or discounts, as all rewards will be
offered and managed by BonusBoulevard. Because we will keep track of
discounts earned and provide all rewards, retailers will not appear to
be undercutting themselves by participating in our online mall.
--COMPARATIVELY INEXPENSIVE ADVERTISING. Tenancy fees, which are charged
by portals and certain other web site owners, are payable by retailers
regardless of the amount of business generated by the tenancy. In
order to participate in our online mall, on the other hand, retailers
need only pay commissions on sales we generate for them.
The features of our business strategy described above are intended to be
implemented during the first stage of our operations. Once our customer base and
revenues are substantial, we intend to enhance our online shopping program by
taking the following steps:
--ADVERTISING ONLINE AND OFFLINE. We intend to advertise online and
through other media in order to build our brand name and further
increase our membership and revenues.
--PROVIDING ENHANCED DISCOUNTS. As our customer base and revenues grow,
we will consider offering enhanced discounts and rewards.
--FORMING STRATEGIC ALLIANCES. We intend to enter into strategic
alliances with providers of online services beneficial to our
customers.
--SPONSORING SPECIAL PROMOTIONS. We intend to sponsor special promotions
for both members and non-members.
It is unlikely that we will be able to implement these potential enhancements to
our online shopping program unless we secure substantial funds from third
parties.
MEMBERSHIP IN BONUSBOULEVARD
REGISTRATION; COMPANY WEB SITE; MEMBER ACCOUNTS
When a prospective customer visits our web site, www.BonusBlvd.com, the
customer should find a clear, user friendly display identifying the
participating retailers along with instructions for registering as one of our
members. At the time of registration, a user name and password will be
established for each member and an account will be opened in the member's name.
To be eligible to receive rewards, each
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member will be required to input his user name and password when visiting our
web site. This information will make it possible to track each member's
purchases, discounts accrued and rewards earned and claimed. After inputting his
user name and password, a member will be able to make purchases from
participating retailers, check his account, select rewards, review his detailed
account history, and view all other information available at our web site.
We intend to make available to members an array of additional information
at our web site. This information will include: Member account history;
instructions for redeeming rewards; a description of our stock distribution plan
and any other promotional programs; general information about BonusBoulevard;
descriptions of our participating retailers; and copies of our filings with the
SEC.
When a member qualifies to receive Class A shares as part of our stock
distribution plan, the number of shares for which the member qualifies will be
recorded in his account. This information will be updated each time the member
qualifies for additional shares. No person will be required to acquire any
shares of our stock as a condition to becoming a member or making purchases
through our online shopping program.
SHOPPING THROUGH BONUSBOULEVARD; DISCOUNTS; REDEMPTION
Once a consumer registers as a member of BonusBoulevard, we will keep
records of all transactions between the member and our participating retailers.
Each time a member makes a purchase through BonusBoulevard's website, the
following information will be entered in the member's account:
--Identity of purchasing member
--Date of purchase
--Dollar amount of purchase
--Retailer from whom purchased
--Order/tracking number
Member accounts will also show the dollar amount of all discounts accrued.
This dollar amount will be reflected in the member's account as BBBucks. The
discount on any given purchase will equal a percentage of the purchase price,
exclusive of taxes and shipping and handling charges. If, for example, a member
were to purchase an item for $100, and the applicable discount were 5%, then the
member's account would reflect 5 BBBucks.
A member will be entitled to redeem BBBucks after their account reaches a
minimum amount to be set by us. Each member will have the option to continue
accruing BBBucks before redeeming them for rewards. BBBucks will be redeemable
by each member, for any of the following rewards, at the member's option: Cash;
gift certificates; charitable donations to be made in the member's name; or,
under the circumstances described elsewhere in this prospectus, Class A shares.
Any member who chooses to use BBBucks to make a charitable donation will be able
to select from a list of charities participating in our rewards program. In
contrast to charitable donations made by certain charity malls, each charitable
donation made under our rewards program will constitute a charitable donation
made by the member, rather than BonusBoulevard. We will arrange for members to
receive documentation required for income tax purposes in electronic form.
Based on our research, we believe that our rewards program, including our
discount percentage, is competitive with the rewards available from other online
shopping malls. It is our intention to monitor the discounts offered by our
competitors on a continuing basis so that we can, if feasible, keep our
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discount rate at a competitive level. We intend to enhance our rewards program
as our customer base and revenues grow. See "Business Strategy."
TRACKING MEMBER INFORMATION
To ensure that all members receive the proper discounts on a timely basis
and that we receive the correct amount of commissions due to us from our
participating retailers, we will need to receive certain information as to each
purchase made by a member through BonusBoulevard. See "Business -- Membership in
BonusBoulevard -- Shopping Through Bonus Boulevard; Discounts; Redemption." In
some cases, BonusBoulevard will obtain this information directly from some of
the participating retailers. Instead of keeping track of such information
themselves, other online retailers contract with third party service providers
to track and report such information. In either case, the information may not be
available to us for as much as 36 hours after a purchase is completed, as
retailers typically collect and provide such information only once each day. A
purchase is completed when the member's credit card is charged or some other
form of payment is accepted by the retailer.
In order for us to receive all required information concerning member
purchases on a daily basis, the software developed for our web site must be able
to communicate with the web sites of our participating retailers and their
tracking services. See "Business -- Web Site and Software Development."
We do not expect to incur any costs of communicating online with retailers
or tracking services other than the development costs of the related web site
software.
WEBSITE AND SOFTWARE DEVELOPMENT
In May 1999, our executive officers entered into an agreement with
InfoStream Solutions, LLC ("InfoStream"). This agreement, which was assigned to
us in June 1999, provides for Infostream to design our web site and related
software, including system architecture. InfoStream is a privately-held company
that specializes in providing development and consulting services for computer
systems and related software. InfoStream's professional staff has substantial
experience in developing computer systems using database technologies for
businesses in a variety of industries, including telecommunications,
biotechnology, financial services and manufacturing. InfoStream was organized in
the State of New Jersey in December 1997. Its principal offices are located in
Philadelphia, Pennsylvania.
The agreement between BonusBoulevard and Infostream, as assigned to us and
amended in June 1999 (the "InfoStream Agreement"), requires InfoStream to
develop a web site that will link BonusBoulevard's website to the web sites of
our affiliated retailers, be easy for members to use, and quickly load on any
commercially available Internet browser. Under the InfoStream Agreement, "easy
to use" encompasses ease in:
--Linking to BonusBoulevard's affiliated retailers;
--Accessing information about each of our affiliated retailers;
--Accessing information summarizing our rewards program;
--Accessing member account information, including purchasing history,
redemption options and ownership of shares in BonusBoulevard; and
--Accessing information about our stock distribution plan.
The InfoStream Agreement also requires InfoStream to deliver a software
system that credits BBBucks, or discounts, to each member's account, after that
member makes a purchase from any of our affiliated retailers. For this to be
accomplished, our software design is required to have the capacity to
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incorporate detailed information provided by our affiliated retailers or their
tracking services. See "Tracking Member Information."
We will be the sole owner of the web site design and all related software
developed for us by InfoStream.
