UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EQUORUMNET
(Name of small business issuer in its charter)
Nevada 8744 88-0431508
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) `Identification No.)
301 W. Armour Suite 1000, Kansas City, MO 64111 877-603-4382
(Address and telephone number of principal executive offices)
Sage International
1135 Terminal Way #209
Reno NV 89502
775-786-5515
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public
As soon as possible after the effective date of this Registration Statement
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 thee same offering [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment field pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ].
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CALCULATION OF REGISTRATION FEE
Title of each Number Proposed Proceeds Amount of
Class of securities of shares to maximum offering to registration
To be registered be registered price per unit eQuorumNet fee
-------------------- -------------- ------------------ -------------- --------------
<S> <C> <C> <C> <C>
Common Stock 1,000,000 $ 5.00 (1) $5,000,000 (2) $ 1,320 (3)
.0001 par value
Common Stock
Offered by sale by 170,000 (4) $ 5.00 (5) (6) $ 44.88 (3)
Selling security
holders
-------------- ------------------ -------------- --------------
1,170,000 $5,000,000 (2) $ 1,364.88
<FN>
(1) The offering price is payable in cash upon subscription. The offering will be
managed by us and the shares will be offered and sold by our officers, without any
discounts or commissions.
(2) Proceeds to us are shown before deducting other offering expenses payable by us for
legal and accounting fees and printing costs.
(3) The registration fee is calculated pursuant to Rule 457(a) under the Securities
Act.
(4) Selling security holder stock
(5) Estimated maximum offering price by selling security holders
(6) eQuorumNet will not benefit from the sales of these securities
</TABLE>
ITEM 1.
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.
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 SEC is
effective. This Prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
Investing in Common Stock is speculative and involves a high degree of risk.
See "Risk Factors" beginning on Page 2.
EQUORUMNET
eQuorumNet, a Nevada corporation, is registering 1,170,000 shares of its
common stock:
* NEW STOCK: We will be selling our 1,000,000 shares using our best
efforts and no one has agreed to buy any of our shares. There is no
minimum amount of shares we must sell, so no money raised from the sale of
our stock will go into escrow, trust or another similar arrangement. The
offering will remain open until December 31, 2000, unless we decide to
cease selling efforts prior to this date.
* EXISTING STOCK: We will also be registering, concurrently with the
offering, the sale of 170,000 shares of Common Stock previously issued to
initial shareholders of the company. Upon a subsequent resale of these
Securities, any proceeds and profits will be realized by these shareholders
and not by us. The selling shareholders may resell the Common Stock they
have previously received at prices below the initial offering price of the
Securities. They have agreed not to sell any of their shares until we have
closed this offering. These shares are being registered in order to make
them freely tradable but registration does not necessarily mean that any or
all of these shares will, in fact, be sold.
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There is currently no public market for the Common Stock. We expect that
the common stock will be traded on the over-the-counter market maintained by
members of the National Association of Securities Dealers, Inc., (the "OTC
Bulletin Board") after the registration statement is declared effective. There
can be no assurance that an active trading market will develop.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
PROSPECTUS, SUBJECT TO COMPLETION
1,170,000 SHARES
EQUORUMNET
Common Stock
The date of this prospectus is ________________, 2000
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ITEM 2. TABLE OF CONTENTS
<S> <C> <C>
Prospectus Summary Page 1
Risk Factors Page 2
- Our company is only recently organized with no operating history which makes an
evaluation of us difficult . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2
- Because of our lack of funds and past losses, our accountants' audit report indicates
there is substantial doubt about our ability to continue as a going concern. . . . . . Page 3
- The success of our company is dependent on our management who has limited
experience and will not spend full time working for our company which makes our
future even more uncertain. Page 3
- Our business is capital intensive and we have no significant operating capital so
we are dependent upon this offering to be able to implement our business plan and our
lack of revenues and profits may make our obtaining additional capital more difficult. Page 3
- Failure to attract and retain qualified personnel could harm our business and
operating results. Page 3
- There is no current public market for our shares and there can be no assurance that
one will develop in the future, thus limiting the transferability of our shares. Page 3
- Our certificate of incorporation contains provisions limiting the liability of our
directors to us and our stockholders. Page 3
- Since we do not expect to pay dividends, you cannot expect to receive income
from this investment. Page 4
- Our management's control of our company will limit the ability of other
shareholders to direct the management of our company. Page 4
- Our management may begin selling shares in February, 2001, potentially
depressing the price of the shares in this offering. Page 4
- Current shareholders may decide to immediate sell their shares, potentially
depressing the price of the shares in this offering. Page 4
- Investors will experience immediate and substantial dilution in the book value of
their shares. Page 4
- Since this is a direct participation offering and there is no underwriter, we may not
be able to sell any shares ourselves. Page 4
- Our common stock may be classified as a "Penny Stock" which could cause
investors in this offering to experience delays and other difficulties in trading the
shares in the Stock Market. Page 4
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- Changes in Government regulations may cause us to change the manner in which
we conduct business. Page 4
- Because the price of our stock is likely to be volatile, its market price is likely to
be very unpredictable. Page 5
Use of Proceeds Page 5
Determination of Offering Price Page 5
Dilution Page 6
Selling Shareholders Page 8
Plan of Distribution Page 9
Legal Proceedings Page 10
Directors, Executive Officers, Promoters and Control Persons Page 10
Security Ownership of Certain Beneficial Ownership and Management Page 11
Description of Common Stock Page 12
Interest of Named Experts and Counsel Page 12
Disclosure of Commission Position of Indemnification for Securities Act Liabilities Page 12
Organization Within Last Five Years Page 13
Description of Business Page 13
Management's Discussion and Analysis or Plan of Operation Page 14
Description of Property Page 18
Certain Relationships and Related Transactions Page 18
Market for Common Equity and Related Stockholder Matters Page 18
Executive Compensation Page 18
Financial Statements Exhibit 27
Change In and Disagreements With Accountants on Accounting and Financial Disclosure Page 19
Indemnification of Directors and Officers Page 19
Other Expenses of Issuance and Distribution Page 19
Recent Sales of Unregistered Securities Page 20
Exhibits Page 21
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WHERE YOU CAN GET MORE INFORMATION
At your request, we will provide you, without charge, a copy of any exhibits to
our registration statement incorporated by reference in this prospectus. If you
want more information, write or call us at:
eQuorumNet
Investor Relations
301 W. Armour Suite #1000
Kansas City, MO 64111
877-603-4382
Fax 877-603-4383
Our fiscal year ends on June 30. We intend to furnish our shareholders with
annual reports containing audited financial statements and other appropriate
reports. In addition, we are a reporting company and file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may
read and copy any reports, statements or other information we file at the SEC's
public reference room in Washington D.C. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. You can
also request copies of these documents, upon payment of a duplicating fee, by
writing the Public Reference Section of the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. Our SEC filings are also
available to the public on the SEC Internet site at http://www.sec.gov.
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FORWARD-LOOKING STATEMENTS
Some of the statements in this Prospectus discuss future expectations, contain
projections of results of operations or financial condition or state other
"forward-looking" information. Those statements are subject to known and
unknown risks, uncertainties and other factors that could cause the actual
results to differ materially from those contemplated by the statements. We
based the forward-looking information on various factors and using numerous
assumptions.
Important factors that may cause actual results to differ from those
contemplated by forward-looking statements include, for example:
- the success or failure of our efforts to implement our business strategy
- the effect of changing economic conditions,
- changes in government regulations, tax rates and similar matters,
- other risks which may be described in our future filings with the SEC.
We do not promise to update forward-looking information to reflect actual
results of changes in assumptions or other factors that could affect those
statements.
Until _________________, 2000, all dealers that effect transactions in our
shares, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscription.
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ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus.
This summary is not complete and may not contain all the information that you
should consider before investing in the Common Stock. You should read this
entire Prospectus carefully, including the section entitled "Risk Factors."
OUR COMPANY
Business Development and Summary
eQuorumNet, hereinafter referred to as "The Company" or eQuorumNet, was
organized by the filing of articles of incorporation with the Secretary of State
of the State of Nevada on July 15, 1999. The Company formed a Missouri LLC,
eQuorumNet, LC, in order to facilitate the private offering. The Company plans
to dissolve the LLC once the Company becomes publicly traded on the OTC Bulletin
Board. The articles of The Company authorized the issuance of fifty million
(50,000,000) shares of Common Stock at a par value of $0.0001 per share.
The Company is a developmental stage company with the principal business
objective to provide network and e-commerce marketing for upscale and mass
market consumer products direct from the manufacturer. We intend to distinguish
ourselves as "the technology leader" in these fields with quality products,
network marketing compensation plans, marketing materials and support programs,
and our e-commerce site.
