As Filed with the Securities and Exchange Commission on June 15, 2000
Registration No.333-92691
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM SB-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
CYBERUNI.ORG, INC.
(Name of small business issuer in its charter)
California 7379 94-3326946
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Identification No.) Classification
Code No.)
GEORGE V. FRANICH
90 Symonds Street, Level 2
Auckland, New Zealand
(011) 64-9-309-3387
(Name, Address and Telephone Number of Agent for Service)
-----------------------
Copies to:
WILLIAM D. EVERS
Evers & Hendrickson, LLP
155 Montgomery, 12th Floor
San Francisco, CA 94104
Phone No.: (415) 772-8100 Fax No.: (415) 772-8101
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462
(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462
(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
<TABLE>
If delivery of the prospectus is expected to be made pursuant to Rule
434 check the following box. / /
<CAPTION>
CALCULATION OF REGISTRATION FEE
---------------------------- ------------------- --------------------------- ---------------------- ----------------
Title of each class of Amount to be Proposed maximum offering Proposed maximum Amount of
securities to be registered registered price per unit aggregate offering registration
price fee
---------------------------- ------------------- --------------------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Series A Preferred 1,000,000 $5.00 $5,000,000 $1,320
---------------------------- ------------------- --------------------------- ---------------------- ----------------
<FN>
(1) Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as
amended (the "Securities Act"), solely for purposes of calculating the
registration fee.
</FN>
</TABLE>
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.
Disclosure alternative used (check one): Alternative 1 [ X ]; Alternative 2 [ ]
<PAGE>
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is prohibited.
--------------------------------------------------------------------------------
Initial Public Offering Prospectus
Subject to Completion, Dated June 15, 2000
Cyberuni.org, Inc.
1,000,000 shares of Series A Convertible Preferred Stock
This is our initial public offering of Series A Convertible Preferred
Stock. The offering price per share is $5.00. The maximum number of shares being
offered under this prospectus is 1,000,000. The minimum number of shares being
offered under this prospectus is 140,000. Proceeds from this offering will be
placed in an escrow account until $700,000 is raised. The minimum investment
required by each is investor is 200 shares.
This offering will commence upon the date of this prospectus and
continue for a maximum of twelve months. This offering is made as a
self-underwritten offering. No public market currently exists for our shares.
Our shares will not be listed on NASDAQ or any national exchange.
______________________
Investing in our stock involves significant risks. See "Risk Factors"
beginning on page 4.
______________________
--------------------------------------------------------------------------------
Public Price Underwriting Discount Proceeds to Company (2)
& Commissions(1)
--------------------------------------------------------------------------------
Per Share $5.00 None $5.00
--------------------------------------------------------------------------------
Total Minimum
(14,000 shares) $700,000 None $700,000
--------------------------------------------------------------------------------
Total Maximum
(1,000,000 shares) $5,000,000 None $5,000,000
--------------------------------------------------------------------------------
(1) The shares are being sold directly by us through a designated executive
officer who will be registered as Sales representative, where required. The
executive officer will not receive any commissions.
(2) Before deducting estimated expenses of $66,890 including registration fees,
escrow agent fees, costs of printing, copying and postage and other
offering costs, in addition to legal and accounting fees.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is ___________, 2000
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
Table of Contents
<CAPTION>
Page Page
---- ----
<S> <C> <C> <C>
Executive Summary 2 Management Relationships, Transactions and Remuneration 33
Risk Factors 2 Litigation 34
Business and Properties 9 Federal Tax Aspects 35
Offering Price Factors 18 Miscellaneous Factors 35
Use of Proceeds 20 Financial Statements 36
Capitalization 23 Management's Discussion of Certain Relevant Factors 53
Description of Securities 24 Notification 54
Plan of Distribution 25 Signatures 60
Dividends, Distributions and Redemptions 27
Officers and Key Personnel of the Company 27
Principal Stockholders 32
</TABLE>
You should rely only on the information contained in this prospectus. We have
not authorized any person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. The information in this document may
only be accurate on the date of this document.
REFERENCE DATA
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-1 under the Securities Act with respect to this offering.
This prospectus does not contain all the information set forth in the
registration statement and the exhibits and schedules thereto, as permitted by
the rules and regulations of the Commission. We will be subject to the
informational filing requirements of the Securities Exchange Act of 1934 upon
the effectiveness of the SB-1. We intend to furnish our shareholders with annual
reports containing financial statements audited by our independent public
accountants and quarterly reports containing unaudited financial information for
the first three quarters of each fiscal year. Our fiscal year ends on July 31.
1
<PAGE>
Cyberuni.org, Inc.
Exact corporate name ......................... Cyberuni.org, Inc.
State and date of incorporation .............. California, March 2, 1999.
Street address of principal office ........... 90 Symonds St, Level 2, Auckland,
New Zealand
Company telephone number ..................... Ph: 011-64-9-309-3387
Fax: 011-64-9-309-3327
Fiscal year ended .......................... July 31
Persons to contact at
Company with respect to offering ............. George Franich
--------------------------------------------------------------------------------
For the purposes of this prospectus, references to "we," "our" and "us"
shall mean Cyberuni.org, Inc.
--------------------------------------------------------------------------------
1. Executive Summary
We intend to provide college level courses to universities and colleges
around the world via the Internet. We also intend to provide student
registration services to colleges via the Internet. Our aim is to enable
colleges to broaden the range of courses that they offer their students without
having to increase the size of their faculty and without having to invest in
excessive capital expenditures.
2. Risk Factors
You should consider carefully the risks described below before you
decide to buy our preferred stock. The risks and uncertainties described below
are not the only ones facing us. Additional risks and uncertainties that we do
not presently know about or that we currently believe are immaterial may also
adversely impact our business operations. If any of the following risks actually
occur, our business, financial condition or results of operations would likely
suffer. In such case, the trading price of our stock could fall, and you may
lose all or part of the money you paid to buy our stock. This prospectus
contains forward-looking statements that involve risks and uncertainties. These
forward-looking statements are usually accompanied by words such as `believes,'
`anticipates,' `plans,' `expects' and similar expressions. Our actual results
may differ materially from the results discussed in the forward-looking
statements because of factors such as the Risk Factors discussed below.
Risks Relating to Our Business
Our prospects are difficult to evaluate because we have only been operating our
business since March 1999.
We have not yet begun to implement major portions of our business plan.
We have not yet started to offer courses to colleges and universities and Kavil
University Limited, our subsidiary, has only recently begun offering classes to
a limited number of students. We do not have a substantial operating history
which you may review in order to analyze the past performance of our business.
As a consequence, you may find it difficult to evaluate our business and
prospects.
2
<PAGE>
We lack significant revenues, we have a history of net operating losses and
expect net operating losses and negative cash flow for the foreseeable future.
We have not achieved profitability and expect to incur operating losses
for the foreseeable future. We have incurred net losses from operations of
$130,525 in the period since our incorporation date of March 2, 1999. We expect
these operating losses to increase for at least the foreseeable future. We may
never achieve profitability, and if we do, we may not be able to sustain
profitability. We have invested heavily to develop our services and establish
our development, sales and marketing capabilities. We believe that our success
depends, among other things, on our ability to develop new relationships with
colleges and universities and maintain existing customer relationships.
Accordingly, we intend to continue to incur significant expenses for development
and sales and marketing. As such, we expect to continue experiencing net
operating losses and negative cash flow for the foreseeable future. To the
extent our sales and marketing efforts do not significantly increase our
revenues, our business and financial results will be negatively affected.
Our operating results are likely to fluctuate significantly and may be below the
expectations of analysts and investors.
Because of our limited operating history and the emerging nature of the
online learning market, we may be unable to accurately forecast our revenues.
The sales cycle for our products and services varies widely and it is difficult
for us to predict the timing of particular sales, the rate at which online
courses and/or course supplements will be implemented or the number of students
who will enroll in the online courses. The cancellation or delay of even a small
number of courses could cause our revenues to fall short of projections. Since
most of our costs are fixed and are based on anticipated revenue levels, small
variations in the timing of revenue recognition could cause significant
variations in operating results from quarter to quarter. Among the most
significant factors that may affect our quarterly operating results are:
o our development of online courses;
o the number of students who enroll in our online courses each
term; and
o the seasonality inherent in the academic calendar.
Additionally, the following factors may affect our quarterly, as well as our
annual, operating results:
o our ability to attract and retain colleges and universities;
o our ability to successfully implement online courses;
o our ability to sell support services;
o the amount and timing of operating costs and capital
expenditures relating to expansion of our business;
o our introduction of new or enhanced services and products, and
similar introductions by our competitors;
o the budgetary cycles of colleges and universities;
o our ability to upgrade and develop our systems and
infrastructure;
o our ability to attract, motivate and retain personnel;
o technical difficulties in delivering our services;
o governmental regulation; and
o general economic conditions.
As a result, we believe that quarter-to-quarter comparisons of our
sales and operating results are not necessarily meaningful, and that such
comparisons may not be accurate indicators of future performance. Since we may
be unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall, any significant decrease in revenue would likely have an
immediate adverse effect upon our financial results.
3
<PAGE>
We cannot predict our success because our business and pricing models are
unproven.
Our success depends on our ability to generate revenues by providing
online learning products and services to students throughout the world via the
Internet. The viability and profitability of this model are unproven. To be
successful, we must develop and market products and services that achieve broad
market acceptance with both colleges and universities and their students. Online
learning in general, and our products and services in particular, may not
achieve broad market acceptance. In addition, our pricing model generally
includes fees for student and faculty support and a per student fee for each
enrollment in an online course. This pricing model may not be successful and it
may not achieve or maintain revenue growth in the future. The failure of either
our business model or our pricing model would have a material adverse affect on
our business and financial results.