We have agreed to compensate InfoStream for the design and development of
our web site in a combination of cash and stock, some of which can be redeemed
by us. See "Principal Shareholders" and "Certain Transactions." The InfoStream
Agreement requires that the web site design and related software be completed
and operational no later than September 30, 1999.
SOURCES OF REVENUE
COMMISSIONS
During the first stage of our operations, our revenues will be derived
primarily from commissions paid by participating retailers. Commissions will be
payable to us only if a member links from our web site to that of a
participating retailer and completes a purchase while at the retailer's web
site. If a member makes a purchase after going to a participating retailer's web
site directly, without having been linked to that web site from our web site, we
will not be entitled to receive a commission.
Not all online retailers have the same commission structure. Some retailers
pay affiliates a single commission rate on all sales generated by the affiliate,
regardless of the total amount of such sales. Other online retailers pay
commissions on a sliding scale, with the rates increasing in accordance with the
dollar amount of sales generated by the affiliate relationship. CDNow, for
example, currently pays commissions ranging from 7%, for single sales generated
by an affiliate during any month, to 15%, for monthly sales generated in excess
of $17,000. With the different commission structures in mind, we estimate that
average commissions payable to BonusBoulevard by its affiliated retailers will
initially be 7.5% of the amount of member purchases, excluding sales tax and
shipping and handling charges. Our estimates are based on our review of the
commission rates currently available from online retailers, the exclusive
opportunity we will provide to each of our affiliated retailers to be promoted
by us in its main product category, and the average number and average dollar
amount of purchases that each member makes from affiliated retailers.
Our income derived from commissions will be net of the "discount" to be
credited by us to members on most purchases.
FUTURE SOURCES OF REVENUE
--Tenancy/Placement Fees. Tenancy or placement fees are fees payable by
online retailers to the owners of other web sites, such as Internet
shopping malls, that electronically link their web sites to the web
site of the retailer. Whereas commissions are payable by online
retailers only on sales generated by an affiliate, tenancy fees are
payable whether or not any sales are generated as a result of the
linking of the web sites. Tenancy fees are less common than affiliate
commissions. Only the web sites that have the greatest amount of
Internet traffic are able to command substantial tenancy fees.
BonusBoulevard will not be able to charge tenancy fees unless and
until we establish a large and loyal membership base. We cannot assure
you that we can accomplish this quickly, if at all, following
commencement of our operations.
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--Advertising Revenue. Currently, the most prevalent form of advertising
on the Internet is the use of banner ads. Banner ads take the form of
a small window dedicated to the advertiser at the web site of another
party. At the window, a message or other advertisement is displayed
for visitors to the web site. In exchange for the right to place an
advertisement at the dedicated window, the advertiser pays a fee to
the web site owner. Fees payable for banner ads are based either on
the number of impressions, that is, the number of visitors to the web
site that view the ad, or the number of visitors that click on the
banner ad, thus connecting to another web site, typically a web site
of the advertiser. We do not expect to collect revenue for banner ads
during the first stage of our operations, as we will not have a large
enough customer base. We may provide free banner ads to online
retailers that enter into affiliate relationships with us upon
commencement of our operations, as a means of rewarding retailers that
participate in our Internet shopping mall from the outset.
MARKETING
BonusBoulevard's Chief Executive Officer and our Chief Operating Officer
currently handle all of our marketing activities. Upon receipt of at least
$350,000 in venture capital or other third-party financing, we intend to hire
two additional employees who will share responsibility for marketing our online
shopping mall to prospective members and participating retailers.
During the initial phase of our operations, we will select participating
retailers based on a number of criteria. The most important of these criteria
are the value of the retailer's brand name, the quality and price of each
retailer's merchandise, the commission structure offered by each retailer to
prospective affiliates, and the quality of the retailer's web site and policies
concerning customer service, merchandise returns and privacy and security.
We intend to attract online retailers on the basis of free advertising, the
opportunity to be promoted by us exclusively in the retailer's main product
category, and the fact that we will offer and manage all discounts and rewards
to consumers. At the same time, we will market our online shopping program to
prospective members through the quality of our web site, the quality of our
rewards program, our stock distribution and special promotions.
Once we have a substantial number of members generating a significant
amount of revenues to participating retailers, we expect to retain our retail
affiliates and attract new affiliates based on the size of our membership and
the revenues our members generate. We expect to retain existing members and
attract new ones based on ease and security of use of our online services and
rewards program, special promotions, and the expanded number of products
available for purchase from quality retailers.
COMPETITION
Although relatively new and rapidly evolving, retailing through the
Internet is intensely competitive. Competition for members and purchasers is not
only intense, but expected to increase significantly in the future. At the same
time, barriers to entry are low, if not insubstantial. We will compete not only
with direct retailers, but with all types of aggregators as well. See "Business
- - Overview of Internet-Based Retailing."
We believe that the principal competitive factors for companies seeking to
create online shopping malls utilizing affiliate relationships are:
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<PAGE>
--a large membership base;
--web site functionality;
--brand recognition for the mall and its affiliated retailers;
--member loyalty; and
--open access for visitors.
We will compete for customers and members not only with other online shopping
malls, but also with portals and to some extent, direct retailers.
We may also face competition in the future from Web directories, search
engines, content sites, commercial online service providers, sites maintained by
Internet service providers, traditional media companies and other entities that
attempt to or establish online shopping malls by developing their own
communities or acquiring malls of a competitor.
In contrast to BonusBoulevard, our competitors have longer operating
histories in the Internet marketplace, greater name recognition, larger customer
bases and significantly greater financial, technical and marketing resources
than we do. Our competitors are able to undertake more extensive marketing
campaigns for their brands and services and make more attractive offers to
potential employees, affiliated retailers, and third-party content providers. We
cannot assure you that we will be able to compete successfully against our
competitors either upon commencement of our operations or thereafter or that our
competition will not have a material adverse effect on our business prospects,
results of operations and financial condition.
GOVERNMENT REGULATION
We are not currently subject to direct regulation by any government agency,
other than regulations applicable to businesses generally or directly applicable
to electronic commerce. Although there are few laws and regulations at the
present time applicable to commerce on the Internet, as the Internet becomes
increasingly popular, it is possible that a number of laws and regulations may
be adopted with respect to the Internet. These laws and regulations, if adopted,
may cover issues such as user privacy, freedom of expression, pricing, content
and quality of products and services, taxation, advertising, intellectual
property rights and security of information. Continued growth of electronic
commerce may also prompt calls for more stringent consumer protection laws.
Several states have proposed legislation to limit the uses of personal user
information gathered online or require online services to establish privacy
policies. While the Federal Trade Commission has also initiated action against
at least one online service regarding the manner in which personal information
is collected from users and provided to third parties, we have adopted a policy
against providing personal information regarding our members to third parties
without members' prior authorization. The adoption of such consumer protection
laws could create uncertainty in Internet usage and reduce the use of our online
shopping program.
A number of proposals have been made at the federal, state and local levels
that could impose additional taxes on the sale of goods and services over the
Internet, and several states have taken measures to tax Internet-related
activities. The imposition of additional taxes on Internet commerce could have a
substantial, adverse effect on our business and financial results. See "Risk
Factors - We May Be Required To Collect Sales Tax And Incur Related Costs."