The Company intends to identify overseas manufacturers of consumer products
that have a need for a marketing arm in the United States. We believe the
development of new products such as nutritional aids and electronics in the Far
East is expansive and the need for a specialized marketing company for the
United States market has continued to grow in the last ten years. eQuorumNet
plans to market its network marketing and e-commerce services to these
manufacturers.
During our initial phase of development, we are formulating profitability
budgets, and marketing plans with the intention to make presentations to
overseas manufacturing firms to become its marketing company in the United
States. No specific manufacturing companies have signed a contract with
eQuorumNet as yet, and we anticipate 6 to 8 months until the research phase is
completed. A manufacturer/client needs to be identified and contracted with in
order to begin phase II, when revenues will be expected.
The Company intends to build a distributor base and attract a new
generation of distributor leadership by providing additional financial
incentives for the core leadership (i.e., short-term income incentives,
recruiting incentives). We plan to increase long-term stability by addressing
key distributor structure/compensation areas: 1) create several "base of tree"
distributor lines to foster competition and increase opportunities for
aggressive new leadership 2) implement a compensation plan which fosters
long-term sustainable growth by continuing to highly reward aggressive, serious
business builders, while better rewarding the 95% of part-time
consumer/retailer-type distributor, and better ensuring that new distributor
leaders will have a solid organization under them before "breaking away", so
that they will better be able to qualify for leadership bonuses, and 3)
continually train distributor leadership to focus on building deep and wide with
a solid base of consumers and to nurture their networks.
We intend to focus on achieving and maintaining profitability also ensuring
tight financial and systems control by I) being fully prepared for cyclical
sales performance while still providing top quality customer service, 2)
focusing on quality, not quantity, of new staff, 3) instituting
financial/accounting software systems to enable much tighter cash flow and
inventory control, and minimizing long-term contractual arrangements with
suppliers and keeping minimum order quantities as low as possible.
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We plan to generate revenues through the following sources:
- Percentage of product profit
- Fees from warehousing and shipping of products
- Cyber-advertising on our planned e-commerce site
- Commissions on sales, advertising development, and sales management
THE OFFERING
SECURITIES OFFERED NEW STOCK: Up to a maximum of 1,000,000 shares of
Common Stock, $.0001 par value
EXISTING STOCK: Up to a maximum of 170,000 shares of
Common Stock, $.0001 par value, by selling security
holders from private placement by the Company.
OFFERING PRICE NEW STOCK: The shares are offered at $5.00 per share
for total gross offering proceeds of $5,000,000.
EXISTING STOCK: Estimated at $5.00 per share for
registration fee purposes only. As these shares may or
may not be sold by current shareholders, at their
sole discretion, according to Federal and State law,
the Company cannot predict or guarantee an offering
price at the time of sale.
TERMS OF THE OFFERING NEW STOCK: There is no minimum offering. Accordingly,
as shares are sold, we will use the money raised for
our activities. The offering will remain open until
December 31, 2000, or an additional 60 days in the sole
discretion of our management, unless the maximum
proceeds are earlier received or we determine, in our
sole discretion, to cease selling efforts.
EXISTING STOCK: Selling shareholders may, from time to
time, decide to sell their shares. All terms and
conditions of all Federal and State laws, if
applicable, must be complied with.
USE OF PROCEEDS NEW STOCK: We intend to use the net proceeds of this
offering primarily for working capital and general
corporate purposes.
EXISTING STOCK: The Company will receive no proceeds
from the sale of these securities. However, we are
paying the costs of registration of these securities
for the shareholders.
PLAN OF DISTRIBUTION NEW STOCK: This is a best efforts offering, with no
commitment by anyone to purchase any shares. The
offering will be managed by us and the shares will be
offered and sold by our officers, without any discounts
or other commissions.
EXISTING STOCK: To be sold, at shareholders discretion,
with no proceeds going to the Company. See "Plan of
Distribution".
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You should
carefully consider the following information about these risks, together with
the other information contained in this prospectus, before you decide whether to
buy our common stock. If any of the following risks actually occur, our
business, results of operations and financial condition would likely suffer. In
any such case, the market price of our common stock could decline, and you may
lose all or part of the money you paid to buy our common stock.
The risks and uncertainties described below are not the only ones we face.
Additional risks and uncertainties, including those not presently known to us or
that we currently deem immaterial, may also impair our business.
OUR COMPANY IS ONLY RECENTLY ORGANIZED WITH NO OPERATING HISTORY, WHICH MAKES AN
EVALUATION OF US DIFFICULT. Our company was recently organized on July 15,
1999, and is a start-up company. We have no operating history and we do not
have any business prior to our organization. There is nothing at this time on
which to base an assumption that our business plans will prove successful, and
there is no assurance that we will be able to operate profitably. You should
not invest in this offering unless you can afford to lose your entire
investment.
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BECAUSE OF OUR LACK OF FUNDS AND PAST LOSSES, OUR ACCOUNTANTS' AUDIT REPORT
INDICATES THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN. Our independent certified public accountants have pointed out that we
have incurred losses since our inception and have not yet been successful in
establishing profitable operations, raising substantial doubt about our ability
to continue as a going concern. Therefore, our ability to continue as a going
concern is highly dependent upon obtaining additional financing for our planned
operations. If we are unable to raise additional capital, then you may lose
your entire investment.
THE SUCCESS OF OUR COMPANY IS DEPENDENT ON OUR MANAGEMENT WHO HAS LIMITED
EXPERIENCE AND WILL NOT SPEND FULL TIME WORKING FOR OUR COMPANY WHICH MAKES OUR
FUTURE EVEN MORE UNCERTAIN. As compared to many other public companies, our
company does not presently have a depth of managerial and technical personnel.
Our management has only limited experience with the business proposed to be
engaged in by us. Furthermore, Richard Hung, our sole officer and director,
will not be employed full time, at least initially, as he is involved with other
businesses and has other interests which could give rise to conflicts of
interest with respect to the business of and the amount of time devoted to our
company.
OUR BUSINESS IS CAPITAL INTENSIVE AND WE HAVE NO SIGNIFICANT OPERATING CAPITAL
SO WE ARE DEPENDENT UPON THIS OFFERING TO BE ABLE TO IMPLEMENT OUR BUSINESS PLAN
AND OUR LACK OF REVENUES AND PROFITS MAY MAKE OUR OBTAINING ADDITIONAL CAPITAL
MORE DIFFICULT. We presently have no significant operating capital and we are
totally dependent upon receipt of the proceeds of this offering to provide the
capital necessary to commence our proposed business. Upon completion of the
offering, the amount of capital available to us will still be extremely limited,
especially if less than the total amount of the offering is raised since this is
not an underwritten offering. We have no commitments for additional cash
funding beyond the proceeds expected to be received from this offering. In the
event that the proceeds from this offering are not sufficient given the
capital-intensive nature of our business, we may need to seek additional
financing from commercial lenders or other sources, for which we presently have
no commitments or arrangements.
FAILURE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL COULD HARM OUR BUSINESS AND
OPERATING RESULTS. Our success will depend, in part, upon our ability to
attract and retain qualified employees, technical consultants, management
personnel, and participating overseas manufacturers. We are unable to provide
any assurance or guarantee that we will be able to attract, integrate or retain
sufficiently qualified personnel. Our inability to retain additional qualified
personnel in the future could harm our business and operating results.
THERE IS NO CURRENT PUBLIC MARKET FOR OUR SHARES AND THERE CAN BE NO ASSURANCE
THAT ONE WILL DEVELOP IN THE FUTURE, THUS LIMITING THE TRANSFERABILITY OF OUR
SHARES. There is currently no market for any of our shares and no assurances
are given that a public market for such securities will develop after the
closing of this offering or be sustained if developed. While we plan to take
affirmative steps to request or encourage one or more broker-dealers to act as a
market maker for our securities, no such efforts have yet been undertaken and no
assurances are given that any such efforts will prove successful. As such,
investors may not be able to readily dispose of any shares purchased hereby.
OUR CERTIFICATE OF INCORPORATION CONTAINS PROVISIONS LIMITING THE LIABILITY OF
OUR DIRECTORS TO US AND OUR STOCKHOLDERS. Our Certificate of Incorporation
contains provisions, authorized by Nevada law, which eliminate our directors'
liability for breach of fiduciary duty except under limited circumstances.
Theses provisions may limit our ability to have any remedy against a director
who breaches his fiduciary duty.
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SINCE WE DO NOT EXPECT TO PAY DIVIDENDS, YOU CANNOT EXPECT TO RECEIVE INCOME
FROM THIS INVESTMENT. We expect to reinvest our income in our growth.
Therefore, an investor cannot expect to receive income from an investment in us.