Since our business focuses solely on online education, we are particularly
vulnerable to uncertain market acceptance, competing services, implementation
difficulties and other factors that could inhibit our ability to generate sales
and achieve market penetration.
Substantially all of our revenue will be derived from our online
education. If online learning does not become a widely accepted alternative
and/or companion to classroom instruction, our business will not be successful.
Our inability to generate sufficient sales and achieve market penetration of our
service due to competitive factors, implementation difficulties or other reasons
would have a material adverse effect on our business and financial results.
We have no experience in the management of an online educational institution.
Our management has no experience in marketing online educational
courses. Because of our lack of experience in this area, it is possible that we
may not execute our business plan as well as businesses with more experienced
management. If we cannot effectively manage our operations, we may not be able
to grow, or may grow at a slow pace. Our failure to successfully manage growth
and to develop financial controls and accounting and reporting systems or to add
and retain personnel that adequately support our growth would have a material
adverse effect on our business and financial results.
Our management will have broad discretion in the use of proceeds raised from
this offering.
We will have broad discretion to allocate a substantial portion of the
proceeds of this offering, in both dollar and percentage terms, on a net
proceeds basis. Because we have broad discretion, it is possible that we may use
the proceeds in a manner different from that described in this prospectus.
We may not be able to manage our growth.
Any future growth is likely to place a significant strain on our
managerial, operational, financial and other resources. This growth will require
us to implement additional management information systems, to further develop
our operating, administrative, financial and accounting systems and controls and
to maintain close coordination among our technology development, accounting,
finance, marketing, sales, and customer service and support departments.
We must expand our customer service and support department and it may be
difficult for us to do so.
As we increase the number of customers we serve, we will require
greater numbers of development personnel and account service representatives to
ensure rapid and successful implementation of our technology and services. For
these positions, we seek individuals with postgraduate degrees and we face great
competition in hiring them. We may not be able to increase the size of our
customer service and support department on a timely basis, or at all, and we may
not be able to provide the high level of support required by our customers,
4
<PAGE>
especially during the initial implementation and development of our services.
Our failure to continue to provide a high level of customer support would have a
material adverse effect on our business and financial results.
Our network infrastructure and computer systems may fail.
The continuing and uninterrupted performance of our network
infrastructure and computer systems is critical to our success. Any system
failure that causes interruptions in our ability to provide service to our
customers or their students could reduce customer satisfaction and, if sustained
or repeated, would reduce the attractiveness of our technology and services to
both existing and potential customers. An increase in the number of students
online through our servers could strain the capacity of our software or
hardware, which could lead to slower response times or system failures.
Our operations are dependent upon our ability to protect our computer
systems against damage from fire, power loss, telecommunications failures,
vandalism and other malicious acts, and similar unexpected adverse events. In
addition, the failure of our telecommunications provider or our network backbone
provider, which provides us with our Internet connection, to provide the data
communications capacity and network infrastructure in the time frame we require
could cause service interruptions or slower response times. Despite precautions
we have taken, unanticipated problems affecting our systems in the future could
cause interruptions or delays in the delivery of our products and services. Any
damage or failure that interrupts or delays our operations could have a material
adverse effect on our business and financial results.
We must monitor and protect our Internet domain names.
We currently hold the Internet domain name "www.cuberuni.org". Third
parties may acquire substantially similar or conceptually similar domain names
that decrease the value of our domain name and other proprietary rights which
may hurt our business. Domain names generally are regulated by governmental
agencies and their designees. For example, in the United States, the National
Science Foundation has appointed Network Solutions, Inc. as the exclusive
registrar for the ".com," ".net," and" ".org" generic domains. The regulation of
domain names in the United States and in foreign countries is subject to change.
Governing bodies could appoint additional domain name registrars or modify the
requirements for holding domain names. Governing bodies could also establish
additional "top-level" domains, which are the portion of a Web address that
appears to the right of the "dot," such as "com," "gov" or "org." The
relationship between regulations governing domain names and laws protecting
trademarks and similar proprietary rights is unclear. As a result, we may not
acquire or maintain exclusive rights to our domain names in the United States or
in other countries in which we conduct business.
We may need additional capital in the future and it may not be available on
acceptable terms, or at all.
We expect the proceeds of this offering, together with cash generated
from operations and our current cash, cash equivalents and short term
investments to meet our working capital and capital expenditure requirements for
at least the next 12 months. However, after that time, we may need to raise
additional funds to fund our operations, to finance the substantial investments
in equipment and corporate infrastructure we will need for our planned
expansion, to enhance and/or expand the range of services we offer, to increase
our promotional and marketing activities, or to respond to competitive pressures
and/or perceived opportunities, such as investment, acquisition and
international expansion activities. Additional financing may not be available on
terms favorable to us, or at all. If adequate funds are not available when
required or on acceptable terms, our business and financial results could
suffer. Without this offering, we believe that current cash on hand and other
sources of liquidity are sufficient to fund our operations for only a limited
time. In order to fund our operations without the proceeds of this offering, we
would be required to raise additional capital through debt or private equity
financings, consistent with our historical practices.
5
<PAGE>
Our courses are not accredited and this factor could significantly limit our
growth
Our courses are not accredited, and we do not presently intend to have
our courses accredited. Accreditation provides students with the assurance that
the time they spend studying and receiving a degree will provide them with an
education recognized by employers and other universities. Many universities and
colleges are given accreditation by accrediting organizations, whose approval
may be necessary to allow those universities to use our service. Our growth
could be significantly hindered because our courses are not accredited.
No efforts have been taken to copyright our courses or to trademark our name
Cyberuni.org, Inc.
We have not registered copyrights for our educational courses in any
country. Our clients and competition may attempt to reproduce our courses and
thereby cause us a significant loss of revenues as a result of unauthorized
copying as well as in costs of prosecuting infringers. Although we have applied
to register our name "Cyberuni" in Australia and New Zealand, we have not
applied to register our trademark in any other jurisdiction. This fact could
limit our rights to enforce our trademark in those jurisdictions. In addition,
if we are forced to defend our right to use the name "Cyberuni," we could incur
substantial litigation costs.
Risks Relating to Our Industry
Online learning may not be broadly accepted by academics and educators.
We understand that some academics and educators are opposed to online
learning in principle. They also have expressed concerns regarding the perceived
loss of control over the education process that can result from the outsourcing
of online courses. Some of these critics, particularly college and university
professors, have the capacity to influence the market for our services, and
their opposition could have a material adverse impact on our business and
financial results. Further, the growth and development of the market for online
learning has resulted in some concerns from the academic community about the
protection of intellectual property associated with course content, which may
impose additional burdens on companies offering online learning. We are unaware
of any legal action resulting from course content being delivered over the
Internet. The adoption of any additional laws or regulations may impair the
growth of online learning, which could have a material adverse effect on our
business and financial results.
We operate in a highly competitive market and we may not have adequate resources
to compete successfully.
The online learning market is quickly evolving and is subject to rapid
technological change. Although the market is highly fragmented with no single
competitor accounting for a dominant market share, competition is intense. Our
competitors vary in size and in the scope and breadth of the products and
services they offer. Competition is most intense from colleges' and
universities' internal information technology departments. Some colleges and
universities construct online learning systems utilizing in-house personnel and
creating their own software or purchasing software components from a vendor. We
also face significant competition from a variety of companies including:
o other companies which seek to offer a complete solution
including software and services;
o software companies with specific products for the college and
university market;
o systems integrators; and
o hardware vendors.
Other competitors in this market include a wide range of education and
training providers. These companies use video, cable, correspondence, CD-ROM,
computer-based training, and online training. We
6
<PAGE>
believe that the level of competition will continue to increase as current
competitors increase the sophistication of their offerings and as new
participants enter the market. Many of our current and potential competitors
have longer operating histories, larger customer bases, greater brand
recognition and significantly greater financial, marketing and other resources
than we do and may enter into strategic or commercial relationships with larger,
more established and well-financed companies. Certain competitors may be able to
secure alliances with customers and affiliates on more favorable terms, devote
greater resources to marketing and promotional campaigns and devote
substantially more resources to systems development than we can. In addition,
new technologies and the expansion of existing technologies may increase the
competitive pressures we face. Increased competition may result in reduced
operating margins, as well as loss of market share and brand recognition. We may
not be able to compete successfully against current and future competitors, and
competitive pressures we face could have a material adverse effect on our
business and financial results.
Our success depends on maintenance and continued development of the Internet's
infrastructure.
Our success depends, in large part, upon the maintenance of the
Internet's infrastructure with the necessary speed, data capacity and security,
and timely development of enabling products such as high speed modems, for
providing reliable Web access and services as well as improved content.
Increases in the number of users, frequency of use or bandwidth requirements may
strain the Internet's infrastructure and degrade the performance and reliability
of the Web. Furthermore, the Web has experienced a variety of outages and delays
as a result of damage to portions of its infrastructure, and any future outages
or delays could adversely affect our online courses. In addition, delays in the
development or adoption of new standards and protocols that are designed to
handle increased levels of activity, could reduce the viability of the Web. The
infrastructure or complementary products or services necessary to maintain and
enhance the Web as a commercial medium may never be developed. If the necessary
infrastructure, standards or protocols or complementary products, services, or
facilities are not developed, or if the Web does not continue to develop as a
viable commercial medium, our business and financial results would be materially
and adversely affected. Even if such infrastructure, standards or protocols or
complementary products, services or facilities are developed, we may be required
to incur substantial expenditures in order to adapt our services to changing or
emerging technologies, which could have a material adverse effect on our
business and financial results.