We are not certain how our business may be affected by the application of
existing laws governing issues such as property ownership, copyrights,
encryption and other intellectual property issues, taxation,
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<PAGE>
libel, obscenity and export or import matters. Most of these laws were adopted
prior to creation of the Internet. As a result, they do not contemplate or
address the unique issues of the Internet and related technologies. Changes in
laws intended to address such issues could create uncertainty in the Internet
market place. Such uncertainty could reduce use of our online shopping program
or increase the cost of doing business as a result of increased service delivery
and/or litigation costs.
The feature of our rewards program that allows members to apply discounts
accrued in their accounts to charitable donations may subject us to the laws and
regulations of several states governing the solicitation of charitable
contributions. We do not believe that compliance with such laws and regulations
will have a material, adverse effect upon our business or financial results.
EMPLOYEES
We currently have two employees, our Chief Executive Officer and our Chief
Operating Officer. We do not currently plan to hire additional employees until
we receive venture capital or other third party financing in the amount of at
least $350,000. At such time, we intend to hire at least two additional
employees. See "Plan of Operation."
INTELLECTUAL PROPERTY RIGHTS
Under the terms of the InfoStream Agreement, we will own the web site
design and related software being developed by InfoStream for our online
shopping mall. See "Business -- Web Site and Software Development." We have
filed an application with the United States Patent and Trademark Office to
register our service marks, BonusBoulevard, BonusBlvd.com and BBBucks.
FACILITIES
We lease approximately 100 square feet on a month-to-month basis at 55 West
19th Street, 4th floor, New York, New York 10011. This space is the location of
our principal executive offices. We will be required to acquire larger space in
the event that we hire additional employees. See "Plan of Operation."
ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form SB-2 under the
Securities Act of 1933 with respect to the Class A shares offered pursuant to
this prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement and the exhibits and schedules thereto. Descriptions contained in this
prospectus relating to any contract or other document are not necessarily
complete, and these descriptions are qualified in all respects by reference to
the full text of the related contract or document.
Our registration statement, and the exhibits and schedules thereto, may be
inspected and copied at the principal office of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC at Seven World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any
part of our registration statement may be obtained at prescribed rates from the
SEC's Public Reference Section at 450 Fifth Street, N.W. Washington D.C. 20545
or by calling the SEC at 1-800 SEC-0300. The SEC also maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC.
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<PAGE>
Following this offering, we will be subject to the reporting and other
requirements of the Securities Exchange Act of 1934, and we intend to furnish to
our shareholders annual reports containing audited financial statements. We may
also furnish to our shareholders interim reports as we deem appropriate.
When we qualify statements in this prospectus with the word "believe,"
unless otherwise indicated, we are basing our belief on the knowledge and
experience of our personnel and advisers. We have obtained the statistical
information included in this prospectus from publications we deem reliable and
with which we have no relationship.
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
Our directors and executive officers and their respective ages as of
July 2, 1999 are as follows:
<TABLE>
<CAPTION>
POSITIONS
NAME AGE HELD SINCE POSITION(S)
---- --- ---------- -----------
<S> <C> <C> <C>
David Brous, Jr. 30 June 1999 Director and Chief Executive Officer
Jonathan F. Morgenstern 30 June 1999 Director, President and Chief Operating
Officer
</TABLE>
DAVID BROUS, JR. Together with Jonathan F. Morgenstern, Mr. Brous
co-founded BonusBoulevard in February 1999. He has served as a Director and as
our Chief Executive Officer since incorporating BonusBoulevard in June 1999.
Prior to co-founding BonusBoulevard, Mr. Brous was a Director at VT
International, Ltd. ("VT International"), a privately held wholesale concern,
where he managed three of VT International's top customer accounts, accounting
for approximately 47% of its annual revenue. During the last half of 1998, Mr.
Brous was involved in structuring the sale of VT International. Mr. Brous
received a Masters of Business Administration degree from Columbia University in
1994 with a concentration in Finance, Marketing and Management. From 1990 to
1992, Mr. Brous participated in the Management Program at Saks Fifth Avenue. He
holds a Bachelor of Arts degree from the University of Pennsylvania.
JONATHAN F. MORGENSTERN Mr. Morgenstern co-founded BonusBoulevard with
David Brous, Jr. in February 1999. He has served as a Director and as our
President and Chief Operating Officer since incorporating BonusBoulevard in June
1999. Prior to co-founding BonusBoulevard, Mr. Morgenstern served as a
consultant at Synygy, Inc., an incentive compensation consulting company. At
Synygy, Mr. Morgenstern was responsible for Synygy's largest client,
Schering-Plough Corporation, and focused primarily on client and database
management. From 1996 to 1998, Mr. Morgenstern served as an analyst at each of
Canus Corporation and Altman Development Corporation, two related real estate
development companies. While there, Mr. Morgenstern was instrumental in the
development of a 284 unit low-income tax credit project valued at approximately
$20 million. Mr. Morgenstern received both a Juris Doctor degree and a Master of
Business Administration degree from Villanova University in 1995. He also holds
a Bachelor of Arts degree from the University of Pennsylvania.
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DIRECTOR COMPENSATION
Our directors receive no cash compensation for their services as Board
members or committee members and are not reimbursed for expenses incurred in
connection with attending Board and committee meetings.
EXECUTIVE COMPENSATION
The following table shows total compensation expected to be paid for the
year ended December 31, 1999 to our Chief Executive Officer and Chief Operating
Officer. We do not expect to commence paying salaries to these officers until
July 1, 1999. We have no other employees.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1999 ANNUAL COMPENSATION TOTALS
- ----------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL POSITION SALARY BONUS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
David Brous, Jr.
Chief Executive Officer $37,500 $0 $37,500
- ----------------------------------------------------------------------------------------------------
Jonathan F. Morgenstern, President and
Chief Operating Officer $37,500 $0 $37,500
- ----------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT AND CHANGE OF CONTROL CONTRACTS
We do not currently have any employment agreements with our employees or
key personnel. However, Mr. Brous and Mr. Morgenstern have reached an agreement
in principle as shareholders with regard to options to purchase each other's
shares in BonusBoulevard under certain circumstances and other matters. Under
the terms of this shareholders' agreement if either of them leaves
BonusBoulevard's employ or resigns as officer and director of BonusBoulevard, he
will be prohibited from competing with BonusBoulevard for a period of one year.
See "Certain Transactions."