OUR MANAGEMENT'S CONTROL OF OUR COMPANY WILL LIMIT THE ABILITY OF OTHER
SHAREHOLDERS TO DIRECT THE MANAGEMENT OF OUR COMPANY. After completion of this
offering, assuming all of the shares offered hereby are sold, our management,
inclusive of our Board of Directors will own 7,330,000 shares of our outstanding
common stock. Thus, management will control approximately 86% of our voting
securities, if all shares offered are sold. As a result, our management will
effectively control the affairs of our company, including the election of all of
our Board of Directors, the issuance of additional shares of common stock for a
stock option plan or otherwise, the distribution and timing of dividends, if
any, and all other matters.
OUR MANAGEMENT MAY BEGIN SELLING SHARES IN JULY, 2001, POTENTIALLY DEPRESSING
THE PRICE OF THE SHARES IN THIS OFFERING. 98% of our presently outstanding
shares of common stock, aggregating 7,330,000 shares of common stock, are
"restricted securities" as defined under Rule 144 promulgated under the
Securities Act and may only be sold pursuant thereto. Richard Hung, our
principal executive officer, owns an aggregate of 7,330,000 restricted shares
that he could begin to sell under Rule 144 beginning on July, 2001. A sale of
shares by Mr. Hung may have a depressing effect upon the price of our common
stock, offered hereby, in any market that might develop.
CURRENT SHAREHOLDERS MAY DECIDE TO IMMEDIATE SELL THEIR SHARES, POTENTIALLY
DEPRESSING THE PRICE OF THE SHARES IN THIS OFFERING. 2% of our presently
outstanding shares of common stock, aggregating 170,000 shares of common stock,
are being registered concurrent with this offering. Once this registration
becomes effective, these shares could be sold. This will have a direct and
immediate affect on the dilution of stock.
INVESTORS WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE BOOK VALUE
OF THEIR SHARES. Immediately after this offering the book value of your shares
will be approximately $.59. This represents dilution of $4.41, or more than
88%, from the purchase price you will pay in the offering assuming all the
shares are sold.
SINCE THIS IS A DIRECT PARTICIPATION OFFERING AND THERE IS NO UNDERWRITER, WE
MAY NOT BE ABLE TO SELL ANY SHARES OURSELVES. No underwriter has been retained
by us to sell these shares. This offering is being conducted as a direct
participation offering, meaning there is no guarantee as to how much money we
will be able to raise through the sale of our shares. Our sole officer will be
selling the shares himself and has limited prior experience in selling
securities. If we fail to sell all the shares we are trying to sell, our
ability to implement our business plan will be materially effected, and you may
lose all or substantially all of your investment.
OUR COMMON STOCK MAY BE CLASSIFIED AS A "PENNY STOCK" WHICH COULD CAUSE
INVESTORS IN THIS OFFERING TO EXPERIENCE DELAYS AND OTHER DIFFICULTIES IN
TRADING THE SHARES IN THE STOCK MARKET. Broker-dealer practices in connection
with transactions in "penny stocks" are regulated by certain rules adopted by
the Securities and Exchange Commission. Penny stocks generally are equity
securities with a price of less than $5.00. The penny stocks generally increase
the amount of disclosure that must be provided by a broker-dealer, making trades
in penny stocks more cumbersome. Because our shares in this offering are priced
at $5.00 per share, it is likely that our shares will be classified as a "penny
stock", and these additional rules and restrictions may decrease the ability of
a shareholder to easily sell his shares in our company, thus potentially
decreasing our shareholders' ability to easily sell shares of our common stock
in the stock market.
CHANGES IN GOVERNMENT REGULATIONS MAY CAUSE US TO CHANGE THE MANNER IN WHICH WE
CONDUCT BUSINESS. We are subject to regulation and licensing of our business by
federal, state and local regulatory agencies. Regulations promulgated by these
agencies are complex and often difficult to comply with. Failure to comply with
regulatory requirements could result in a variety of significant sanctions.
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Due to concerns arising in connection with the increasing popularity and use of
the Internet, a number of laws and regulations may be adopted covering issues
such as user privacy, pricing, characteristics, acceptable content, taxation and
quality of products and services. Such legislation could dampen the growth in
use of the Internet generally and decrease the acceptance of the Internet as a
communications and commercial medium. In addition, the growing infrastructure
and many areas with high Internet use have begun to experience interruptions in
phone service. As a result, certain local telephone carriers have petitioned
governmental bodies to both regulate Internet service providers (ISPs) and
online service provides (OSPs) in a manner similar to long distance telephone
carriers and to impose access fees on ISPs and OSPs. If any of these petitions
or the relief sought is granted the costs of communicating on the Internet could
increase substantially and potentially adversely affect the growth in use of the
Internet.
Further, due to the global nature of the Internet, it is possible that the
governments of many states or foreign countries might attempt to regulate our
transmissions or levy sales or other taxes relating to our activities. We
cannot assure you that violations of local laws will not be alleged or charged
by state or foreign governments, that we might not unintentionally violate such
laws or that such laws will not be modified, or new laws enacted, in the future.
In addition, although import/export regulations are favorable at this time, we
cannot assure such favor in the future, nor can we assure that import/export
costs will not increase, thus reducing the possible profits of our company.
This could drastically affect your investment in our company.
BECAUSE THE PRICE OF OUR STOCK IS LIKELY TO BE VOLATILE, ITS MARKET PRICE IS
LIKELY TO BE VERY UNPREDICTABLE. The market price of our stock, if we are
accepted as a trading company by the OTC Bulletin Board, is likely to be highly
volatile. The market for our stock may be unpredictable because of general
market conditions, as well as factors related to our performance and our ability
to meet market expectations. Such factors as investor perceptions, variations
in our financial condition, announcements regarding our plans and other
developments affecting our future could cause significant fluctuations in the
market price of the stock. In addition, the stock market in general has
recently experienced price and volume fluctuations, which appear to be unrelated
to historical measures such as price-earnings ratio, anticipated revenues,
growth of sales or other investment standards for individual companies. Broad
market fluctuations having nothing to do with our company may also cause the
price of the stock to go down.
ITEM 4. USE OF PROCEEDS
NEW STOCK: We estimate that the net proceeds that we will receive from the sale
of the common stock offered by us will be approximately $5 million. There will
be no fees incurred for expenses related to this offering, as all accounting,
legal, and registration fees have been paid by our sole officer, Richard Hung,
in advance.
We currently intend to use the proceeds from this offering for working capital
and general corporate purposes. Our use of proceeds may vary significantly and
will depend on a number of factors described under "Risk Factors". Accordingly,
our management has broad discretion in the allocation of the proceeds.
EXISTING STOCK: The Company will not receive any of the proceeds from the
resale of security holder's stock.
ITEM 5. DETERMINATION OF OFFERING PRICE
The price at which the securities are being offered for sale hereunder has been
arbitrarily determined by management. Prior to this registration of our common
stock, there has been no public market for any of our securities and there can
be no assurance that a market will develop. The price of our common stock, when
sold by our stockholders, will be determined by broker-dealers and market makers
in negotiated transactions, or trades over the open market where we intend to
list our common stock. The following are some of the factors which may be
considered by broker-dealers, market makers and investors in order to determine
the price for our securities in the public market:
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a) estimates of our business potential
b) prevailing market conditions in the United States economy and the market
in which we intend to compete; and
c) an evaluation of other companies comparable to us ad their ability to
effectively compete with our product(s).
ITEM 6. DILUTION
You will suffer substantial dilution in the purchase price of your stock
compared to the net tangible book value per share immediately after the
purchase.
Dilution is the difference between the public offering price of $5.00 per share
for the common stock offered herein and the net tangible book value per share of
the common stock immediately after its purchase. Our net tangible book value
per share is calculated by subtracting our total liabilities from our total
assets less any intangible assets, and then dividing by the number of shares
then outstanding.
Our net tangible book value prior to the offering, based on the June 30, 2000
audited financial statements, was $NIL, or approximately $ (.01) per common
share. Prior to selling any shares in this offering, we have 7,330,000 shares
of common stock outstanding, which were purchased by the founding shareholder
for $80,000, or $.01 per share. An additional 170,000 shares were purchased in
a private placement for approximately $.025 per share. We are now offering up
to 1,000,000 shares at $5.00 per share. If all shares offered herein are sold,
we will have 8,500,000 shares outstanding upon completion of the offering. Our
post offering pro forma net tangible book value, which gives effect to receipt
of the net proceeds from the offering on all shares sold and payment and
issuance of the additional shares of common stock in the offering, but does not
take into consideration any other changes in our net tangible book value, will
be $5,000,067 or approximately $.59 per share. This would result in dilution to
investors in this offering of $4.41 per share , or 88% from the public offering
price of $5.00 per share. Net tangible book value per share would increase to
the benefit of our present stockholders from $.025 prior to the offering to $.59
after the offering, or an increase of $.565 per share attributable to purchase
of the shares by investors in this offering.