Risks Relating to this Offering
You will experience immediate and substantial dilution in the book value of your
investment.
Our present common stockholders acquired their shares at a cost
substantially below the price at which we are offering the Series A Convertible
Preferred Stock, on a fully diluted basis. Assuming the maximum number of shares
are sold, you will incur an immediate and substantial dilution of $3.99 per
share of Series A Preferred Stock purchased. Assuming the minimum number of
shares are sold, you will incur an immediate and substantial dilution of $4.77
per share of Series A Preferred Stock purchased.
After this offering, our executive officers, directors and 10% or greater
stockholders will still control all matters requiring a stockholder vote.
Currently, our existing officers, directors and 10% or greater
stockholders and their affiliates, in the aggregate, beneficially own
approximately 98.7% of our outstanding capital stock. Upon consummation of this
offering, this group will continue to own a substantial majority of our
outstanding capital stock. As a result, such persons, acting together, will have
the ability to control the vote on all matters requiring approval by our
stockholders, including the election of directors and approval of significant
corporate transactions, and might act in a manner inconsistent with the wishes
of our other stockholders. This concentration of ownership may have the effect
of delaying, deferring or preventing a change in control.
7
<PAGE>
No market exists for our securities, you may not be able to sell your stock, and
you may lose the entire amount of your investment.
There is no public market for any shares of our stock and it is
unlikely that a market will develop anytime soon. This will very likely make it
difficult for you to sell your shares, and you may find it impossible to
liquidate your investment. We also do not intend to pay dividends at any time in
the foreseeable future. Because it is unlikely that you will ever receive any
dividends, and you may not be able to sell your shares, you may not be able to
receive any return on your investment.
We arbitrarily determined the purchase price for our shares and the share price
should not be considered an indication of the value of our company
The offering price of our Series A Convertible Preferred Stock was
determined arbitrarily by our management. The actual value of our stock could in
fact be significantly less than the offering price.
Investors will bear the risk that we will sell less than all of the shares
offered herein and then be unable to complete all of our plans
Our shares will be sold only by our chief executive officer, George
Franich. There can be no assurance that we will sell all or even a substantial
portion of the shares we are offering. Accordingly, you will bear the risk that
we will accept subscriptions for less than $5,000,000, but more than $700,000,
and be unable to successfully complete all of the anticipated uses of the
proceeds as listed in this prospectus without seeking additional financing. We
can provide you with no assurance that we will be able to find additional
financing.
We have not retained any outside parties to conduct a due diligence review of
this prospectus.
Notwithstanding the review conducted by our independent accountants of
the financial statements, we have not retained an outside broker, underwriter or
any third party to conduct a due diligence review of any other disclosure
contained herein. Our management has provided all of the information in this
prospectus without verification of its accuracy by a third party.
8
<PAGE>
3. BUSINESS AND PROPERTIES
With respect to the business of the Company and its properties:
(a) Describe in detail what business the Company does and proposes to do
including what product or goods are or will be produced or services that are or
will be rendered.
Our proposed business can be broken-down into the following three areas:
1. Supplying college level courses to colleges around the world.
We intend to supply college level courses to universities and colleges
around the world via the Internet. We believe our courses will enable colleges
to widen the range of courses that they are able to offer their students without
having to increase the size of their faculty. Our materials will be designed for
self- study. The faculty shall be responsible for grading all student work, and
we will receive a proportion of the enrollment fees. We intend to market our
courses only to colleges. We do not intend to market our courses directly to
students. Our subsidiary, Kavil University Ltd., will market courses directly to
students.
Our courses are not accredited by any governmental institution or
self-regulating agencies, and we do not presently intend to seek accreditation
from any such institution or agency at this time. However, many of the colleges
and universities that sign-up for our courses may be accredited institutions
and/or accrediting agencies themselves; as such, universities or colleges that
enter into licensing agreements with our company will cause our courses to
become automatically accredited. In addition, in negotiating the licensing
agreements with these schools, we intend to require the schools to accept all
courses taken by Cyberuni students with full credit received. Further, students
who take our courses, and are enrolled with accredited colleges will receive
degrees from accredited colleges even though our courses are not independently
accredited.
We are not currently supplying courses to colleges, and we have not yet
entered into contracts to supply courses to colleges.
2. Supplying college level courses directly to students through our
subsidiary Kavil University, Ltd.
Our subsidiary, Kavil University, intends to recruit students directly
and offer them courses. Kavil University is not an accredited university, and it
does not intend to apply to become an accredited university in any jurisdiction.
Kavil University will only operate in countries where it can legally be
classified as a "university." All of Kavil's courses will be the same courses
that we offer online to traditional non-internet colleges. We believe that Kavil
University will complement our operations and will enable us to participate
directly in the projected growth of Internet based distance learning.
Kavil University was incorporated in the Republic of Vanuatu. All of
Kavil University's shares are held in a trust. We own 100% of the beneficial
interests in all of Kavil's shares. The trust has two companies that are acting
as co-trustees: (1) Regent Limited, P.O. Box 782, Port Villa, Vanuatu, and (2)
Satellite Holdings Limited, P.O. Box 782, Port Villa, Vanuatu.
3. Student registration and examination services
We intend to develop an information system that will handle student
enrollments, academic records, and the examination of students. This system will
be Internet based, accessed through login and password codes, allowing both
students and colleges to be able to enter the system over the World Wide Web.
9
<PAGE>
(b) Describe how these products or services are to be produced or rendered and
how and when the Company intends to carry out its activities. If the Company
plans to offer a new product(s), state the present stage of development,
including whether or not a working prototype(s) is in existence. Indicate if
completion of development of the product would require a material amount of the
resources of the Company, and the estimated amount. If the Company is or is
expected to be dependent upon one or a limited number of suppliers for essential
raw materials, energy or other items, describe. Describe any major existing
supply contracts.
Production of courses and their assessment
We intend to recruit authors for our course materials from the faculty
and graduate students of existing colleges around the world. Many of our core
undergraduate courses can be provided by graduate students, with review by
members of our faculty. In addition, we intend to enter into a licensing
agreement with Kavil University in order to utilize their existing courses.
As of the end of April 2000, there were 23 English and Philosophy
Cyberuni courses available for enrollment or licensing. All are offered on-line
by Kavil University Limited. We have received course and examination materials
from faculty for a further four courses in History, Women's Studies,
Mathematics, and Management. We expect these will be ready for enrollment by the
end of July 2000. We have signed contracts for the provision of further courses,
but may have to delay receipt of these until our offering reaches escrow. We
have contracts under negotiation for the provision of further courses, but may
have to delay receipt of these until our offering reaches escrow. We believe
that the total cost to bring these additional courses to market will vary,
depending on the course subject and depending on the individual faculty member
who develops the course content. We expect that the first series of courses
developed will initially cost more than subsequent courses, but as we gain more
experience in the intricacies of course development, and as we develop a better
working relationship with our various faculty members, the cost per course may
decline.
Recently, we sold 50,000 shares of our Series A Preferred Stock, at a
deemed price of $5.00 per share, to a company named Tertiary Providers Limited,
in return for fifteen college level courses. The courses are:
Englit0 A first course studying English literature
Nznovel1 A first course studying the novel in New Zealand literature
Nznovel2 A second course studying the novel in New Zealand literature
Nznovel3 A third course studying the novel in New Zealand literature
Nzpoetry2 A first course studying poetry in New Zealand literature
Nzpoetry3 A second course studying poetry in New Zealand literature
Nzshortstory2 A first course studying the short story in New Zealand
literature
Nzshortstory3 A second course studying the short story in New Zealand
literature
Nzdrama3 A first course studying drama in New Zealand literature
Metaphysics1 A first course in metaphysics
Ethics1 A first course in moral philosophy
AppliedEthics2 A first course in applied ethics
MedEthics2 An undergraduate course in medical ethics
BusinessEthics3 An undergraduate course in business ethics
EnvironEthics3 An undergraduate course in environmental ethics
All of the above courses have been licensed to our subsidiary, Kavil
University Ltd, and are available for students registered with Kavil University.
Student assessment will be carried out by our faculty, the majority of
whom will have doctorate-level qualifications. A majority will also hold or have
held academic posts at recognized universities. Currently, we have entered into
agreements with 11 faculty members to provide courses.
10
<PAGE>
Our 11 faculty members have PH. D's in the following areas of study:
o Accounting o Philosophy--two of our faculty members have
o Cell Biology Ph.D.'s in philosophy.
o English o Physics
o History o Sociology--three of our faculty members have
o Mathematics Ph.D.'s in sociology.
Neither Cyberuni nor Kavil University will operate as a medical school or law
school.
(c) Describe the industry in which the Company is selling or expects to sell its
products or services and, where applicable, any recognized trends within that
industry. Describe that part of the industry and the geographic area in which
the business competes or will compete. Indicate whether competition is or is
expected to be by price, service, or other basis. Indicate (by attached table if
appropriate) the current or anticipated prices or price ranges for the Company's
products or services, or the formula for determining prices, and how these
prices compare with those of competitors' products or services, including a
description of any variations in product or service features. Name the principal
competitors that the Company has or expects to have in its area of competition.
Indicate the relative size and financial and market strengths of the Company's
competitors in the area of competition in which the Company is or will be
operating. State why the Company believes it can effectively compete with these
and other companies in its area of competition.
The college education industry is increasingly competitive with
institutions under pressure to grow and contain costs at the same time. We
intend to offer smaller colleges an alternative to the 'grow larger or decline'
option. By adopting our courses, smaller colleges will be able to increase the
number of courses that they offer their students without significantly
increasing the costs to provide the additional courses.