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
Our certificate of incorporation limits the liability to BonusBoulevard of
individual directors for certain breaches of their fiduciary duty to us. The
effect of this provision is to eliminate the liability of directors for monetary
damages arising out of their failure, through negligent or grossly negligent
conduct, to satisfy their duty of care, which requires them to exercise informed
business judgment. The liability of directors under the federal securities laws
is not affected by this provision of our certificate of incorporation. A
director may be liable for monetary damages only if a claimant can show a breach
of the individual director's duty of loyalty to BonusBoulevard, a failure to act
in good faith, intentional misconduct, a knowing violation of the law, an
improper personal benefit or an illegal dividend or stock purchase. There is no
pending litigation or proceeding involving any of our directors, officers,
employees or agents in which we are required or permitted to provide
indemnification. We are not aware of any threatened litigation or proceeding
that may result in a claim for such indemnification. Our certificate of
incorporation also provides that we will indemnify and hold harmless each of our
directors and officers to the fullest extent authorized by the Business
Corporation Law of New York (the "NYBCL"), against all expenses, liabilities and
losses (including attorneys' fees, judgments, fines, Employee Retirement Income
Security Act excise taxes and penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith. To the extent that
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<PAGE>
indemnification for liabilities arising under the Securities Act permitted to
directors, officers or controlling persons pursuant to our certificate of
incorporation and for New York law, we have been informed that, in the opinion
of the SEC, such indemnification is against public policy as expressed in the
Securities Act and is consequently unenforceable.
CERTAIN TRANSACTIONS
Mr. Brous and Mr. Morgenstern, both of whom are executive officers and
directors of BonusBoulevard, were issued 48,000,000 and 32,000,000 shares,
respectively, of our Class B voting common stock, par value $.0001 per share, in
consideration for their funding our operations to date in the total amount of
$36,739. Mr. Brous and Mr. Morgenstern have reached an agreement in principle as
shareholders of BonusBoulevard with regard to options to purchase each other's
shares in BonusBoulevard under certain circumstances and other matters. Under
the terms of this shareholders' agreement, if either of them leaves
BonusBoulevard's employ or resigns as officer and director of BonusBoulevard, he
will be prohibited from competing with BonusBoulevard for a period of one year.
In May 1999, Mr. Brous and Mr. Morgenstern, our executive officers and
directors, entered into an agreement with InfoStream. This agreement was
assigned by these officers to us, with InfoStream's consent, in return for our
assuming the officers' obligations under this agreement, immediately after we
were incorporated. At the time the agreement was assigned, it was also modified.
We refer to this agreement, as assigned to us and modified, as the InfoStream
Agreement.
Under the InfoStream Agreement, we have agreed to compensate InfoStream for
its services by a combination of cash, Class B shares and warrants to purchase
Class B shares. We have paid InfoStream $15,000 in cash to date and are
obligated to pay InfoStream another $10,000 in cash 30 days following
InfoStream's completion of our web site design in fully operation form. If
InfoStream completes our web site design in fully operational form no later
September 30, 1999, we will be obligated to issue to InfoStream Class B shares
having a value of $35,000 and warrants to purchase Class B shares having a value
of $56,250. The number of shares equaling these amounts will be determined as
follows: If we receive third party equity financing on a date which is no later
than six months following InfoStream's completion of our web site, then the
number of shares issuable outright and the number of shares issuable pursuant to
warrants to be issued to InfoStream will be determined on the basis of the terms
of that financing. If we do not receive third party equity financing by that
date, the number of the shares issuable outright and the number of shares
issuable pursuant to warrants will be determined on the basis of the amount of
all expenses incurred by us since our inception. The warrants to be issued to
InfoStream will be exercisable for a period of ten years commencing on the date
which is two years following the date of InfoStream's completion of our web
site, provided that the warrants have not been previously redeemed. We will have
the right to redeem the warrants issued to InfoStream, in whole or in part, at
our election, at any time prior to their exercise. If we elect to redeem any or
all of these warrants, we will be required to pay $56,250 plus interest accrued
thereon at a rate of 25% per year commencing at the date InfoStream completed
our web site as described above. See "Business -- Web Site Design and
Development" and "Principal Shareholder."
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of June 29, 1999 and as adjusted
for the sale of the securities offered by this prospectus, the number and
percentage of outstanding shares of common stock beneficially owned by:
--each of our officers and directors; and
--all of our officers and directors as a group; and
--each person that owns beneficially more than 5% of the outstanding
shares of our Class B voting common stock.
Beneficial ownership is determined in accordance with the rules and
regulations of the SEC. Shares of common stock subject to warrants and options
that are currently exercisable or exercisable within 60 days of July 2, 1999
are deemed to be outstanding and beneficially owned by the person holding such
warrants or options for the purpose of computing the number of shares
beneficially owned and the percentage ownership of such person, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person.
Except as otherwise noted below, the persons named in this table have sole
voting and investment power with respect to all shares of Class B common stock
owned by them.
Unless otherwise indicated below, the address of each beneficial owner is
c/o BonusBoulevard, Inc., 55 West 19th Street, 4th Floor, New York, New York
10011.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Shares of Class B Voting
Common Stock
Beneficially Owned(1) Percentage of Total Voting Shares(1)
------------------------- ------------------------------------
----------------------------------------------
Name of Beneficial Owner Before Offering After Offering
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
David Brous, Jr. 48,000,000 60% 60%
- --------------------------------------------------------------------------------------------------------------------
Jonathan F. Morgenstern 32,000,000 40% 40%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------
(1) Does not give effect to (a) the potential issuance by BonusBoulvard to
InfoStream of certain shares of Class B voting common stock and certain
warrants to purchase Class B shares that are issuable to InfoStream upon
completion by InfoStream of certain work to be performed under the
InfoStream Agreement and (b) the issuance of certain warrants to purchase
Class B shares issued to Brown Raysman Millstein Felder & Steiner LLP as
compensation for certain legal services to be provided by that firm in
connection with this offering.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue up to 25,000,000 shares of Class A redeemable,
convertible non-voting common stock, par value $.0001 per share, 275,000,000
shares of Class B voting common stock, par value $.0001 per share, and
150,000,000 shares of preferred stock, par value $.0001 per share. The following
summary of certain provisions of our common and preferred stock does not purport
to be
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<PAGE>
complete and is subject to, and qualified in its entirety by, the provisions of
our certificate of incorporation as amended and restated, and our by-laws, which
are included as exhibits to our registration statement.
CLASS A NON-VOTING COMMON STOCK
As of June 29, 1999, there were no shares of Class A non-voting common
stock outstanding.
NO VOTING RIGHTS. The holders of our Class A shares are not entitled to
vote in the election of directors.
DIVIDENDS. Subject to preferences that may be applicable to any shares of
preferred stock issued and outstanding in the future, holders of our Class A
shares are entitled to receive ratably such dividends as may be declared from
time to time by our board of directors out of funds legally available for
payment.
LIQUIDATION. In the event of our liquidation, dissolution or winding up,
holders of our Class A shares are entitled to share ratably in all of our assets
remaining after payment of liabilities and subject to any preferences that may
be applicable to any shares of preferred stock then issued and outstanding.
PREEMPTIVE AND OTHER RIGHTS. Holders of Class A shares have no preemptive
or other subscription or conversion rights. All Class A shares outstanding upon
completion of this offering will by fully paid and non-assessable, subject to
the provisions of Section 630 of the Business Corporation Law of New York. Under
this Section, our ten largest shareholders will be personally liable for unpaid
wages and debts to our employees if our capital stock is not listed on a
national securities exchange or an affiliated securities association. We have
agreed to indemnify our ten largest shareholders in the event they incur
personal liability under this provision of New York law.