6
<PAGE>
<TABLE>
<CAPTION>
DILUTION TABLE
The following table sets forth the estimated net tangible book value ("NTBV")
per share after the offering and the dilution to persons purchasing shares based
upon various levels of sales achieved:
250,000 500,000 750,000 1,000,000
shares sold shares sold shares sold shares sold
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Public offering price/share $ 5.00 $ 5.00 $ 5.00 $ 5.00
NTBV/share prior to offering NIL NIL NIL NIL
Increase attributable to new investors $ 0.159 $ 0.309 $ 0.459 $ 0.589
Post offering pro forma NTBV/share $ 0.16 $ 0.31 $ 0.46 $ 0.59
Dilution to new investors $ 4.84 $ 4.69 $ 4.54 $ 4.41
</TABLE>
<TABLE>
<CAPTION>
COMPARATIVE DATA
The following table sets forth with respect to existing shareholders and new
investors, a comparison of the number of shares of common stock acquired from
our company, the percentage ownership of such shares, the total consideration
paid, the percentage of total consideration paid and the average price per
share.
Shares Purchased Total Consideration
------------------- --------------------
Number Percent Amount Percent Avg Price Per Share
--------- -------- ---------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Existing
Shareholders 170,000 2% $ 4,173 * $ .025
Ownership
Shareholders 7,330,000 86% $ 80,000 1.5% $ .01
New
Investors 1,000,000 12% $5,000,000 98.4% $ 5.00
--------- -------- ---------- -------- --------------------
8,500,000 100% $5,084,173 100% $ .59
<FN>
* Less than one percent
Please note that it is possible we may not sell any of the shares, in which case
the proceeds to our company will be $0.
</TABLE>
7
<PAGE>
ITEM 7. SELLING SHAREHOLDERS
The following table provides certain information with respect to the selling
shareholders' beneficial ownership of our common stock as of June 30, 2000.
Three of the selling shareholders could be considered affiliates of the
registrant, and therefore those shares, totaling 90,000 shares, or 53% of the
selling shareholders, may only be sold under Rule 144. None of the selling
shareholders are or were affiliated with registered broker-dealers. See "Plan of
Distribution." The selling shareholders possess sole voting and investment power
with respect to the securities shown.
Name of Selling Shareholder Number Percent Percent
of Shares of Class of Class
Before After
Offering(1) Offering(1)
----------- -----------
Russell Anderson 5,875 * *
Earl Atwood 1,750 * *
Ronald Baker 2,000 * *
Gayle Baker 4,000 * *
Richard Cahill 1,500 * *
Mary Bickerton 3,800 * *
Patrick Cahill 1,500 * *
EdieDozier 2,450 * *
Seymour Fields 2,000 * *
Shelly Gehle 500 * *
John Hiler 3,500 * *
International Broadcasting** 35,250 * *
Investors Holdings** 27,250 * *
Harry Jacobberger 21,725 * *
Richard Jarrett 2,700 * *
K&C Corp 1,000 * *
Pete Kulik 2,500 * *
Aldo LaGotteria 500 * *
Kenneth McDermott 2,000 * *
New Source 2,900 * *
Max Raver 2,500 * *
Missouri Investors Trust, LC** 5,000 * *
Linda Modrak 2,300 * *
Hugo Schielke 1,000 * *
Charles Shook 1,000 * *
Jack Stephens 1,500 * *
Eric Whitener 2,500 * *
David Rossi 5,000 * *
Al Statler 2,000 * *
True Law Firm*** 22,500 * *
----------
170,000
* Less than One Percent
** Under the control of J. Thomas Howard, LTD (See Item 19 "Certain
Relationships and Related Transactions")
*** True Law Firm has provided legal counsel to J. Thomas Howard, LTD. J.
Thomas Howard, LTD transferred 22,500 shares from Missouri Investors Trust, LC
in payment. (See Item 19 "Certain Relationships and Related Transactions")
(1) Figures are rounded to the nearest percentage.
8
<PAGE>
ITEM 8. PLAN OF DISTRIBUTION
Reasons for this Registration: The Company's Board of Directors has determined
that it is in the best interest of eQuorumNet. to register these 170,000 shares
at this time, as well as an additional 1,000,000 shares to the public at $5.00
per share. Currently there is no active market for trading. After the
completion of this registration 170,000 shares will be freely tradable. After
this registration 7,330,000 shares or approximately 86% of the shares issued and
outstanding will remain restricted and cannot be sold until such time as a
subsequent registration statement if filed by the Company, or with the passage
of time, the owners of the restricted stock can obtain removal of the
restriction pursuant to rules and regulations of the SEC, including Rule 144 or
144(k).
The selling security holders have advised us that, prior to the date of this
prospectus, they have not made any agreement of arrangement with any
underwriters, brokers, or dealers regarding the distribution and resale of the
shares. Further, selling security holders have agreed not to sell their shares
until this offering is completed. If we are notified, however, by a selling
security holder that any material arrangement has been entered into with an
underwriter for the sale of their shares, then, to the extent required under the
Securities Act of 1933 or the rules of the Securities and Exchange Commission, a
supplemental prospectus will be filed to disclose the following information as
the Company believes appropriate:
- The name of the participating underwriter;
- The number of the shares involved
- The price at which such shares are to be sold, the commissions to be
paid or discounts or concessions to be allowed to such underwriter, and
- Other facts material to the transaction.
The existing shares have not been registered for sale by the selling security
holders under the securities laws of any state as of the date of this
prospectus. Brokers or dealers effecting transactions in these securities
should confirm the registration thereof under the securities laws of the states
in which transactions occur or the existence of any exemption from registration.
We expect that the selling security holders will sell their securities covered
by this prospectus through customary brokerage channels, either through
broker-dealers acting as agents or brokers for the seller, or in the
over-the-counter market, or at private sale or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The selling security holders may effect such
transactions by selling the securities to or through broker-dealers, and such
broker-dealers may receive compensation in the form of concessions or
commissions from the selling security holders and/or the purchasers of the
securities for whom they may act as agent (which compensation may be in excess
of customary commissions). The selling security holders and any broker-dealers
that participate with the selling security holders in the distribution of shares
may be deemed to be underwriters and commissions received by them and any profit
on the resale of securities positioned by them might be deemed to be
underwriting discounts and commissions under the Securities Act. There can be
no assurance that any of the selling security holders will sell any or all of
the common stock offered by them hereunder.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144. In general, under Rule 144 as currently in effect, any
person (or persons whose shares are aggregated) who has beneficially owned
restricted securities for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of the issuer's common stock or the average weekly
trading volume during the four calendar weeks preceding such sale, provided that
certain public information about the issuer as required by Rule 144 is then
available then the seller complies with certain other requirements. Affiliates
may sell unrestricted securities in compliance with Rule 144 subject to the
holding period requirement. A person who is not an affiliate, has not been an
affiliate within three months prior to sale, and has beneficially owned the
restricted securities for at least two years, is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
9
<PAGE>
NO ESCROW OF PROCEEDS
There is no escrow of any of the proceeds of this offering. Accordingly, we
will have use of such funds once we accept a subscription and funds have
cleared. Such funds shall be non-refundable to subscribers except as may be
required by applicable law.
LISTING AND TRADING OF THE COMMON STOCK IN THE FUTURE
Immediately after this registration is declared effective, the Company intends
to apply to NASD for listing of the Common stock on NASD's OTC Bulletin Board
and it is anticipated that trading in the common stock should commence shortly
after approval of the listing is received from NASD. No assurance can be given
as to when that approval will be received.
The Company expects that the common stock will initially be traded on the OTC
Bulletin Board after the effectiveness of the registration statement. Shares of
the common stock will be freely transferable, except for shares beneficially
owned by persons who may be deemed to be "affiliates:" of eQuorumNet under the
Securities Act. Persons who may be deemed to be affiliates of the Company
include individuals or entities that control, are controlled by or under common
control with the Company, and include the directors and principal executive
officers of the Company as well as any stockholder that owns 10% or more of the
total stock issued and outstanding. Persons who are affiliates of the Company
will be permitted to sell their shares of common stock only pursuant to an
effective registration statement under the Securities Act or an exemption from
the registration requirements of the Securities Act, which is applicable to
them.
ITEM 9. LEGAL PROCEEDINGS
We are not subject to any pending litigation, legal proceedings, or claims.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth the directors and executive officers of our
company, their ages, term served and all officers and positions with our
company. A director is elected for a period of one year and thereafter serves
until his or her successor is duly elected by the stockholders and qualifies.
Officers and other employees serve at the will of the Board of Directors.