Competition
We intend to provide college level courses and student registration
services over the Internet. We have a number of competitors who also provide
college courses through the Internet. These competitors consist of operators of
Internet services which are not affiliated with any specific university, as well
as universities and colleges which offer their own on-line courses.
It is estimated that in 1999, the 'proprietary' for-profit secondary
education industry was composed of approximately 345 schools with revenues that
approximate $5 billion. Adding $2.5 billion in textbooks and materials and
another $500 million in distance learning courses brings the for-profit
component of the post-secondary industry to $8 billion. These numbers are
comprised of different companies that focus on different segments of the
education market, including: eCollege.com, California Virtual Campus, DeVry, The
Lightspan Partnership, Convene.com and ITT Educational Services. Our direct
competitors include such public companies as eCollege.com, California Virtual
Campus, and The Lightspan Partnership, and a number of private companies that
offer courses directly to students, including Convene.com, The University of
Phoenix, Western Governors University, and Blackboard.com.
Although the market is highly fragmented with no single competitor
accounting for a dominant market share, competition is intense. Our competitors
vary in size and in the scope and breadth of the products and services they
offer. We believe that the level of competition will continue to increase as
current competitors increase the sophistication of their offerings and as new
participants enter the market. Many of our current and potential competitors
have longer operating histories, larger customer bases, greater brand
recognition and significantly greater financial, marketing and other resources
than we do and may enter into strategic or commercial relationships with larger,
more established and well-financed companies and institutions. Certain
11
<PAGE>
competitors may be able to secure alliances with customers and affiliates on
more favorable terms, devote greater resources to marketing and promotional
campaigns and devote substantially more resources to systems development than we
can.
Notwithstanding the above, distance learning has evolved into a booming
industry. Our company is unique in that we intend to target lower-level colleges
and universities that would like to integrate long-distance learning over the
Internet, without subjecting themselves to the prices and impersonal services of
our much larger competitors.
Our principal competitors who are not affiliated with a college or
university are:
o California Virtual Campus (www.cvc.edu); and
o ECollege.com (www.eCollege.com).
California Virtual Campus operates an online website to help students
further their educational objectives by linking students to courses offered by
California colleges and universities. It is funded and operated by the State of
California and only students that are enrolled in public colleges and
universities in California are eligible to take their courses. California
Virtual Campus is not a university and it does not grant degrees or
certificates.
eCollege.com advertises that it can create and deliver an "online
campus," including the training of faculty and administration, within 60
business days to the colleges it services. ECollege does not grant degrees or
certificates.
Our principal university competitors who offer online distance learning
over the Internet are The University of Phoenix and Western Governors
University.
The University of Phoenix is America's largest private accredited
university. It has 85 campuses and learning centers that are located throughout
the United States, Puerto Rico, and British Columbia. Each University of Phoenix
campus establishes its own course fee structure. The average course takes 5 to 6
weeks to complete. The University of Phoenix is accredited by the Commission on
Institution of Higher Education of the North Central Association of Colleges and
Schools.
Western Governor's University offers online courses throughout the
United States. They currently offer the following degrees: MA, Learning and
Technology; AAS, Network Administration; AA, General; AAS, Electronics
Manufacturing Technology; and AAS, Software Applications Analysis and
Integration. Western Governor's University's prices vary and the length of
courses range from 1-hour programs to 18-month courses. Western Governors
University has received accreditation from the Inter-Regional Accrediting
Committee.
Many colleges have started for-profit entities to develop, deliver, or
market online courses. For example, NYUonline is a for-profit subsidiary of the
School of Continuing and Professional Studies at New York University. Both
Temple University and Cornell University have announced plans to create
for-profit subsidiaries in order to venture into distance education. In
addition, universities such as George Washington University, have spun off
companies to market their web-based course development and delivery software.
Other universities have developed geographically-based consortiums to provide
distance education over the Internet and using videoconferencing. One example of
this is SCATE, the Southwest Consortium for the Advancement of Technology in
Education, which is made up of schools such as Howard College, Texas Tech
University, New Mexico State University and the University of Houston. While
SCATE does not provide degrees, its courses originate from accredited
universities, meaning the individual course themselves are accredited.
12
<PAGE>
Pricing
We have not determined the price for our courses and student
registration services. Our intention is to charge universities and colleges a
proportion of the enrollment fees that they charge their students. The specific
fees that we will charge colleges may depend on the number of courses and
services the colleges have purchased and on our ability to negotiate with the
colleges.
Our subsidiary, Kavil University, is charging students $600 per course.
This price is based on the average tuition cost of students at state colleges in
the United States.
Long Term Growth
We envision that the majority of our long-term growth will come from
penetration into Asia, India and Africa. Our courses and student registration
services may be attractive to developing countries because many developing
countries have placed a higher priority on the development of their economic
infrastructure than on building universities.
NOTE. Because this prospectus focuses primarily on details concerning the
company rather than on the industry in which the company operates or will
operate, potential investors may wish to conduct their own separate
investigation of the company's industry to obtain broader insight in assessing
the company's prospects.
(d) Describe specifically the marketing strategies the Company is employing or
will employ in penetrating its market or in developing a new market. Set forth
in response to Question 4 below the timing and size of the results of this
effort which will be necessary in order for the Company to be profitable.
Indicate how and by whom its products or services are or will be marketed (such
as by advertising, personal contact by sales representatives, etc.), how its
marketing structure operates or will operate and the basis of its marketing
approach, including any market studies. Name any customers that account for, or
based upon existing orders will account for a major portion (20% or more) of the
Company's sales. Describe any major existing sales contracts.
Our marketing strategy can be broken-down into the following three
areas:
1. Building relationships with high schools in the United States and other
countries.
We plan to develop relationships with high schools students so that
when the students consider universities, they will already be familiar with our
methods. We plan to develop these relationships by:
o allowing students to complete our courses while still in high
school;
o providing high school students with homework and learning
aides through our website www.cyberuni.org;
o organizing essay competitions with cash or travel rewards that
will establish our reputation at the various high schools;
o organizing regional high school projects such as expanded
versions of our 'Huia' Project which addresses the issue of
cloning an extinct bird named the Huia (please refer to the
discussion of the Huia Project below); and
o allowing teachers at local high schools to access our website
free of charge so that they can inform students of our
resources.
13
<PAGE>
2. Development of our website as an information bulletin board
We believe there are two fundamental questions members of an academic
community ask when accessing our website: "how can I find out about...?" and
"who can I talk to about...?" We intend for our website to be the website for
addressing these questions from pre-school through college levels of education
-- the ultimate academic reference and discussion venue.
We have registered 10,000 members on our website since July 1999.
"Registered members" are persons who have entered our database and who have
access to the `members only' area of our website. We currently do not have any
students. We intend to market our courses and our program to colleges and
universities through an extensive solicitation campaign headed by our President
George Franich, through the networks and contacts generated by other members of
the company, as well as various agents employed throughout the world. We intend
to develop a sales package that we believe will promote the company by
highlighting the uniqueness and affordability of our services and products. We
also intend to employ a sales manager who will coordinate the efforts of our
agents and to ensure their effectiveness.
Kavil University, our subsidiary, currently has 7 students enrolled in
courses. The gross revenue that Kavil University received from the 7 registered
students was $6,468.
3. The Huia Project
The Huia Project is a profile-raising project that discusses the
possibility of cloning the extinct Huia bird. In July of 1999, we held a
conference to discuss the Huia Project. We believe the benefit from the Huia
Project to us is that it is newsworthy. News articles have appeared in academic
journals, and these articles have helped to build a profile for us in the
academic world. While we do not intend to actively employ researchers involved
in "cloning the Huia," we have provided $100,000 in grants to researchers,
conference organizers, and institutions involved in the project.
The scope of our marketing activities will depend upon the amount of
funding we receive in this offering. If we raise only the minimum amount of
funding, our primary focus will be to build course content and our marketing
efforts will be significantly reduced.
(e) State the backlog of written firm orders for products and/or services as of
a recent date within the last 90 days) and compare it with the backlog of a year
ago from that date.
There are no written firm orders for our services.
(f) State the number of the Company's present employees and the number of
employees it anticipates it will have within the next 12 months. Also, indicate
the number by type of employee (i.e., clerical, operations, administrative,
etc.) the Company will use, whether or not any of them are subject to collective
bargaining agreements, and the expiration date(s) of any collective bargaining
agreement(s). If the Company's employees are on strike, or have been in the past
three years, or are threatening to strike, describe the dispute. Indicate any
supplemental benefits or incentive arrangements the Company has or will have
with its employees.
We employ four full-time staff members:
o George Franich, Chief Executive Officer;
o Peter Caccioppoli, Chief Operations Officer;
o Antony Franich, Marketing Manager; and
o Dr. Rhys Cullen, Academic Advisor.
14
<PAGE>
We employ five part-time staff members. All part-time staff members are
all employed in operational tasks, such as preparing submitted course and
assessment materials for the World Wide Web.
Over the next twelve months, we may increase our staff to perhaps to as
many as twenty full-time employees. However, our intention is to contract out
much of the work involved in preparing course and assessment materials.
No employees are subject to collective bargaining agreements, nor are
there any strike threats.
(g) Describe generally the principal properties (such as real estate, plant and
equipment, patents, etc.) that the Company owns, indicating also what properties
it leases and a summary of the terms under those leases, including the amount of
payments, expiration dates and the terms of any renewal options. Indicate what
properties the Company intends to acquire in the immediate future, the cost of
such acquisitions and the sources of financing it expects to use in obtaining
these properties, whether by purchase, lease or otherwise.