LOCK-UP AND REDEMPTION. A recipient of Class A shares in the offering will
be subject to a lock-up for a period of three years. During this period, holders
of Class A shares distributed in the offering may not, directly or indirectly,
sell, transfer, offer, pledge, grant any option to purchase or otherwise dispose
of any Class A shares. The three-year lock-up period begins on the effective
date of our registration statement and expires three years following this
effective date; except that the lock-up period will terminate earlier, (i) on
the date on which we list our Class B shares either on any national securities
exchange or on NASDAQ or (ii) on the date on which we elect to redeem any Class
A shares, after a liquidity event occurs. If we redeem some, but not all, of the
Class A shares, the lock-up period will expire only as to the Class A shares we
redeem. A liquidity event will occur when:
--we sell all or substantially all of our assets;
--we merge into another entity, except if we merge for the purpose of
changing the state of our incorporation; or we obtain funding from a
third party, whether privately or through another public offering of
securities, in the minimum amount of $500,000.
--our receipt of outside funding, whether from private sources or
through another public offering of our securities, in the minimum
amount of $500,000.
We have the option, when a liquidity event occurs, to redeem all or any portion
of the Class A shares distributed in this offering at a price per share
determined by dividing the total consideration payable upon such liquidity event
by the total number of shares of common stock
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<PAGE>
of all classes outstanding on the date such liquidity event occurs. In the event
that we redeem some but not all of the Class A non-voting shares, we will redeem
shares from each Class A shareholder on a pro rata basis. If we elect to redeem
your shares, we will pay you cash in the amount of the redemption price for each
Class A share redeemed by us from you at the time of such redemption. If we do
not elect to redeem all of your Class A shares upon the occurrence of a
liquidity event, we may elect to redeem any remaining portion of your Class A
shares upon the occurrence of one or more additional liquidity events up until
the expiration of the three-year lock-up period. If we have not redeemed all of
your Class A shares upon expiration of the lock-up period, the restrictions on
the transferability of your shares set forth above will expire. All members who
register at our web site will be required to acknowledge, upon registration,
that they accept and agree to the lock-up and redemption provisions applicable
to their Class A shares.
We will give notice of any redemption of Class A shares by e-mail, or in
any other manner as may be required by law, not less than 30 days prior to the
applicable date of redemption, to each holder of record of Class A shares at the
close of business on the day before the date of the redemption notice at the
e-mail or other address last provided to us by the holder. The redemption notice
will specify the percentage and number of Class A shares to be redeemed, the
date fixed for redemption, the redemption price per share and the address to
which payment of the redemption price will be mailed. When we give a redemption
notice, we will be required to redeem the Class A shares covered by the notice
on the date for redemption stated in the notice. If we redeem less than all
outstanding Class A shares, we will redeem a set percentage of shares from each
holder determined by resolution of our board of directors. At any time on or
after a redemption date, holders of record of Class A shares will be entitled to
receive the redemption price per share upon cancellation of their shares on our
book-entry share register. If less than all outstanding Class A shares are
redeemed, the number of Class A shares of each holder will be reduced to reflect
the number of Class A shares held of record by that holder after we redeem
shares. All Class A shares redeemed by us will become authorized but unissued
Class A shares.
If we do not redeem all Class A shares by the end of the lock-up period and
we list our Class B shares on any national securities exchange or on NASDAQ,
each Class A share will be (i) automatically converted into one Class B voting
share and (ii) listed on that exchange. As a result, you will have voting shares
that are listed for trading.
CLASS B VOTING COMMON STOCK
As of June 29, 1999, there were 80,000,000 shares of Class B voting common
stock outstanding. All of these shares were held of record by our two executive
officers. We will also issue Class B shares to InfoStream upon the occurrence of
certain events, as described more fully elsewhere in this prospectus. We also
have reserved 150,000,000 Class B shares for issuance upon conversion of our
preferred stock in the event that any shares of preferred stock are issued in
the future. See "Principal Shareholders" and "Certain Transactions."
VOTING RIGHTS. The holders of Class B shares are entitled to one vote for
each share held of record on all matters submitted to a vote of our
shareholders. Holders of Class B shares are not entitled to cumulative voting
rights with respect to the election of directors.
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<PAGE>
DIVIDENDS. Subject to preferences that may be applicable to any shares of
preferred stock issued in the future, holders of Class B shares are entitled to
receive ratably such dividends as may be declared from time to time by our board
of directors out of funds legally available for payment.
LIQUIDATION. In the event of our liquidation, dissolution or winding up,
holders of both our Class A shares and our Class B shares are entitled to share
ratably in all of our assets remaining after payment of liabilities, subject to
any preferences applicable to any shares of preferred stock then issued and
outstanding.
PREEMPTIVE AND OTHER RIGHTS. Holders of Class B shares have no preemptive
or other subscription or conversion rights.
PREFERRED STOCK
We are authorized to issue up to 150,000,000 shares of preferred stock, par
value $.0001 per share. Our certificate of incorporation, as restated, grants us
the authority to issue, from time to time, any class or series of preferred
shares. Our board of directors has the authority, under our certificate of
incorporation, to establish and designate any series of preferred shares and to
fix the number of shares included in each such series. Accordingly, our board
has the discretion, without shareholder approval, including your approval as a
holder of Class A shares, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights that could negatively affect the liquidation,
dividend and other rights applicable to your Class A shares. In the event shares
of our preferred stock are issued, these shares could be used, under certain
circumstances, as a way to discourage, delay or prevent a change in control
which, in turn, could discourage bids for our shares and prevent shareholders
from receiving the maximum value for their shares as well as the variations in
the relative rights, preferences, and limitations as between series, subject to
certain limitations. No shares of preferred stock are issued and outstanding and
no series of preferred stock has been designated.
TRANSFER AGENT AND REGISTRAR
We currently act as our own transfer agent and registrar for our common
stock. Our address is 55 West 19th Street, 4th Floor, New York, New York 10011
and our telephone number is (212) 414-2115. Record ownership of shares shall be
made by bookkeeping entry only. A member will receive confirmation of ownership
in our uncertificated securities by e-mail.
PLAN OF DISTRIBUTION
The securities are being offered by us through our web site. No selling
discounts, commissions or other form of remuneration will be paid in connection
with the offering. We intend to engage the services of a registered broker or
dealer in each state that requires that a registered broker or dealer act on
behalf of a company selling its own securities in that state.
We will distribute one Class A share to each of the first 5,500,000 members
of our online shopping mall. We will also distribute 1,000,000 Class A shares to
members based upon their referrals of new members to our web site. Each time a
new member lists an existing member as the referring party in the new member's
registration at our web site, we will distribute one share to the referring
member. Another 1,000,000 Class A shares will be distributed in lots of five
shares each to the first 200,000 members who make a purchase of any amount
through our online shopping mall. These 7,500,000 shares
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<PAGE>
will be distributed in the offering for a deemed consideration of $.0001 per
share, or total consideration of $750.