There are no arrangements or understandings regarding the length of time a
director of our company is to serve in such a capacity. Our director holds no
directorships in any other company subject to the reporting requirements of the
Securities Exchange Act of 1934.
Name of Director Age Term Served Positions with Company
------------------ --- ----------- ----------------------
Richard Hung 48 Since inception President, Secretary,
Treasurer & Director
Richard Hung, President, Chairman
Richard Hung graduated from the University of Toronto, Toronto, Ontario, Canada,
with B.A.Sc. (Industrial Engineering) in 1976. In 1978, he received a Bachelor
of Commerce, with a major in organization behavior from the University of
Windsor, Windsor, Ontario, Canada, and a M.B.A.with a major in finance in 1979.
He has more than 15 years of mass volume manufacturing experience in the
consumable electronics industry, and 6 years of multi-level marketing operations
management He speaks fluent English and Chinese (Cantonese, Chiu Chow), plus
elementary Mandarin.
Mr. Hung is currently Senior Vice President/Operations at Applied International
Holdings Ltd, a Hong Kong company operating in Hong Kong, China, North America
and Europe. Applied International Holdings Ltd has 1500 employees and is
involved in consumer electronics manufacturing, and multi-level network
marketing. As Senior Vice President/Operation since 1994, Mr. Hung reports
directly to the Chairman, manages all manufacturing related function, and is
involved in new product development, budget review, P/L. In 1993, Mr. hung was
Vice President/Operations for one of the company's subsidiaries in the United
States that specialized in multi-level network marketing for consumable
products. In that capacity, he was responsible for the customer service center
with more than 300 staff members, managed order entry, customer service, MIS,
purchasing, quality control and shipping departments. As General Manager of
another company subsidiary in 1992, Mr. hung was responsible for a manufacturing
center with 3000 employees in China, managed all the manufacturing related
departments, and liased with the overseas subsidiaries on the logistics and
shipments.
10
<PAGE>
From 1987 to 1992, Mr. Hung was employed by Golden Alpha Electronics Ltd, an
electronic company in the IBM compatible market and old fashioned wood cassette
radios. He managed a manufacturing plant in China, was involved in the product
development, toolings, pilot and mass production, worked with customers in the
development and the production of 80286 and 80385 IBM compatibles.
From 1985 to 1986, Mr. I-lung was Operations Manager for Commodore Electronic
Ltd, a USA Personal Home Computer Manufacturer. lie managed a 24 hour continuous
mass volume production, 6 days a week with total production employees of 1000 in
the Hong Kong factory. He headed Production Engineering, Plant Engineering,
Production and Process Control Engineering departments.
From 1984 to 1985, Mr. Hong was General Manager of Bondwell Computech Ltd, a
computer electronic company engaged in the home and small business computer
industry. He began as the General Manager of one of the international marketing
companies of the group and then as the General Manager of one of the major
manufacturing subsidiaries within the group. He managed the Hong Kong plant
manufacturing, Purchasing, Material Control, Quality Control, Shipping,
Accounting and Personnel, development, and international marketing.
Mr. Hung is not an officer or director of a publicly traded company at this
time.
Notable achievements during his career include:
* Trimmed down the monthly factory operating expenses from HK$I3mil to
HK$9mil while maintaining the same sales value
* Cost reduction via renegotiations with UPS, Federal Express, Visa,
Tel-e-Check
* Improved ship-out time to within 36 hours of sales order placements
* Project leader who organized network marketing conventions with 12,000
attendants
* Improved quality of packing by applying industrial engineering approaches
* Improved profit margins of marketing materials by renegotiations with USA
local vendors
* Maintained an operating profit before tax to an average of HK$l0mil per
month
for 10-consecutive months
* Launched production of 10 new products within a six month period
* Shipment of more than 1 million units per month
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSHIP AND MANAGEMENT
The following table sets forth certain information as of June 30, 2000, with
respect to the beneficial ownership of Common Stock by (i) each person who to
the knowledge of the Company, beneficially owned or had the right to acquire
more than 5% of the Outstanding Common Stock, (ii) each director of the Company
and (iii) all executive offices and directors of the Company as a group.
Name of Beneficial Owner (I) Number Percent
of Shares of Class (2)
Richard Hung(3) 7,330,000 98%
301 W. Armour #1000
Kansas City, MO 64111
All Directors & Officers as a Group 7,330,000
11
<PAGE>
(1) As used in this table, "beneficial ownership" means the sole
or shared power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to dispose
of, or to direct the disposition of, a security). In addition, for purposes of
this table, a person is deemed, as of any date, top have "beneficial ownership"
of any security that such person has the right to acquire within 60 days after
such date.
(2) Figures are rounded to the nearest percentage.
ITEM 12. DESCRIPTION OF EQUORUMNET'S COMMON STOCK
Our Certificate of Incorporation authorizes the issuance of 50,000,000 shares of
common stock, with a par value of $.0001 per share. Holders of common stock are
entitled to one vote for each share owned on each matter submitted to a vote of
the shareholders. Currently there are 7,500,000 shares of common stock issued
and outstanding. The Company's Board of Directors has the legal authority to
issue the remaining unissued authorized shares, without shareholder approval,
for any purpose deemed to be in the best interest of eQuorumNet. Shares could
be issued to deter or delay a takeover or other change of control of eQuorumNet.
All the shares of the common stock which are now outstanding are fully paid,
validly issued and nonassessable and holders of the common stock have no
preemptive rights to subscribe for or to purchase any additional securities
issued by eQuorumNet. Upon liquidation, dissolution or winding up of the
Company, the holders of common stock are entitled to share ratably in the
distribution of assets after payment of debts and expenses. There are no
conversion, sinking fund or redemption provisions, or similar restrictions with
respect to the common stock.
Holders of the common stock are entitled to receive dividends, when and if
declared by the Board of Directors, out of funds legally available. See
"Dividend Policy".
The transfer agent for eQuorumNet's common stock is Florida Atlantic Stock
Transfer, 7130 Nob Hill Road, Tamarac, Florida 33321.
DIVIDEND POLICY
We have never paid or declared a cash dividend on its common stock and does not
intend to pay cash dividends in the foreseeable future. The payment by
eQuorumNet of dividends, if any, on its common stock in the future is subject to
the discretion of the Board of Directors and will depend on our earnings,
financial condition, capital requirements and other relevant factors.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL.
N/A
ITEM 14. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES.
No director of eQuorumNet will have personal liability to eQuorumNet or any of
its stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability. The foregoing
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to eQuorumNet or our stockholders, (ii)
for acts or omissions not in good faith or, which involve intentional misconduct
or a knowing violation of law, (iii) under applicable Sections of the Nevada
Revised Statutes, (iv) the payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes or, (v) for any transaction from which the
12
<PAGE>
director derived an improper personal benefit. The Bylaws provide for
indemnification of the directors, officers, and employees of eQuorumNet in most
cases for any liability suffered by them or arising out of their activities as
directors, officers, and employees of eQuorumNet if they were not engaged in
willful misfeasance or malfeasance in the performance of his or her duties;
provided that in the event of a settlement the indemnification will apply only
when the Board of Directors approves such settlement and reimbursement as being
for the best interests of the Corporation. The Bylaws, therefore, limit the
liability of directors to the maximum extent permitted by Nevada law (Section
78.751). The officers and directors of eQuorumNet are accountable to eQuorumNet
as fiduciaries, which mean they are required to exercise good faith and fairness
in all dealings affecting eQuorumNet. In the event that a shareholder believes
the officers and/or directors have violated their fiduciary duties to the
Company, the shareholder may, subject to applicable rules of civil procedure, be
able to bring a class action or derivative suit to enforce the shareholder's
rights, including rights under certain federal and state securities laws and
regulations to recover damages from and require an accounting by management.
Shareholders who have suffered losses in connection with the purchase or sale of
their interest in eQuorumNet in connection with such sale or purchase, including
the misapplication by any such officer or director of the proceeds from the sale
of these securities, may be able to recover such losses from eQuorumNet.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS.
See Item 19 "Certain Relationships and Related Transactions"
ITEM 16. DESCRIPTION OF BUSINESS
eQuorumNet has a principal business objective to emerge as a global leader in
the network marketing industry, with millions of distributors around the world
enjoying the full benefits of the secure and enhanced lifestyle that its
products/services/company could bring. The Company's focus will be to develop a
stable, cohesive distributor force to market its targeted products. As a
secondary objective, but equally important, eQuorumNet intends to expand its
marketing capabilities to the Internet via e-commerce and reusable, mass
products.
Strategy
The principal components of the Company's strategy are as follows:
- Provide highly attractive financial incentives needed to attract powerful
new distributor leaders and reward loyal leadership as well as the key
management team
Under development is a Compensation Plan which intends to foster
long-term sustainable growth of its distributors and provide for a
continuous training program of distributors.