We do not own any real estate, plant, equipment or patents. We lease
4244 square feet of office space in Auckland, New Zealand for NZ$5,200 per month
(approximately $2,500). This lease expires in May 2003, and there is no renewal.
The rental increases each year to a figure of NZD6437 per month for the third
year (approximately $3,095 per month).
We pay $240 per month for part-time clerical services and virtual use
of a shared office in San Francisco. This office, about one hundred square feet,
is a standard day office that provides a desk, fax, computer, printer, and
answering service.
(h) Indicate the extent to which the Company's operations depend or are expected
to depend upon patents, copyrights, trade secrets, know-how or other proprietary
information and the steps undertaken to secure and protect this intellectual
property, including any use of confidentiality agreements,
covenants-not-to-compete and the like. Summarize the principal terms and
expiration dates of any significant license agreements. Indicate the amounts
expended by the Company for research and development during the last fiscal
year, the amount expected to be spent this year and what percentage of revenues
research and development expenditures were for the last fiscal Year.
We were incorporated on March 2, 1999, and we have not spent any money
on research and development since our incorporation.
We have no confidentiality agreements with our employees, and we have
not entered into any covenants-not-to-compete with our current employees.
We have applied to register our trademark "Cyberuni" in Australia and
New Zealand. We have not applied for registration of this trademark in the
United States. We have not registered any copyrights with governmental or
regulatory agencies. However, we do place copyright notices on our courses. Our
operations are not dependent upon patents, and we do not own any patents.
(i) If the Company's business, products, or properties are subject to material
regulation (including environmental regulation) by federal, state, or local
governmental agencies, indicate the nature and extent of regulation and its
effects or potential effects upon the Company.
Neither our company, nor Kavil University are subject to material
governmental regulation. In the future, if we seek independent accreditation of
our courses, we could be subject to regulation by accrediting agencies or
institutions. However, our courses are not currently accredited by any
governmental institution or self-regulating agencies, and we presently do not
intend to seek accreditation from any such accrediting
15
<PAGE>
agencies or institutions. However, many of the colleges that sign-up for our
courses may be accredited institutions and/or accrediting agencies themselves;
as such, universities or colleges that enter into licensing agreements with our
company will cause our courses to become automatically accredited.
Our subsidiary, Kavil University, currently does not offer accredited
courses. It can not claim to be accredited, or that its courses are accredited
unless such a claim is true in the jurisdiction where it is made. However,
students who take courses through Kavil University, and that are independently
enrolled with accredited colleges, will receive degrees from accredited colleges
even though Kavil's courses are not accredited. Students enrolled at Kavil
University are not be entitled to federal or state assistance with their fees.
(j) State the names of any subsidiaries of the Company, their business purposes
and ownership, and indicate which are included in the Financial Statements
attached hereto. If not included, or if included but not consolidated, please
explain.
Our subsidiary, Kavil University Ltd., will recruit students directly
and offer them courses.
Kavil University was incorporated in the Republic of Vanuatu in January
1999. All of Kavil University's shares are held in a trust. We own 100% of the
beneficial interests in all of Kavil's shares. The trust has two companies that
are acting as co-trustees: (1) Regent Limited, P.O. Box 782, Port Villa,
Vanuatu, and (2) Satellite Holdings Limited, P.O. Box 782, Port Villa, Vanuatu.
Kavil University was incorporated in the country of Vanuatu, outside the
jurisdictional limits of New Zealand, because universities incorporated under
New Zealand law are potentially subject to numerous legal restrictions that may
not apply to universities incorporated in Vanuatu.
(k) Summarize the material events in the development of the Company (including
any material mergers or acquisitions) during the past five years, or for
whatever lesser period the Company has been in existence. Discuss any pending or
anticipated mergers, acquisitions, spin-offs or recapitalizations. If the
Company has recently, undergone a stock split, stock dividend or
recapitalization in anticipation of this offering, describe (and adjust
historical per share figures elsewhere in this prospectus accordingly).
We were incorporated in California on March 2, 1999.
In March 1999, we purchased the beneficial ownership of all the shares
of Kavil University for $5,000 from Dr. Rhys Cullen, an Academic Advisor to our
company.
In March 1999, 3,500,000 shares of common stock were issued to the
following founders of our company: Peter J Caccioppoli, 1,000,000 shares; George
V. Franich, 1,500,000 shares; the Matthew Gardiner-Hill Community Trust,
1,000,000 shares; and Kavil University, 500,000 shares. The total consideration
paid by all of our founding members as a group was $40,000.
On or about June 15, 1999, we sold 50,000 shares of our Series A
Convertible Preferred Stock, $5.00 par value, to a company named Tertiary
Providers Limited at the offering price of $5.00 per share in exchange for 15
educational courses. The sale of the Preferred Stock to Tertiary Providers
Limited was exempt from registration pursuant to Regulation S of the Securities
Act of 1933. Tertiary Providers Limited is incorporated in the Republic of
Vanuatu. None of our shareholders, directors, or affiliates is a shareholder,
director, or affiliate of Tertiary Providers Limited.
16
<PAGE>
4. (a) If the Company was not profitable during its last fiscal year, list below
in chronological order the events which in management's opinion must or should
occur or the milestones which in management's opinion the Company must or should
reach in order for the Company to become profitable, and indicate the expected
manner of occurrence or the expected method by which the Company will achieve
the milestones.
We were not profitable in our last fiscal year. In order for us to
become profitable we believe that we need to reach the following milestones. The
timetable below is from the date on which we raise a minimum of $700,000 in this
offering.
o 100 courses available for licensing
We expect that this will take 9 months. Three months to negotiate contracts
with course providers. Four months for the courses to be prepared by the
providers and two months for the courses to be approved by us and
formatted.
We believe we need 100 courses to demonstrate that we can provide a
sufficiently wide range of subjects and sufficient depth within subjects.
100 courses will allow us to provide the curriculum for three different
Diplomas (10-15 courses in each diploma) as well as courses in most of the
common subject areas.
o Information system.
We expect that it will take 9 months to fully develop the information
system: two months to plan and create conceptual designs for the project;
three months to develop and build a prototype; and four months to rework
and test the prototype. The Information System will handle student
enrollments, academic records, the examination of students, moderation of
marking, the evaluation of tutors and makers, and will support student
learning and inquiries. This system will be Internet based.
o Attract sponsorships, sell advertising, naming rights
We believe that with 100 courses available for licensing and with our
university information system operating we will be able to close deals with
sponsors and advertisers within three months. We believe that we will have
signed some contracts with sponsors and advertisers within twelve months of
the date on which we have raised the minimum of $700,000. Pricing for
advertising and sponsor has not been finalized, however we anticipate that
web site advertising will start from $1500 per month as a minimum or on a
per impression basis of 3 cents. Sponsorship and naming rights packages
will be negotiated per package.
o Sign Up partners to provide courses for us.
We hope to enter into agreements with universities and colleges to provide
our courses to their students as well as to license the courses from us and
then distribute them to students. We expect to have attracted some partners
to provide courses to us within six months of the time when we have 100
courses available for licensing, have a operating university information
system, and sponsors and advertisers. We anticipate that this will take 18
months.
(b) State the probable consequences to the Company of delays in achieving each
of the events or milestones within the above time schedule, and particularly the
effect of any delays upon the Company's liquidity in view of the Company's then
anticipated level of operating costs. (See Question Nos. 11 and 12)
The milestones listed above in 4(a) are only estimates. If the
milestones listed above in 4(a) are not met within 36 months of the effective
date of this offering, we believe that we will need to raise additional
17
<PAGE>
financing to reach those milestones. The amount of financing we will need to
raise at that time will depend on the funds we receive in this offering. At this
time, we do not know what the terms of that financing might be.
Note: After reviewing the nature and timing of each event or milestone,
potential investors should reflect upon whether achievement of each within the
estimated time frame is realistic and should assess the consequences of delays
or failure of achievement in making an investment decision.
OFFERING PRICE FACTORS
If the securities offered are common stock, or are exercisable for or
convertible into common stock, the following factors may be relevant to the
price at which the securities are being offered.
5. What were net after-tax earnings for the last fiscal year?
We sustained a loss of $73,847 in the fiscal year ended July 31 1999.
6. If the Company had profits, show offering price as a multiple of earnings.
Not applicable.
7. (a) What is the net tangible book value of the Company? (If deficit, show in
parenthesis.) For this purpose, net tangible book value means total assets
(exclusive of copyright, patents, goodwill, research and development costs and
similar intangible items) minus total liabilities.
As of March 31, 2000, our financial statements showed a net tangible
book value of $79,408 ($.02 per share).
If the net tangible book value per share is substantially less than this
offering (or exercise or conversion) price per share, explain the reasons for
the variation.
The offering price at which our Series A Convertible Preferred Stock is
to be sold is significantly higher than the net tangible book value per common
share purchased by our current members on a fully diluted basis. Assuming the
maximum number of shares of Series A Convertible Preferred Stock offered hereby
is sold, you will experience, on a fully diluted basis, an immediate and
substantial dilution of $3.99 per share for each share purchased. Assuming the
minimum number of shares of Series A Convertible Preferred Stock offered hereby
is sold, you will experience, on a fully diluted basis, an immediate and
substantial dilution of $4.82 per share for each share purchased.
18
<PAGE>
(b) State the dates on which the Company sold or otherwise issued securities
during the last 12 months, the amount of such securities sold, the number of
persons to whom they were sold, and relationship of such persons to the Company
at the time of sale, the price at which they were sold and, if not sold for
cash, a concise description of the consideration. (Exclude bank debt.)