The remaining 12,500,000 Class A shares to be distributed in the offering
may be purchased by members solely upon redemption of BBBucks accrued to their
accounts, as follows: The first 100,000 members that elect to redeem $5 in
BBBucks for Class A shares will each receive 100 shares. The first 5,000 members
that elect to redeem $25 in BBBucks for Class A shares will each receive 500
shares. The price at which Class A shares may be purchased with accrued BBBucks
has been established by us without obtaining an independent appraisal. This
price has no relationship to the book value per share, our earnings, or other
generally accepted measurement of value. See "Plan of Operation" and "Business--
Membership in BonusBoulevard--Shopping Through BonusBoulevard; Discounts;
Redemption."
We plan to publish the final prospectus, as included in the registration
statement when it becomes effective, on the Internet at our web site,
www.BonusBlvd.com. We will only offer the Class A shares included in this
offering to those members who consent to electronic delivery of our final
prospectus in this manner.
The Class A shares will not be represented by share certificates. We will
record ownership of shares by bookkeeping entries only. Each member owning
shares will receive confirmation of ownership of our uncertificated securities
by e-mail. Information about share ownership will also appear in each member's
account, which will be accessible from out web site.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. The Class A shares to be distributed in this offering are subject to a
lock-up for a period which begins on the effective date of our registration
statement and expires three years after the effective date or on any earlier
date on which we redeem the Class A shares following the occurrence of a
liquidity event. The lock-up and our right to redeem the Class A shares are more
fully described elsewhere in this prospectus. During the lock-up period, you
will not be able, directly or indirectly, to offer, sell, transfer, pledge,
grant any option to purchase or otherwise dispose of your Class A shares. We do
not currently intend to list the Class A shares or any other BonusBoulevard
securities on any stock exchange. Accordingly, there will be no trading market
for the Class A shares during the lock-up period, and we cannot assure you that
an active trading market will develop for these securities, or if developed, be
sustained, after the lock-up period expires.
Upon completion of this offering, we will have 20,000,000 Class A shares
outstanding. The shares, if not redeemed by us, could be available for resale
immediately upon the expiration of the lock-up period described above. At that
time, the Class A shares will be freely transferable without restriction under
the Securities Act of 1933, except for any shares held by an "affiliate" of
BonusBoulevard (as the term affiliate is defined by the rules and regulations
issued under the Securities Act), which will be subject to the resale
limitations of Rule 144 promulgated under the Securities Act.
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Under Sections 721 through 725 of the Business Corporation Law of New York
("NYBCL"), we have broad powers to indemnify our directors, officers and other
employees. These sections (1) provide
44
<PAGE>
that the provisions of the NYBCL regarding statutory indemnification and
advancement of expenses are not exclusive, provided that no indemnification may
be made to or on behalf of any director or officer if a judgment or other final
adjudication adverse to the director or officer establishes that his acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action as adjudicated, or that he in fact
personally gained a financial profit or other advantage to which he was not
legally entitled, (2) establish procedures for indemnification and advancement
of expenses that may be contained in the certificate of incorporation or
by-laws, or, when authorized by either of the foregoing, set forth in a
resolution of the shareholders or directors of an agreement providing for
indemnification and advancement of expenses, (3) apply a single standard for
statutory indemnification for third-party and derivative suits by providing that
indemnification is available if the director or officer acted in good faith, for
a purpose which he reasonably believed to be in the best interests of the
corporation, and, in criminal actions, had no reasonable cause to believe that
his conduct was unlawful, and (4) permit the advancement of litigation expenses
upon receipt of an undertaking from the director or officer to repay such
advance if the director or officer is ultimately determined not to be entitled
to indemnification or to the extent the expenses advanced exceed the
indemnification to which the director or officer is entitled. Section 726 of the
NYBCL permits the purchase of insurance to indemnify a corporation or its
officers and directors to the extent permitted.
As permitted by Section 721 of the NYBCL, our by-laws provide that we will
indemnify our officers and directors, as such, to the fullest extent permitted
by applicable law and that expenses reasonably incurred by any of our officers
or directors in connection with a threatened or actual action or proceeding will
be advanced or promptly reimbursed by us in advance of the final disposition of
such action or proceeding upon receipt by us of an undertaking by or on behalf
of such officer or director to repay such amount if and to the extent that it is
ultimately determined that such officer or director is not entitled to
indemnification.
Article SIXTH of our certificate of incorporation provides that (a) we
will, to the fullest extent permitted by Article 7 of the NYBCL, indemnify any
and all persons whom we have the power to indemnify under Article 7 of the NYBCL
from and against any and all of the expenses, liabilities, or other matters
referred to in or covered by Article 7 of the NYBCL and (b) the indemnification
provided for in Article SIXTH of our certificate of incorporation will not be
deemed exclusive of any other rights to which any person may be entitled under
any by-law, resolution of shareholders, resolution of directors, agreement, or
otherwise, as permitted by Article 7 of the NYBCL, as to action in any capacity
in which such person served at our request.
Article SEVENTH of our certificate of incorporation also provides that the
personal liability of our directors is eliminated to the fullest extent
permitted by the provisions of paragraph (b) of Section 402 of the NYBCL.
Section 402(b) of the NYBCL provides that a corporation's certificate of
incorporation may set forth a provision eliminating or limiting the personal
liability of directors to the corporation or its shareholders for damages for
any breach of duty in such capacity; provided that no such provision may
eliminate or limit: (i) the liability of any director if a judgment or other
final adjudication adverse to him establishes that his acts or omissions were in
bad faith or involved intentional misconduct or a knowing violation of law or
that he personally gained in fact a financial profit or other advantage to which
he was not legally entitled or that his acts violated Section 719 of the NYBCL,
or (ii) the liability of any director for any act or omission prior to the
adoption of the relevant provision in the corporation's certificate of
incorporation.
We may also purchase and maintain insurance for the benefit of any director
or officer which may cover claims for which we could not indemnify such person.
45
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons pursuant to the
foregoing provisions or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy and is, therefore,
unenforceable.
LEGAL MATTERS
The legality of the common stock offered hereby will be passed upon for
BonusBoulevard by Brown Raysman Millstein Felder & Steiner LLP, New York, New
York.
EXPERTS
The financial statements of BonusBoulevard for the period from February 1,
1999 to June 29, 1999 included in this prospectus and registration statement
have been audited by Berenson & Company LLP, independent auditors, as stated in
their report appearing herein and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
46
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report................................................F-2
Balance Sheet...............................................................F-3
Statement of Operations.....................................................F-4
Statement of Stockholders' Equity...........................................F-5
Statement of Cash Flows.....................................................F-6
Notes to Financial Statements ..............................................F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
BonusBoulevard, Inc.
New York, NY
We have audited the accompanying balance sheet of BonusBoulevard, Inc. (a
company in the development stage) as of June 29, 1999 and the related statements
of operations and cash flows for the period from February 1, 1999 (inception)
through June 29, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BonusBoulevard, Inc. as of June
29, 1999 and the results of its operations and its cash flows for the period
then ended in conformity with generally accepted accounting principles.
New York, NY
July 2, 1999
F-2
<PAGE>
BONUSBOULEVARD, INC.