- Identify future products and expansions, with profitability and
marketability
- Focus on achieving and maintaining profitability
- Maintain tighter cash flow and inventory control through
financial/accounting software systems
- Minimize long-term contractual arrangements with suppliers
- Identify cyclical sales performances and prepare accordingly
Distribution Methods of the Products or Services
a) Distribution:
Distribution of products will be carried out through the
following channels:
13
<PAGE>
1) Network Marketing: Distributors will sell products directly from
the manufacturer to the consumer. The Company believes this will cut
out the many levels of wholesalers, distributors and retailers, and
reduces the markup that is placed on the products at each of these
levels. The result is intended to be larger profits, passed along to
the consumer, the distributor and the Company.
2) e-Commerce. Mass-marketed products such as electronics, and
lifestyle services will be sold via the Internet to the general
public. The Company hopes to achieve a high volume site with added
income from advertising banners and referrals.
b) Advertising and Promotion
The Company's advertising is expected to he through
high-visibility methods, including press releases and targeted print and media
campaigns, as well as Internet sources. Effective tours in key cities to attract
distributors may be implemented, as well as a yearly convention for distributors
and leaders. Product videos, CD-RoMs, DVDs can he developed to attract potential
new distributors. Training kits for each distributor including a continual
training programs intended to motivate and to create loyal distributors can be
designed.
c) Customer Service
The Company recognizes the need for an effective and responsive
customer service base. To that end, the Company is developing a Customer Service
Plan to include a Distributor Support Plan.
ITEM 17. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with, and is
qualified in its entirety by the Financial Statements section included below.
With the exception of historical matters, the matters discussed herein are
forward looking statements that involve risks and uncertainties. Forward looking
statements include, but are not limited to, statements concerning anticipated
trends in revenues and net income, the date of introduction or completion of the
Company's products, projections concerning operations and available cash flow.
The Company's actual results could differ materially from the results discussed
in such forward-looking statements. The following discussion of the Company's
financial condition and results of operations should be read in conjunction with
the Company's financial statements and the related notes thereto appearing
elsewhere herein.
A. OVERVIEW
(1) The Company, since raising its initial capital, has concentrated on
researching and developing contacts in the manufacturing community to identify
quality products for its network marketing and e-commerce site. The Company has
specifically targeted new products and services aimed at "securing and enhancing
life" including 1) Direct-from-factory electronics via Internet 2) New
generation security products 3) Lifestyle services (recreation, travel sports
memberships) 4) Nutritional and personal care products e.g., "nourish and
cleanse" Chinese herbal supplements, skin care systems.
During the initial phase of researching and developing contacts, the
Company does not anticipate the need for any additional capital. Its office at
301 W. Armour Suite 1000, Kansas City, MO 64111 is being used free of charge.
On July 24, 1999, the Company completed an offering of 170,000 shares of the
Common Stock of the Company to approximately '~9 unaffiliated shareholders. This
offering was made in reliance upon an exemption from the registration provisions
of Section 4(2) of the Securities Act of 1933 (the "Act"), as amended, pursuant
to Regulation 1), Rule 504 of the Act. As of the date of this filing, the
Company has approximately 7,500,000 shares of its $00001 par value common voting
stock issued and outstanding which are held by 30 shareholders of record.
14
<PAGE>
In addition, management of the Company believes the needs for additional capital
going forward will be derived somewhat from internal revenues and earnings
generated from the sale of its products and services. If the Company is unable
to begin to generate revenues from its anticipated products, management believes
the Company will need to raise additional funds to meet its cash requirements.
We believe that our initial revenues will h~ primarily dependent upon the
number of distributors it has, the number of customers it has, and the profit
margins on the products it offers. Realization of significant sales of our
products and services during the fiscal year ending December 31, 2000 is vital
to our plan of operations. To that end, realization of developing a stable
organization of distributors is paramount to our plan.
(2) No engineering, management or similar report has been prepared or
provided for external use by the Company in connection with the offer of
its securities to the public.
(3) We believe that the our future growth and success will be largely
dependent on its ability to obtain several overseas manufacturers as
clients, to attract a stable distributor force, its ability to target
repeat sales through reusable products, the marketing efforts for its
e-commerce site, and its choice of profitable products.
We have yet to incur any research and development costs from July 15, 1999,
to present, and the Company does not expect to incur any significant research
amid development expenses during the fiscal year ending December 31, 2000.
(4) We expect to purchase regular office equipment, i.e., desks,
calculators, a computer when revenues warrant such purchases, and a
client/manufacturer has hired the Company to do its marketing. We do
not have any facilities or equipment to sell at this time.
(5) We anticipate that we will hire and add 5 full time employees over the
next twelve (12) months, as well as distributors who will be paid on a
commission-only basis. Employees will not be added during Phase I,
the research period. Employees will be added as revenues permit.
(6) From inception in July, 1999 through present, we have devoted a
majority of our time on research and planning. We have incurred
start up costs of $80,000.00 and do not anticipate a large amount of
additional start up costs. Richard Hung, individually, has paid all
start up costs. This cost includes all start up costs of attorneys,
filing fees, and accountants. This $80,000.00 start up costs is borne
solely by Richard Hung, and is part of his contribution to the
Company, with no expected payback from the Company.
B. SEGMENT DATA
There were no revenues from sales since its inception July 15, 1999. Because
there was no revenue, no table showing percentage breakdown of revenue by
business segment or products/service line is included.
C. RESULTS OF OPERATIONS
15
<PAGE>
There were no revenues from sales up to the date of this filing. Since its
inception, July 15, 1999, we have formed the Company's organization to pursue
its business strategy.
a) Pre-Operating Expenses. Pre-Operating expenses were not necessary, as all
costs for the Company's legal organization, legal expenses. and financial audits
are included in the start of costs of $80,000, to be paid in full by Richard
Hung, individually.
b) Revenues. The Company is a development state enterprise as defined in SFAS
#7, and has yet to generate any revenues. The Company is devoting substantially
all of its present efforts to: (1) develop the contacts to attract overseas
manufacturers (2) developing plans of operations (network marketing, customer
service, e-commerce), and (3) obtaining sufficient capital to commence full
operations.
D. LIQUIDITY AND CAPITAL RESOURCES
As of the date of this filing, we have $67on hand or in the bank. Until such
time as we set forth and implement our business plan, there will he no need for
additional capital, since Richard Hung is contributing his time and expenses at
no cost during that time. Although the complete strategic business plan has not
yet been fully researched and put together, management, at present, foresees the
possibility of the need to raise about $500,000 in additional capital to fully
enter the revenue stage of its plan.
The receipt of funds from Private Placement Offerings and loans obtained through
private sources by the Company are a possibility to fund the Company until
revenues can be achieved. Since inception, we have financed our cash flow
requirements though issuance of common stock and through contributions from
Richard Hung. As we expand our activities, we may continue to experience net
negative cash flows from operations, pending receipt of sales revenues.
Additionally we may be required to obtain additional financing to fund
operations through Common Stock offerings and bank borrowings, to the extent
available, or to obtain additional financing to the extent necessary to augment
our working capital.
Over the next twelve months, we intend to increase our revenues by obtaining an
overseas manufacturer/client and network marketing its products to consumers in
the United States. However, the Company will continue the research and planning
of clients/products and in-depth plans. We believe that existing capital and
anticipated funds from operations will be sufficient to sustain operations and
planned expansion in the next three(3) to six(6) months. However, the need for
additional capital after that time may be necessary. Consequently, we may seek
additional financing in order to sustain operations. There can be no assurance
such additional funds will be available or that, if available, such additional
funds will be on terms acceptable to the Company. In either case, the financing
could have negative impact on the financial conditions of the Company and its
Shareholders.
We anticipate that we will incur operating losses in the next twelve months. The
Company's lack of operating history make predictions of future operating results
difficult to ascertain. Our prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stage of development, particularly companies in new and rapidly evolving
markets. Such risks for the Company include, but are not limited to, an evolving
and unpredictable business model and the management of growth. To address these
risks, the Company must, among other things, obtain a customer base, implement
and successfully execute its business and marketing strategy, continue to
develop its overseas contacts, provide superior customer services and order
fulfillment, respond to competitive developments, and attract, retain and
motivate qualified personnel. There can be no assurance that we will be
successful in addressing such risks, and the failure to do so can have a
material adverse effect on our business prospects, financial condition and
results of operations.
16
<PAGE>
Initial financing is only to provide funds to prove the business be necessary to
obtain manufacturer/clients. We hope to enter into additional funding
arrangements through strategic partnerships, merger, equity offering or debt
offering. Nothing has been secured as of this time.