<TABLE>
We were incorporated on March 2, 1999. We have issued four million
(4,000,000) shares of our common stock in the previous twelve months. We also
sold 50,000 shares of our Series A Convertible Preferred Stock to Tertiary
Providers Limited at the offering price of $5.00 per share within the last 12
months. The following table sets forth the information relating to all
securities issued by Cyberuni prior to the filing of this Form SB-1:
<CAPTION>
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Shareholder Name Date Acquired Number of Shares Consideration Total Shares Owned
----------- ----------- as of 5/01/00
Preferred Common
------------------------- ---------------------- ----------- ----------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
George Vidak Franich March 2,1999 1,500,000 $.01 per share 1,500,000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Peter Joseph Caccioppoli March 2,1999 1,000,000 $.01 per share 1,000,000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Matthew Gardiner-Hill March 2,1999 1,000,000 $.01 per share 1,000,000
Community Trust
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Kavil University Ltd March 2, 1999 500,000 $.01 per share 500,000
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Tertiary Providers June 15, 1999 50,000 $5.00 per share 50,000
Limited(TPL)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
All outstanding shares of common stock were issued in March 1999 in a
private placement exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933 and section 25102(f) of the California Corporations Code.
The sale of the Series A Preferred Stock, $5.00 Par Value, to Tertiary Providers
Limited was exempt from registration pursuant to Regulation S of the Securities
Act.
8. (a) What percentage of the outstanding shares of the Company will the
investors in this offering have? Assume exercise of outstanding options,
warrants or rights and conversion of convertible securities, if the respective
exercise or conversion prices are at or less than the offering price. Also
assume exercise of any options, warrants or rights and conversions of any
convertible securities offered in this offering.
If the maximum of one million (1,000,000) shares of Series A
Convertible Preferred Stock are sold in this offering, investors who purchase
shares in this offering will own 19.8% of the outstanding shares of Cyberuni on
a fully diluted basis.
If the minimum of one hundred and forty thousand (140,000) shares of
Series A Convertible Preferred Stock are sold in this offering, investors who
purchase shares in this offering will own 2.7% of the outstanding shares of
Cyberuni on a fully diluted basis.
(b) What post-offering value is management implicitly attributing to the entire
Company by establishing the price per security set forth on the cover page (or
exercise or conversion price if common stock is not offered)? (Total outstanding
shares after offering times offering price, or exercise or conversion price if
common stock is not offered.)
If the maximum is sold: $25,250,000
If the minimum is sold: $20,950,000
In order to provide some financing prior to this offering, the Matthew
Gardiner-Hill Community Trust agreed to advance NZ$500,000 (equivalent to
$260,000), at an 8% annual interest rate, to Cyberuni. We have to pay monthly
interest of NZ$2,683 (equivalent to $1,408). This debt financing must be repaid
within three months after the public offering reaches escrow.
19
<PAGE>
Note: After reviewing the above, potential investors should consider whether or
not the offering price for the securities is appropriate at the present stage of
the Company's development.
USE OF PROCEEDS
9. (a) The following table sets forth the use of the proceeds from this
offering:
<TABLE>
We must reach the Minimum of $700,000 before we can have access to the
proceeds of this offering.
<CAPTION>
------------------------------------------ ---------------------------------------------
MINIMUM MAXIMUM
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
TOTAL PROCEEDS 700,000 5,000,000
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Less Offering Expenses
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Legal & Accounting 60,000 7% 60,000 5%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Copying & Advertising 20,000 4% 20,000 1.6%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
NET PROCEEDS FROM OFFERING 620,000 89% 4,920,000 93.4%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Use of Net Proceeds
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Purchase of Course 50,000 7% 1,200,000 24%
Materials (1)
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Develop Web Site and 50,000 7% 950,000 19%
Infrastructure (2)
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Office and Training Space 70,000 10% 100,000 2%
Rental (3)
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Marketing (4) 20,000 3% 370,000 7.4%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Salaries
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
- Administration (5) 280,000 40% 1,000,000 20%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
- Faculty 50,000 7% 450,000 9%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
- Sales (6) 10,000 2% 200,000 4%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Travel (7) 40,000 6% 200,000 4%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Utilities 20,000 3% 100,000 2%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
Working Capital (8) 30,000 4% 100,000 2%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
TOTAL USE OF NET PROCEEDS 700,000 100% 5,000,000 100%
--------------------------- ------------------- ---------------------- ---------------------- ----------------------
</TABLE>
NOTES TO USE OF PROCEEDS SECTION
1. If only the minimum is achieved then we will seek to acquire courses by means
other than purchasing them for cash. We might, for example, offer to pay
providers a set proportion of the enrollment fees from each of the first 100
students that enroll in a course. If we obtain the maximum this will enable us
to acquire courses for cash allowing us to reach our milestones sooner.
2. If the maximum is raised, we intend to spend approximately two-thirds of this
amount on developing our student enrollment and academic record keeping
software. The remaining one-third will be spent on developing our web site. If
the minimum is raised, we will license an existing student software system and
make minimal changes to our web-site.
3. We lease 4244 square feet of office space in Auckland, New Zealand for
NZD5,200 (approximately $30,000) per year and also lease an office in San
Francisco for $240 per month. If only the minimum is raised we will sublease
part of our premises in Auckland. The additional rent payments of NZD70,000 from
the sublease of the office will be allocated towards more space for learning
centers and additional office space in California that we may establish if the
maximum amount of this offering is sold. The learning centers will allow us to
provide support to students who are having difficulty with courses. If we obtain
the maximum amounts raised we will increase our presence in California by moving
to larger premises and employing office and professional staff.
20
<PAGE>
4. Our objective is to develop the `Cyberuni' profile and brand image with
academic institutions, as well as with students. If we raise the maximum amount
we intend to employ a marketing director and marketing assistant to implement a
program in line with our marketing strategy. How the marketing budget is
allocated between these new salaries and other marketing expenses will be
negotiated with the marketing director.
5. Administration at this stage of our development is a coordination and
recruitment function. If the minimum is raised, then other sources of finance
will have to be found for some existing salaries, or these will have to be
reduced.
6. We intend to spend this money persuading universities and colleges to offer
our courses.
7. Air fares and accommodation between Australia and the United States with some
development of relationships in Europe, Asia, and Africa. We expect to commute
every 3-4 weeks, as leads are followed up and negotiations pursued.
8. We have not allocated all the proceeds to cost areas because we believe
spending in some areas may exceed the budgeted sum. We want to keep some of the
proceeds in reserve to meet cost overruns. The most likely area of cost overrun
is in the development of student management software (see Note Two above)
(b) If there is no minimum amount of proceeds that must be raised before the
Company may use the proceeds of this offering, describe the order of priority in
which the proceeds set forth above in the column "If Maximum Sold" will be used.
Not applicable. We must raise a minimum of $700,000 prior to using the
proceeds from this Offering.
Note: After reviewing the portion of the offering allocated to the payment of
offering expenses, and to the immediate payment to management and promoters of
any fees, reimbursements, past salaries or similar payments, a potential
investor should consider whether the remaining portion of his investment, which
would be that part available for future development of the Company's business
and operations, would be adequate.
10. (a) If material amounts of funds from sources other than this offering are
to be used in conjunction with the proceeds from this offering, state the
amounts and sources of such other funds, and whether funds are firm or
contingent. If contingent, explain.
In order to provide some financing prior to this offering, the Matthew
Gardiner-Hill Community Trust agreed to advance NZ$500,000 (equivalent to
$260,000), at an 8% annual interest rate, to Cyberuni. We have to pay monthly
interest of NZ$2,683 (equivalent to $1,408). We intend to repay this debt prior
to the close of escrow with funds generated through as yet to be determined debt
financing.
(b) If any material part of the proceeds is to be used to discharge
indebtedness, describe the terms of such indebtedness, including interest rates.
If the indebtedness to be discharged was incurred within the current or previous
fiscal year describe the use of proceeds of such indebtedness.
We currently do not have any indebtedness. In the future, we intend to
secure debt financing in order to pay off monies loaned from the Matthew
Gardiner-Hill Community Trust. At this time, we not yet know the source of these
funds, nor do we know the terms of the loan.
21
<PAGE>
(c) If any material amount of proceeds is to be used to acquire assets other
than in the ordinary course of business briefly describe and state the cost of
the assets and other material terms of the acquisitions. If the assets are to be
acquired from officers, directors, employees or principal stockholders of the
Company or their associates, give the names of the persons from whom the assets
are to be acquired and set forth the cost to the Company, the method followed in
determining the cost, and any profit to such persons.
No material amount of proceeds are to be used to acquire assets other
than in the ordinary course of business.
(d) If any amount of the proceeds is to be used to reimburse any officer,
director, employee or stockholder for services already rendered, assets
previously transferred, or monies loaned or advanced, or otherwise, explain:
None of the proceeds are to be used to reimburse any officer, director,
employee or stockholder for services already rendered, assets previously
transferred, or monies loaned or advanced.
11. Indicate whether the Company is having or anticipates having within the next
12 months any cash flow or liquidity problems and whether or not it is in
default or in breach of any note, loan, lease or other indebtedness or financing
arrangement requiring the Company to make payments. Indicate if a significant
amount of the Company's trade payables have not been paid within the stated
trade term. State whether the Company is subject to any unsatisfied judgments,
liens or settlement obligations and the amounts thereof. Indicate the Company's
plans to resolve any such problems.