(a Company in the Development Stage)
BALANCE SHEET
JUNE 29, 1999
<TABLE>
ASSETS
<S> <C>
Current assets:
Cash $ 100
Prepaid expenses 992
--------
Total current assets 1,092
Deferred offering costs (note 5) 50,000
Computer software costs (note 6) 15,000
Computer hardware 5,952
--------
Total assets $ 72,044
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 45,000
--------
Commitment (note 7)
Stockholders' equity:
Preferred stock, $.0001 par value, 150,000,000 shares authorized;
none issued and outstanding
Common stock, nonvoting, $.0001 par value, 25,000,000
shares authorized; none issued and outstanding
Common stock, voting, $.0001 no par value, 275,000,000
shares authorized; 80,000,000 shares issued and outstanding 8,000
Additional paid-in capital 28,739
Deficit accumulated during development stage (9,695)
--------
27,044
--------
$ 72,044
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
BONUSBOULEVARD, INC.
(a Company in the Development Stage)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 1, 1999 (INCEPTION)
THROUGH JUNE 29, 1999
<TABLE>
<S> <C>
Costs and expenses:
General and administrative $ 8,342
Selling 1,353
-------
Net loss $(9,695)
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
BONUSBOULEVARD, INC.
(a Company in the Development Stage)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM FEBRUARY 1, 1999 (INCEPTION)
THROUGH JUNE 29, 1999
<TABLE>
<CAPTION>
Common stock, Common stock, Accumulated
Preferred stock Nonvoting Voting Additional deficit during
---------------- ------------- ---------------- Paid-in development
Shares Amount Shares Amount Shares Amount capital stage Total
------ ------ ------ ------ ------ ------ ------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception, February 1, 1999 -- $ -- -- $ -- -- $ -- $ -- $
Issuance of common stock,
voting, on June 10, 1999 -- -- -- -- 80,000,000 8,000 28,739 -- 36,739
Net loss -- -- -- -- -- -- (9,695) (9,695)
---- ----- ---- ----- ---------- ------ ------- -------
Balance, June 29, 1999 -- $ -- -- $ -- 80,000,000 $8,000 28,739 $(9,695) $27,044
==== ===== ==== ===== ========== ====== ------ ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
BONUSBOULEVARD, INC.
(a Company in the Development Stage)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 1, 1999 (INCEPTION)
THROUGH JUNE 29, 1999
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (9,695)
Adjustments to reconcile net loss to
net cash used from operating activities:
Change in assets and liabilities:
Prepaid expenses (992)
--------
Net cash used by operating activities (10,687)
--------
Cash flows used by investing activities:
Capital expenditures (20,952)
--------
Cash flows from financing activities:
Issuance of common stock 36,739
Deferred offering costs (5,000)
--------
Net cash provided by financing activities 31,739
--------
Net increase in cash 100
Cash, beginning of period --
--------
Cash, end of period $ 100
=======
Supplemental disclosure of noncash financing activity:
The Company has incurred $50,000 of deferred offering costs as
of June 29, 1999, of which $45,000 has not been paid for.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
BONUSBOULEVARD, INC.
(a Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1999
1. Nature of business:
BonusBoulevard is developing an Internet-based shopping mall through which
web users that register as members will be able to make purchases from a
selected group of online retailers. These members will be entitled to
earn rewards on all purchases made.
2. Development stage enterprise:
BonusBoulevard is in the development stage as its operations principally
involve the building of its website infrastructure, market analysis and
other business planning activities. No revenue has been generated. Since
BonusBoulevard is in the development stage, the accompanying financial
statements should not be regarded as typical for normal operating periods.
3. Initial public offering:
BonusBoulevard is in the process of filing a Registration Statement with
the Securities and Exchange Commission for a proposed initial public
offering ("IPO") of common stock. In its proposed IPO, BonusBoulevard plans
to issue shares of non-voting common stock to new members of its online
shopping mall. BonusBoulevard is proposing to issue 7,500,000 shares for a
deemed consideration of $.0001 per share, and 12,500,000 shares at an
assumed initial public offering price of $.05 per share. Offering costs
are estimated to be approximately $90,000.
4. Significant accounting policies:
a. Cash:
BonusBoulevard maintains its cash accounts in one commercial bank. The
balance is insured by the Federal Deposit Insurance Corporation (FDIC)
up to $100,000.
b. Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from these estimates.
F-7
<PAGE>
BONUSBOULEVARD, INC.
(a Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 1999
4. Significant accounting policies: (Continued)
c. Property and equipment:
Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to operations in the period
incurred.
d. Start-up costs:
BonusBoulevard has adopted Statement of Position No. 98-5, requiring
companies to expense all start-up related expenses when incurred.
Start-up expenses incurred for the period ended June 29, 1999 was
$9,695.
e. Software development costs:
BonusBoulevard has adopted Statement of Position 98-1 with regard to
the accounting for the costs of developing computer software for
internal use. Only costs incurred subsequent to the preliminary
project stage is to be capitalized.
f. Advertising:
BonusBoulevard expenses advertising costs when incurred. There were no
advertising expenses incurred for the period ended June 29, 1999.
5. Deferred offering costs:
Deferred offering costs represent costs incurred as of the balance sheet
date, as it relates to BonusBoulevard's proposed initial public offering.
6. Computer software costs:
Computer software costs consist of the ongoing construction of
BonusBoulevard's web site. BonusBoulevard has incurred no amortization
expense for the period ended June 29, 1999.
7. Commitment:
BonusBoulevard is obligated under an agreement for the construction and
design of its shopping mall web site. The total cost is expected to be
$105,000, of which $15,000 has been paid as of the balance sheet date. The
remaining amount is payable partially in cash and partially through the
issuance of BonusBoulevard's common stock and warrants.
8. Subsequent event:
On June 30, 1999, BonusBoulevard amended its certificate of incorporation
to increase the number of shares of common stock authorized from
100,000,000 to 275,000,000, and to authorize 150,000,000 shares of
preferred stock (previously unauthorized). On July 2, 1999, BonusBoulevard
amended and restated its certificate of incorporation to designate the
shares of common stock as Class A non-voting redeemable, convertible shares
and Class B voting shares, and to authorize an additional 25,000,000 shares
of common stock. These events are reflected retroactively in the
accompanying financial statements.
F-8
<PAGE>
- ----------------------------------------- ---------------------------------
You should rely on the information
contained in this prospectus. We have
not authorized anyone to provide you
with information different from that 20,000,000 SHARES
contained in this prospectus. We are
offering shares of common stock only in
jurisdictions where the offering is
permitted. The information contained in
this prospectus is accurate only as of BONUSBOULEVARD, INC.
the date of this prospectus, regardless
of the time of delivery of this
prospectus or of any sale of the common
stock.