E. GOVERNMENTAL APPROVAL, REGULATION AND ENVIRONMENTAL COMPLIANCE
Other than general business licensing requirements, management is unaware
of any governmental approval necessary for the Company's operations in the
marketing industry. In addition, we are unaware of existing or probably
governmental regulations on the marketing industry. We anticipate no material
costs associated with compliance with either federal, state or local
environmental law.
Export laws for Hong Kong are currently favorable for the United States, we
believe. However, there can be no assurance that this condition will continue
and that new laws or embargos or other hazardous enactments could adversely
affect the our plan.
F. RISKS ASSOCIATED WITH OPERATIONS
Our long-term success is partially predicated on the strength of obtaining
a favorable alliance with an overseas manufacturer with profitable and
marketable products.
Its principal competition consists of entities within the marketing
industry which are well established. The Company's ability to compete against
these more established and more financially stable companies is premised upon
our ability to provide effective network marketing and e-commerce.
Another uncertainty is the dependence on key personnel familiar with the
control, administration, development, and training of distributors. The loss of
Richard Hung, President, could have an adverse effect on its continued
operations.
Although research in the Company indicates that the Internet will continue
with little, if any regulation, and will continue to become a viable marketing
tool, there can be no assurances that the Internet will prove to be a profitable
outlay for us in our business plans.
While our plan is being researched and developed thoroughly, there is no
assurance the plan will be accepted in or by the marketplace, nor, that if it is
accepted, that demand will be sufficient to make the Company profitable. We
cannot project with certainty the outcome of our operations, and there are no
assurances that we will operate profitably in either the near or long term.
Local, national, and international economic conditions may have a
substantial adverse affect on the efforts of the Company. We cannot guarantee
against the possible eventuality of any potential adverse economic conditions.
G. COMPETITION
We compete with numerous other marketing companies. Many of these
competitors have substantially greater resources than eQuorumNet. We have
identified a niche in the market as it relates to network marketing, selling a
manufacturer's product on a one-to-one basis to a consumer.
H. DEVELOPING AND CHANGING MARKET
The market conditions for importing products from overseas is continually
evolving and changing. We believe the current conditions will continue favorably
for this type of venture. There can be no assurance that our assessment of the
situation is correct, nor that the products it selects will be accepted by the
consumer.
17
<PAGE>
I. EMPLOYEES
As of the current date, we have no paid employees. The Company is dependent
on Richard Hung, President. Mr. Hung does not plan to spend full time efforts on
the research and development of products, plans, and clients during the first
six months of operation. Once these plans are formulated, we will need to hire
full time operational staff as our operations commence. Mr. Hung is fully
prepared to devote full time efforts at that time, but there can be no assurance
that the current full time employment of Mr. Hung would not offer a better
salary and package to Mr. Hung and Mr. Hung could abandon the Company. The
Company's future success also depends on its ability to attract and retain other
qualified personnel, for which competition is intense. The loss of Mr. Hung or
our inability to attract and retain other qualified employees could have
material adverse affect on the Company.
ITEM 18. DESCRIPTION OF PROPERTY
We currently pay no rent for its executive offices. This office
arrangement is considered adequate for current and short-term operations of the
Company.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Business Consultants. The Company has relied on J. Thomas Howard, LTD as key
business consultants while in its development stage. J. Thomas Howard, LTD has
provided the assistance in preparing the Company to become a reporting company.
For this assistance, the Company has issued 90,000 shares of Common Stock at
$.02 per share to companies under control by J. Thomas Howard, LTD. One of
those companies, Missouri Investor's Trust, LC, transferred 22,500 of those
shares to True Law firm for legal fees incurred on behalf of J. Thomas Howard,
LTD.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
eQuorumNet's shares of Common Stock are not registered with the U.S. Securities
and Exchange Commission under the Securities Act of 1933, as amended
(hereinafter referred to as the "Act"), and with the exception of certain shares
issued pursuant to Regulation D-504, are "restricted securities."
Since its inception July 15, 1999, we have not paid cash dividends on
its Common Stock. It is the present policy of the Company not to pay cash
dividends and to retain future earnings to support the Company's growth. Any
payments of cash dividends in the future will be dependent upon, among other
things, the amount of fund available therefore, our earnings, financial
condition, capital requirements, and other factors which the Board of Directors
deem relevant.
As of June 30, 2000, there were 30 Common Shareholders of record.
ITEM 21. EXECUTIVE COMPENSATION.
Richard Hung has not received, nor is he projected to receive, any compensation
for his services, including his capacities as Chairman and President other than
the issuance of the Company's Common Stock as set forth in Item 4 above.
18
<PAGE>
Should the Company become profitable and produce commensurate cash flows
from operations and/or through the sale of strategic investments, there may be
some level of compensation paid to him. However, this will be subject to
approval by the Company's Board of Directors. It is the responsibility of the
Company's Officers and its Board of Directors to determine the timing of any
remuneration for key personnel. Such determination and timing thereof will be
based upon such factors as positive cash flow to include equity sales, operating
cash flows, capital requirements, and a positive cash flow balance in excess of
$12,500 per month. At the time cash flow reaches this point, and appears to be
sustainable, the Officers and Board of Directors will again readdress the
compensation of its key personnel and set forth a more formal and complete plan
for remuneration in line with operations of the Company. At present, our
management cannot accurately estimate the point when revenues and operating cash
flows will be sufficient enough to implement this compensation plan, nor are
they able to estimate the exact amount of compensation at this time.
There are no annuity, pension, or retirement benefits proposed to be
paid of Officers, Directors, or employees of the Company in the event of
retirement at normal date pursuant to any presently existing plan provided or
contributed to by the Company, or any of its subsidiaries, if any.
KEY OFFICER EMPLOYMENT AGREEMENTS
No employment contracts have been negotiated or signed as yet.
However, we plan on having all key employees and officers sign a detailed
employment contract as appropriate.
COMPENSATION OF DIRECTORS
All directors will be reimbursed for expenses incurred in attending
Board or committee meetings.
STOCK OPTION PLAN AND NON-EMPLOYEE DIRECTORS' PLAN
No stock option plan has been set forth, and no non-employee directors'
plan has been instituted. The Company may decide, at a later date, and reserves
the right to, initiate these plans as deemed necessary by the Board.
ITEM 22. FINANCIAL STATEMENTS.
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2000
WILLIAMS & WEBSTER PS
CERTIFIED PUBLIC ACCOUNTANTS
BANK OF AMERICA FINANCIAL CENTER
W 601 RIVERSIDE, SUITE 1940
SPOKANE, WA 99201
(509) 838-5111
<PAGE>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 2000
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6
<PAGE>
Board of Directors
eQuorumNet
301 W. Armour #1000
Kansas City, MO 64111
Independent Auditor's Report
We have audited the accompanying balance sheet of eQuorumNet (a development
stage company) as of June 30, 2000 and the related statements of operations,
cash flows, and stockholder's equity for the period from July 15, 1999
(inception) through June 30, 2000. 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 eQuorumNet as of June 30, 2000
and the results of its operations and its cash flows for the period from July
15, 1999 (inception) to June 30, 2000, in conformity with generally accepted
accounting principles.