We currently have negative working capital and negative net cash used
in operating activities, but we do not anticipate having any cash flow problems
within the 12 months after raising the minimum amount from this offering. We are
not in default or in breach of any note, loan, lease or other indebtedness or
financing arrangement. We have no outstanding trade payables and are not subject
to any unsatisfied judgments, liens or settlement obligations.
12. Indicate whether proceeds from this offering will satisfy the Company's cash
requirements for the next 12 months, and whether it will be necessary to raise
additional funds. State the source of additional funds, if known.
We believe that proceeds from this offering will satisfy our cash
requirements for the next 12 months if the minimum amount is raised in this
offering.
22
<PAGE>
CAPITALIZATION
13. Indicate the capitalization of the company as of the most recent balance
sheet date (adjusted to reflect any subsequent stock splits, stock dividends,
recapitalizations or refinancings) as adjusted to reflect the sale of the
minimum and maximum amount of securities in this offering and the use of the net
proceeds therefrom.
<TABLE>
The following table sets forth our capitalization and our pro forma
capitalization, as adjusted, after giving effect to the issuance at closing of
1,000,000 shares of Series A Convertible Preferred Stock offered in this
placement, after expenses estimated at $80,000:
<CAPTION>
------------------------------- -------------------- -------------------------- -----------------------------------------
Pro Forma Pro Forma
March 31, 2000 As of March 31, 2000 As of March 31, 2000
Minimum: $700,000 Maximum: $5,000,000
------------------------------- -------------------- -------------------------- -----------------------------------------
<S> <C> <C> <C>
Long-term indebtedness $63,000.00 $63,000.00 $63,000.00
------------------------------- -------------------- -------------------------- -----------------------------------------
Stockholders' Equity:
Preferred Stock:
5,000,000 authorized: $250,000 $870,000 $5,170,000
Common Stock
50,000,000 authorized,
4,000,000 outstanding: $40,000 $40,000 $40,000
------------------------------- -------------------- -------------------------- -----------------------------------------
Accumulated Deficit: ($203,821) ($203,821) ($203,821)
------------------------------- -------------------- -------------------------- -----------------------------------------
Other Stockholders' Equity ($5,771) ($5,771) ($5,771)
------------------------------- -------------------- -------------------------- -----------------------------------------
Stockholders' Equity:
Total: $80,408 $700,408 $5,000,408
------------------------------- -------------------- -------------------------- -----------------------------------------
</TABLE>
23
<PAGE>
DESCRIPTION OF SECURITIES
14. The securities being offered hereby are:
Series A Convertible Preferred Stock. $5.00 par value.
15. These securities have:
Yes No
[X] [ ] Cumulative voting rights
[ ] [X] Other special voting rights
[ ] [X] Preemptive rights to purchase in new issues of shares
[ ] [X] Preference as to dividends or interest
[X] [ ] Preference upon liquidation
[ ] [X] Other special rights or preferences
16. Are the securities convertible?
Yes. Each share of Series A Preferred Stock may be converted at the
option of the holder, without the payment of any additional consideration by the
holder , at any time after the date of issuance of such share, at the office of
the Corporation or any transfer agent for Cyberuni, subject to the following:
o The shares shall be converted into such number of fully paid
and nonassessable shares of Common Stock as is determined by
dividing $5 by the Conversion Price; and by
o Adding the product determined by dividing the amount of all
accrued and unpaid dividends on such share of Series A
Preferred Stock by the lower of (1) $5 or (2) in the event of
a conversion upon or following the initial public offering of
Common Stock pursuant to an effective registration statement
under the Securities Act of 1933, the actual initial public
offering price per share.
o The Conversion Price for purposes of calculating the number of
shares of Common Stock deliverable upon conversion without the
payment of any additional consideration by the holder of
Series A Preferred Stock shall initially be $5 per share of
Common Stock.
Automatic conversion. Each share of Preferred Stock, Series A shall
automatically be converted into shares Common Stock, as follows:
o At such time as the fiscal year-end balance sheet of the
corporation, prepared in accordance with GAAP, shows a net
tangible book value of $7.50 or more per share for each share
of the Preferred Stock, Series A. Said stock shall be
automatically converted into Common Stock of the corporation
on a share-for-share basis on the 60th day following the
fiscal year end of the fiscal year in which the book value per
share of Preferred Stock, Series A was found to be $7.50 or
more per share.
o If at any time while there are shares of Preferred Stock,
Series A issued and outstanding there is to be a sale or
transfer of all, or substantially all, of the Corporation's
properties or assets, or a sale of at least 50% of all shares
of the Corporation's Common and Preferred Stock then
outstanding regardless of class or series, each share of the
Preferred Stock, Series A, shall be automatically converted
into Common Stock of the Corporation on a share-for-share
basis prior to said sale or transfer.
o Each outstanding share of Series A Preferred Stock shall be
automatically converted, without any further act of the
corporation or its stockholders, into fully paid and
nonassessable shares of Common Stock on a share-for-share
basis upon the closing of a firm underwritten public offering
pursuant to an effective registration statement under the
Securities Act of 1933. Provided, however, that the aggregate
gross proceeds received by Cyberuni equals or exceeds
$5,000,000.
24
<PAGE>
17. If securities are notes or other types of debt securities:
The securities are not notes or other types of debt securities.
18. If securities are Preference or Preferred stock:
Are unpaid dividends cumulative? [ ] Yes [X] No
Are securities callable? [ ] Yes [X] No
The Series A Preferred Stock does not have a preference with respect to
the payment of dividends over the common stock.
Note: Attach to this Prospectus copies or a summary of the charter, bylaw, or
contractual provision or document that gives rise to the rights of the Preferred
or Preference Stock, notes or other securities being offered.
19. If securities are capital stock of any type, indicate restrictions on
dividends under loan or other financing arrangements or otherwise:
There are no restrictions on dividends under loan or other financing
arrangements or otherwise.
20. Current amount of assets available for payment of dividends. If deficit must
be first made up, show deficit in parentheses.
No assets are currently available for the payment of dividends.
PLAN OF DISTRIBUTION
21. The selling agents (that is, the persons selling the securities as agent for
the Company for a commission or other compensation) in this offering are:
There are no selling agents in this direct public offering. The shares
are being sold directly through a designated executive officer who will be
registered as a sales representative, where required. The executive officer will
not receive any commissions.
22. Describe any compensation to selling agents or finders, including cash,
securities, contracts or other consideration, in addition to the cash commission
set forth as a percent of the offering price on the cover page of this
prospectus. Also indicate whether the Company will indemnify the selling agents
or finders against liabilities under the securities laws. ("Finders" are persons
who for compensation act as intermediaries in obtaining selling agents or
otherwise making introductions in furtherance of this offering.)
Not applicable.
23. Describe any material relationships between any of the selling agents or
finders and the Company or its management.
There are no selling agents or finders.
Note: After reviewing the amount of compensation to the selling agents or
finders for selling the securities, and the nature of any relationship between
the selling agents or finders and the Company, a
25
<PAGE>
potential investor should assess the extent to which it may be inappropriate to
rely upon any recommendation by the selling agents or finders to buy the
securities.
24. If this offering is not being made through selling agents, the names of
persons at the Company through which this offering is being made:
George Franich
Cyberuni.org, inc.
580 California Street, Suite 500
San Francisco, CA 94104
P: (415) 283.3259
F: (415) 283.3301
The shares will initially be sold through our executive officers who
will not receive commissions. We currently do not have a broker-dealer involved
with the sale of our shares. The effect of not working with a broker-dealer is
that there is no guarantee we will meet the minimum number of shares sold and
that we may be able to sell more shares through the use of a broker-dealer. This
direct public offering will begin as of the effective date of this registration
and will continue for twelve months, with the option to extend for three to six
months if required, or until the maximum number of shares are sold.
25. If this offering is limited to a special group, such as employees of the
Company, or is limited to a certain number of individuals (as required to
qualify under Subchapter 5 of the Internal Revenue Code) or is subject to any
other limitations, describe the limitations and any restrictions on resale that
apply:
Not applicable. This offering will be sold to the general public.
26. (a) Name, address and telephone number of independent bank or savings and
loan association or other similar depository institution acting as escrow agent
if proceeds are escrowed until minimum proceeds are raised:
City National Bank
351 California Street, Ground Floor
San Francisco, CA 94104
Attention: Trust Division
Tel. No.: (415) 576-2700
We have entered into an escrow agreement with City National Bank for
the purpose of holding in escrow funds received by Cyberuni on behalf of
investors, together with the Subscription Agreements of said investors. The
agreement is valid until March 16, 2004. City National Bank is entitled to an
escrow fee of two thousand five hundred dollars ($2,500) per annum for the
services provided thereunder. City National Bank is acting only as an Escrow
Holder in connection with this offering of securities described herein, and has
not endorsed, recommended or guaranteed the purchase, value or repayment of such
securities.
This offering will be completed within twelve months of the date of
this prospectus, subject to our option to extend the offering an additional six
months. Should we fail to raise the minimum financing, set under the terms of
this prospectus at $700,000, all funds deposited into the escrow account shall
be returned to investors within thirty days upon the expiration of this
offering. In the event the minimum investment is not received within offering
time period, all interest earned on the investment shall be disbursed, on a
pro-rata basis, to each individual investor respectively. In the event the
minimum investment is reached, all interest earned on the investment will be
disbursed to Cyberuni.
26
<PAGE>
The Company's officers, directors, and/or existing shareholders may
purchase securities in this Offering, with no limit on the amount purchased.
However, any such shares purchased shall not be counted toward the number of
shares necessary to clear escrow.