CLASS A REDEEMABLE CONVERTIBLE
NON-VOTING COMMON STOCK
----------------------
----------------------
PROSPECTUS
----------------------
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Sections 721 through 725 of the Business Corporation Law of New York
("NYBCL"), we have broad powers to indemnify our directors, officers and other
employees. These sections (1) provide that the provisions of the NYBCL regarding
statutory indemnification and advancement of expenses are not exclusive,
provided that no indemnification may be made to or on behalf of any director or
officer if a judgment or other final adjudication adverse to the director or
officer establishes that his acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action as
adjudicated, or that he in fact personally gained a financial profit or other
advantage to which he was not legally entitled, (2) establish procedures for
indemnification and advancement of expenses that may be contained in the
certificate of incorporation or by-laws, or, when authorized by either of the
foregoing, set forth in a resolution of the shareholders or directors of an
agreement providing for indemnification and advancement of expenses, (3) apply a
single standard for statutory indemnification for third-party and derivative
suits by providing that indemnification is available if the director or officer
acted in good faith, for a purpose which he reasonably believed to be in the
best interests of the corporation, and, in criminal actions, had no reasonable
cause to believe that his conduct was unlawful, and (4) permit the advancement
of litigation expenses upon receipt of an undertaking from the director or
officer to repay such advance if the director or officer is ultimately
determined not to be entitled to indemnification or to the extent the expenses
advanced exceed the indemnification to which the director or officer is
entitled. Section 726 of the NYBCL permits the purchase of insurance to
indemnify a corporation or its officers and directors to the extent permitted.
As permitted by Section 721 of the NYBCL, our by-laws, provide that we will
indemnify our officers and directors, as such, to the fullest extent permitted
by applicable law and that expenses reasonably incurred by any of our officers
or directors in connection with a threatened or actual action or proceeding will
be advanced or promptly reimbursed by us in advance of the final disposition of
such action or proceeding upon receipt by us of an undertaking by or on behalf
of such officer or director to repay such amount if and to the extent that it is
ultimately determined that such officer or director is not entitled to
indemnification.
Article SIXTH of our certificate of incorporation provides that (a) we
will, to the fullest extent permitted by Article 7 of the NYBCL, indemnify any
and all persons whom we have the power to indemnify under Article 7 of the NYBCL
from and against any and all of the expenses, liabilities, or other matters
referred to in or covered by Article 7 of the NYBCL and (b) the indemnification
provided for in Article SIXTH of our certificate of incorporation will not be
deemed exclusive of any other rights to which any person may be entitled under
any by-law, resolution of shareholders, resolution of directors, agreement, or
otherwise, as permitted by Article 7 of the NYBCL, as to action in any capacity
in which such person served at our request.
Article SEVENTH of our certificate of incorporation also provides that the
personal liability of our directors is eliminated to the fullest extent
permitted by the provisions of paragraph (b) of Section 402 of the NYBCL.
Section 402(b) of the NYBCL provides that a corporation's certificate of
incorporation may set forth a provision eliminating or limiting the personal
liability of directors to the corporation or its shareholders for damages for
any breach of duty in such capacity; provided that no such provision may
eliminate or limit: (i) the liability of any director if a judgment or other
final adjudication adverse to him establishes that his acts or omissions were in
bad faith or involved intentional misconduct or a knowing
II-1
<PAGE>
violation of law or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled or that his acts violated
Section 719 of the NYBCL, or (ii) the liability of any director for any act or
omission prior to the adoption of the relevant provision in the corporation's
certificate of incorporation.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than
underwriting discounts and commissions) payable by the Registrant in connection
with the issuance and distribution of the securities being registered. Except
for the SEC filing fees, all expenses have been estimated and are subject to
future contingencies.
<TABLE>
<S> <C>
SEC registration fee.........................................$184.60
Legal fees and expenses....................................50,000.00
Printing and engraving expenses.............................8,000.00
Accounting fees and expenses...............................10,000.00
Blue sky fees and expenses.................................20,000.00
Transfer agent registration fees and expenses...............1,000.00
Miscellaneous Expenses......................................1,000.00
-----------
Total....................................................$ 90,184.60
===========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
BonusBoulevard, Inc. was incorporated in the State of New York on June 10,
1999. Upon incorporation, Mr. Brous and Mr. Morgenstern, our two directors and
executive officers, were issued 48,000,000 and 32,000,000 shares, respectively,
of our Class B voting common stock at a price of $.00046 per share.
The foregoing transaction was a transaction not involving a public offering
and was exempt from the registration provisions of the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to Section 4(2) thereof. The
securities were sold pursuant to Regulation D, and the certificates evidencing
the Class B shares bear a restrictive legend permitting the transfer thereof
only upon registration of the securities or an exemption under the Securities
Act.
ITEM 27. EXHIBITS
3.1* Certificate of Incorporation of the Registrant (including all
amendments)
3.2* By-Laws of the Registrant
5* Opinion of Brown Raysman Millstein Felder & Steiner LLP with
respect to legality of the securities of the Registrant being registered
10.1* [Shareholders' Agreement]
10.2 * [Infostream Agreement]
23.1 Consent of Berenson & Company LLP
II-2
<PAGE>
23.2* Consent of Brown Raysman Millstein Felder & Steiner LLP
(contained in opinion to be filed as Exhibit 5)
24.1 Power of Attorney (set forth on page II-5)
- ---------------------------
* To be filed by amendment
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) 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 thereto) which, individually or together,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) 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 purposes of determining liability under the Securities Act,
Registrant will treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) For purposes of determining any liability under the Securities Act, 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 under Rule 424(b)(1), or (4), or
497(h) under the Securities Act as part of this registration statement as of the
time the Commission declares it effective.
(5) For purposes of determining any liability under the Securities Act,
Registrant will treat each post-effective amendment that contains a form of
prospectus as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering
thereof.
(6) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer of
II-3
<PAGE>
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with 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 for filing on Form SB-2 and has authorized this Registration
Statement or Amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on the 2nd
day of July, 1999.
BonusBoulevard, Inc.
By: /s/ David Brous, Jr.
-------------------------------
David Brous, Jr.,
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below under the heading "Signature" constitutes and appoints Sarah Hewitt and J.
Christopher Giancarlo, or either of them, his true and lawful attorney-in-fact
and agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign any or all amendments
to this registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement or Amendment thereto has been signed by the following
persons in the capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ David Brous, Jr. Chief Executive Officer and Director July 2, 1999
- -------------------------------------------
DAVID BROUS, JR.
/s/ Jonathan F. Morgenstern President, Chief Operating Officer and July 2, 1999
- ------------------------------------------- Director
JONATHAN F. MORGENSTERN
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3.1* Certificate of Incorporation of the Registrant (including all amendments)
3.2* By-Laws of the Registrant
5* Opinion of Brown Raysman Millstein Felder & Steiner LLP with respect to
legality of the securities of the Registrant being registered
10.1* [Shareholders' Agreement]
10.2* [Infostream Agreement]
23.1 Consent of Berenson & Company LLP
23.2* Consent of Brown Raysman Millstein Felder & Steiner LLP
(contained in opinion to be filed as Exhibit 5)
24.1 Power of Attorney (set forth on page II-5)
</TABLE>
- --------------
* To be filed by amendment
<PAGE>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Registration Statement, on Form SB-2, of our
report dated July 2, 1999, relating to the financial statements of
BonusBoulevard, Inc., and to the reference to our firm under the caption
"Experts" in the Propsectus.
Berenson & Company LLP
New York, NY
July 2, 1999