As discussed in Note 2, the Company has been in the development stage since its
inception and has no revenues. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing requirements,
and the success of future operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
regarding those matters are described in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
August 3, 2000
F - 1
<PAGE>
<TABLE>
<CAPTION>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2000
<S> <C>
A S S E T S
CURRENT ASSETS
Cash $ 67
----------------------
TOTAL CURRENT ASSETS 67
----------------------
TOTAL ASSETS $ 67
======================
L I A B I L I T I E S & S T O C K H O L D E R S ' E Q U I T Y
TOTAL CURRENT LIABILITIES $ -
----------------------
COMMITMENTS AND CONTINGENCIES -
----------------------
STOCKHOLDER'S EQUITY
Common stock, 50,000,000 shares authorized,
$.0001 par value; 7,500,000 shares
issued and outstanding 750
Additional paid-in capital 83,423
Deficit accumulated during development stage (84,106)
----------------------
TOTAL STOCKHOLDERS' EQUITY 67
----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 67
======================
</TABLE>
F - 2
<PAGE>
<TABLE>
<CAPTION>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FROM JULY 15, 1999 (INCEPTION) TO JUNE 30, 2000
<S> <C>
R E V E N U E S $ -
------------------
E X P E N S E S 84,106
------------------
TOTAL OPERATING EXPENSES 84,106
------------------
LOSS BEFORE INCOME TAXES (84,106)
INCOME TAXES -
------------------
NET LOSS $ (84,106)
==================
Net loss per common share $ (0.01)
==================
Basic and diluted weighted average number of
common stock shares outstanding 7,500,000
==================
</TABLE>
F - 3
<PAGE>
<TABLE>
<CAPTION>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OF JULY 15, 1999 (INCEPTION) TO JUNE 30, 2000
Common Stock Deficit Accumulated Total
-----------------
Number Additional During Stockholders'
of Shares Amount Paid-in Capital Development Stage Equity
--------- ------ --------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock in July 1999
for cash at an average of $.0006 per share 7,500,000 $ 750 $ 3,423 $ - $ 4,173
Additional capital contributed by the president
of the Company - - 80,000 - 80,000
Loss for the period ending June 30, 2000 - - - (84,106) (84,106)
--------- ------ --------------- ----------------- -------------
Balance at June 30, 2000 7,500,000 $ 750 $ 83,423 $ (84,106) $ 67
========= ====== =============== ================= ===========
</TABLE>
F - 4
<PAGE>
<TABLE>
<CAPTION>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD OF JULY 15, 1999 (INCEPTION) TO JUNE 30, 2000
<S> <C>
Cash flows from operating activities:
Net loss $ (84,106)
---------------
Net cash used in operating activities (84,106)
---------------
Cash flows from investing activities: -
---------------
Cash flows from financing activities:
Cash contributed by president of the Company 80,000
Issuance of stock 4,173
---------------
Net cash provided by financing activities 84,173
---------------
Net increase in cash 67
Cash, beginning of period -
---------------
Cash, end of period $ 67
===============
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest and income taxes:
Interest $ -
===============
Income taxes $ -
===============
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Start-up costs paid by shareholder $ 80,000
===============
</TABLE>
F - 5
<PAGE>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
eQuorumNet, (hereinafter "the Company"), was incorporated in July 1999 under the
laws of the State of Nevada primarily for the purpose of internet marketing of
electronics, nutritional and personal care products. At June 30, 2000, the
Company is operating from the residence of a business associate rent free, in
Kansas City, Missouri. In August 1999, the Company formed eQuorumNet, LLC, a
limited liability company, to facilitate the Initial Public Offering (IPO) of
the Company's stock. This limited liability company was dissolved upon
finalization of the Company's IPO.
The Company is in the development stage and as of June 30, 2000 had not realized
any significant revenues from its planned operations.
The Company's year-end is June 30.
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of eQuorumNet is presented to
assist in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management which is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements.
Development Stage Activities
------------------------------
The Company has been in the development stage since its formation on July 15,
1999. It is primarily engaged in internet marketing.
Going Concern
--------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has incurred a
deficit of $84,106 since inception. The Company, being a developmental stage
enterprise, is currently putting technology in place which will, if successful,
mitigate these factors which raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
Management has established plans designed to increase the sales of the Company's
products. Management intends to seek new capital from new equity securities
issuances that will provide funds needed to increase liquidity, fund internal
growth and fully implement its business plan.
F - 6
<PAGE>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
----------------------------
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
Accounting Method
------------------
The Company's financial statements are prepared using the accrual method of
accounting.
Basic and Diluted Loss per share
-------------------------------------
Basic loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted average
number of shares was calculated by taking the number of shares outstanding and
weighting them by the amount of time that they were outstanding. Diluted loss
per share is the same as basic loss per share as there are no common stock
equivalents outstanding.
Income Taxes
-------------
No provision for taxes or tax benefit has been reported in the financial
statements, as there is not a measurable means of assessing future profits or
losses.
Year 2000
----------
Like other companies, eQuorum.Net could be adversely affected if the computer
systems the Company, its suppliers or customers use do not properly process and
calculate date-related information and data from the period surrounding and
including January 1, 2000. This is commonly known as the 'Year 2000' issue.
Additionally, this issue could impact non-computer systems and devices such as
production equipment and elevators, etc. As of June 30, 2000, the Company does
not have any evidence of problems associated with the year 2000 issue.
The Company has not purchased any software or hardware. When the Company does
purchase software and hardware, it will determine at that time if there could be
any adverse effects to the Company's operations regarding Year 2000 issues.
Management also believes that Year 2000 issues should not adversely affect the
ability of its clients and customers to conduct business with the Company. Any
costs associated with Year 2000 compliance will be expensed when incurred.
Fair Value of Financial Instruments
---------------------------------------
Unless otherwise stated, the carrying amounts for the Company's cash, marketable
securities, accounts receivable, accounts payable, notes payable and accrued
liabilities approximate their fair value.
F - 7
<PAGE>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impaired Asset Policy
-----------------------
In March 1995, the Financial Accounting Standards Board issued a statement
titled "Accounting for Impairment of Long-lived Assets." In complying with this
standard, the Company will review its long-lived assets quarterly to determine
if any events or changes in circumstances have transpired which indicate that
the carrying value of its assets may not be recoverable. The Company does not
believe any adjustments are needed to the carrying value of its assets at June
30, 2000.
Use of Estimates
------------------
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
Derivative Instruments
-----------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 122, "Accounting for Derivative
Instruments and Hedging Activities." This standard establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that an entity recognizes all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
At June 30, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
NOTE 3 - PROPERTY AND EQUIPMENT
At June 30, 2000 the Company does not own any property or equipment.
NOTE 4-COMMON STOCK
Upon incorporation, the Company authorized the issuance of 50,000,000 shares of
common stock at a par value of $0.0001 per share of which 7,500,000 shares are
outstanding. Holders of shares of common stock are entitled to one vote for
each share on all matters to be voted on by the stockholders, but have no
cumulative voting rights. Holders of shares of common stock are entitled to
share ratably in dividends, if any, as may be declared by the Board of Directors
in its discretion, from funds legally available therefor. The Company has not
authorized any preferred stock, convertible stock, warrants or options as of
June 30, 2000.
F - 8
<PAGE>
EQUORUMNET
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 5 - CONTRIBUTED CAPITAL
The major stockholder of the Company contributed $80,000 for the payment of
expenses. This amount was recorded as additional paid-in capital.
F - 9
<PAGE>
See Exhibit 27
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Information on this item is set forth in Prospectus under the heading
"Disclosure of Commission Position on Indemnification for Securities Act
Liabilities"
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Information on this item is set forth in the Prospectus under the heading "Use
of Proceeds"
19
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Private Placements.
In July, 1999, The Company completed an exempt placement of 169,000 shares
of common stock, Pursuant to Rule 504, at a price of $0.02 per share, and 1,000
shares of common stock, Pursuant to Rule 504, at a price of $0.06 per share for
a total of $3,440.00. There arc 29 shareholders, all of which hold less than 5%
of the shares.
20
<PAGE>
ITEM 27. EXHIBITS
EXHIBIT 1 - UNDERWRITING AGREEMENT
Not applicable.
EXHIBIT 2. PLAN OF PURCHASE, SALE REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION.
Not applicable.
EXHIBIT 3. ARTICLES OF INCORPORATION AND BY-LAWS.
Articles of Incorporation filed with Form 10SB12(g) October 7, 1999
EXHIBIT 4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES.
(See Exhibit 3)
EXHIBIT 5. OPINION ON LEGALITY.
See Exhibit 5 Page 1
EXHIBIT 8. OPINION ON TAX MATTERS.
Not applicable.
EXHIBIT 9 VOTING TRUST AGREEMENT AND AMENDMENTS.
Not applicable.
EXHIBIT 10. MATERIAL CONTRACTS.
Advisory and Servicing Contract between Richard Hung and J. Thomas Howard, LTD
filed with Form 10SB12(g) October 7, 1999.
EXHIBIT 11. STATEMENT RE COMPUTATION OF PER SHARE EARNINGS.
Not applicable.
EXHIBIT 15. LETTER ON UNAUDITED INTERIM FINANCIAL INFORMATION.
Not applicable.
EXHIBIT 16. LETTER ON CHANGE IN CERTIFYING ACCOUNTANT.
Not applicable.
EXHIBIT 21. SUBSIDIARIES OF THE SMALL BUSINESS ISSUER.
Not applicable.
EXHIBIT 23. CONSENTS OF EXPERTS AND COUNSEL.
Exhibit 23 Page 1 Consent of Williams & Webster
See Exhibit 5 Page 1 Consent of Richard Seay, attorney
EXHIBIT 24. POWER OF ATTORNEY.
Not applicable.
EXHIBIT 25. STATEMENT OF ELIGIBILITY OF TRUSTEE.
Not applicable.
EXHIBIT 27. FINANCIAL DATA SCHEDULE.
Year-End Audit dated August 3, 2000
EXHIBIT 99. ADDITIONAL EXHIBITS.
Not applicable.
21
<PAGE>
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(3) 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.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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 of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Kansas
City, State of Missouri. on August 28, 2000.
eQuorumNet
(Registrant)
By /S/
Richard Hung, President
22
<PAGE>
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
By: /S/
Richard Hung, President, Director, Secretary
Date
23
<PAGE>