27. Explain the nature of any resale restrictions on presently outstanding
shares, and when those restrictions will terminate, if this can be determined:
All of the 4,000,000 shares of common stock issued prior to this public
offering were issued in reliance on the "private placement" exemption under the
Securities Act of 1933 (the "Act"). Such shares will not be available for sale
in the open market without registration except in reliance upon Rule 144 under
the Act. In general, under Rule 144 a person (or persons whose shares are
aggregated) who has beneficially owned shares acquired in a non-public
transaction for at least one year, and who is not deemed to be an "affiliate" of
Cyberuni, as that term is defined under the Act, would be entitled to sell
within any three month period, a number of shares that does not exceed the
greater or 1% of the then outstanding shares of common stock, or the average
weekly reported trading volume on all national securities exchanges or the
NASDAQ Stock Market during the four calendar weeks preceding such sale. Sales
within two years after the shares are issued may only be made if certain current
public information is available about us. In March of 2001, all of the shares of
common stock acquired by the initial shareholders may be eligible for public
sale under Rule 144 subject to the foregoing restrictions. If a substantial
number of the shares owned by the initial shareholders were sold pursuant to
Rule 144 or registered offering, the market price of the common stock could be
adversely affected.
In 1999, we sold 50,000 shares of Series A Preferred Stock to TPL
pursuant to an exemption from registration pursuant to Regulation S of the Act.
Securities that are acquired overseas, pursuant to Regulation S, may be resold
in the United States only if they are registered under the Act or if an
exemption from registration is available.
Note: Equity investors should be aware that unless the Company is able to
complete a further public offering or the Company is able to be sold for cash or
merged with a public company that their investment in the Company may be
illiquid indefinitely.
DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS
28. If the Company has within the last five years paid dividends, made
distributions upon its stock or redeemed any securities, explain how much and
when:
We were incorporated on March 2, 1999. We have not paid dividends or
made distributions upon any classes of our stock or redeemed any securities
since our incorporation.
OFFICERS AND KEY PERSONNEL OF THE COMPANY
29. Chief Executive Officer and Chief Financial Officer
Name: George Franich
Age: 32
Office Street Address: 580 California Street, Suite 500, San Francisco, CA 94104
Telephone No. 415.283.3259
27
<PAGE>
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
Goodman Fielder Milling and Baking (NZ) Ltd.: 4/94-12/99
Financial controller 1999, previously group accountant; job responsibilities
include: consolidation of financial reports (management and statutory) including
current tax and cash flow statements; tax compliance; consolidation of budgets;
daily cash flows; budgetary planning. Presently responsible for a budget of
$120,000,000. The parent company is listed on both the Australian and New
Zealand stock exchanges.
Kliktube/ Dedece: 3/92-11/93
Prior to accepting a position with Goodman Fielder, George Franich was
accountant and factory manager for 'Kliktube' a private company that
manufactured plastic fittings with an annual turnover of approximately 1 million
dollars.
KPMG: 1/90-2/92
His first job as an accountant was with business services, Peat Marwick (now
KPMG). George Franich left Peat Marwick for the position at Kliktube. Central
United Football Club: 1988-Present Since 1988 George Franich had been treasurer
of the Central United Football Club, presently New Zealand's leading soccer
club.
Education (degrees, schools, and dates):
B.Comm (Auckland) 1991
George Franich is also a director of Cyberuni.
30. Chief Operating Officer and Secretary
Name: Peter Caccioppoli
Age: 20
Office Street Address: 90 Symonds St., Peter Caccioppoli level 2 Auckland,
New Zealand
Telephone No. +64-9-3093387
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
This is Mr. Caccioppolis' first position since leaving school.
Education (degrees, schools, and dates): No degrees
Peter Caccioppoli is also a Director of the Company
Peter Caccioppoli anticipates that a Californian will be recruited to the
position of chief operating officer when this offering closes.
31. Chief Financial Officer.
Name: George Franich
Age: 32
Office Street Address: 580 California Street, Suite 500, San Francisco, CA 94104
Telephone No. 415.283.3259
28
<PAGE>
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
See above (Chief Executive Officer).
Education (degrees, schools, and dates):
B.Comm (Auckland) 1991
George Franich is also a Director of the Company
32. Other Key Personnel
Name: Rhys Michael Cullen; Age: 38
Position: Chairman of Academic Committee
Office Street Address: 90 Symonds St., level 2, Auckland, New Zealand
Telephone No. +64-9-3093387
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
Self-employed medical practitioner since 1987.
Research fellow, Department of Mathematics, Auckland University, since
November 1998.
Active researcher in family medicine.
For the last five years Dr. Cullen has been chairman of the Matthew
Gardiner-Hill Community Trust, a "not for profit" organization (incorporated
under the New Zealand Charitable Trusts Act 1957) that provides tertiary
education scholarships, and secondary school bursaries, and funds teacher
sabbaticals. The trust has developed a close relationship with Hastings Boys
High School.
Education (degrees, schools, and dates):
Master of Family Medicine (Monash University) 1999
Diploma of Professional Ethics (Auckland University) 1999
Bachelor of Arts (Auckland University) 1998
senior prize in philosophy
Master of Science (Auckland University) 1996
senior prize in mathematics
Diploma of Statistics (Auckland University) 1992
Bachelor of Medicine, Bachelor of Surgery (Auckland University) 1985
Dr. Cullen is not a director of Cyberuni. Dr. Cullen will work full-time on
Cyberuni matters.
As Chairman of the Academic Committee, Dr. Cullen intends to provide the
following services to the company:
o recruitment of faculty
o negotiation of contracts with potential faculty for the
provision of course materials and the assistance and
assessment of students
o initial review of course and examination materials submitted
by faculty
o coordinating peer review of courses
o establishment of relationships with existing universities and
colleges.
o design of the database and information system
o establishing a moderation system for examinations
o preparing Cyberuni and Kavil University to apply for
accreditation
29
<PAGE>
o coordinating the `cloning the Huia' project
o developing courses, qualifications and examinations
After this offering reaches escrow his responsibilities will include
o development of `learner services'
o development of the pre-university web-sites
Dr. Cullen was banned by the Registrar of Companies from managing a
company or being a company director in New Zealand for a period of five years,
beginning in August 1995. The creditor involved in the "losses to creditors" was
the Inland Revenue Department. He was not banned from running a business, and
has continued to run a successful medical practice and a successful charity, the
Matthew Gardiner-Hill Community Trust, from 1991 to the present. The "company
ban" in New Zealand prohibits him from being a director and from acting as any
sort of financial manager for a company in New Zealand. This ban does not
restrict him from performing the tasks assigned to him as Chairman of the
Academic Committee.
33. Number of Directors.
Our bylaws allow up to five directors. Presently there are three
directors: George Franich, Peter Caccioppoli, and Anthony Franich.
34. Information concerning outside or other directors.
Name: Anthony Peter Franich; Age: 24
Office Street Address: 90 Symonds St., Level 2 Auckland, New Zealand
Telephone No. +64-9-3093387
Name of employers, titles and dates of positions held during past five years
with an indication of job responsibilities.
For the last two years, since graduating, Anthony Franich has been
travelling in Europe.
Education (degrees, schools, and dates):
Bachelor of Business Studies, major in tourism (Massey University) 1996
35 (a) Have any of the Officers or Directors ever worked for or managed a
company (including a separate subsidiary or division of a larger enterprise) in
the same business as the Company?
No.
(b) If any of the Officers, Directors or other key personnel have ever worked
for or managed a company in the same business or industry as the Company or in a
related business or industry, describe what precautions, if any, (including the
obtaining of releases or consents from prior employers) have been taken to
preclude claims by prior employers for conversion or theft of trade secrets,
know-how or other proprietary information.
None of our officers, directors or other key personnel have ever worked
for or managed a company in the same business or industry as Cyberuni.
30
<PAGE>
(c) If the Company has never conducted operations or is otherwise in the
development stage, indicate whether any of the Officers or Directors has ever
managed any other company in the start-up or development stage and describe the
circumstances. including relevant dates.
None of our officers or directors has managed any other company in the
start-up or development stage.
(d) If any of the Company's key personnel are not employees but are consultants
or other independent contractors, state the details of their engagement by the
Company.
Since November 1999, we have paid $10,000 per month for Dr. Cullen's
services to a family trust incorporated in the Republic of Vanuatu. This amount
will increase to $20,000 per month in November 2000.
(e) If the Company has key man life insurance policies on any of its Officers,
Directors or key personnel, explain, including the names of the persons insured,
the amount of insurance, whether the insurance proceeds are payable to the
Company and whether there are arrangements that require the proceeds to be used
to redeem securities or pay benefits to the estate of the insured person or a
surviving spouse.
We do not maintain key-man life insurance policies on any of our
officers, directors or key personnel.
36. If a petition under the Bankruptcy Act or any State insolvency law was filed
by or against the Company or its Officers, Directors or other key personnel, or
a receiver, fiscal agent or similar officer was appointed by a court for the
business or property of any such persons, or any partnership in which any of
such persons was a general partner at or within the past five years, or any
corporation or business association of which any such person was an executive
officer at or within the past five years, set forth below the name of such
persons, and the nature and date of such actions.
No petition under the Bankruptcy Act or any State insolvency law has
been filed by or against Cyberuni or its officers, directors or other key
personnel within the last five years. Further, no receiver, fiscal agent, or
similar officer has been appointed by a court for the business or property of
any such persons, or any partnership in which any of such persons was a general
partner at or within the past five years, or any corporation or business
association of which any such person was an executive officer at or within the
past five years.
Note: After reviewing the information concerning the background of the Company's
Officers, Directors and other key personnel, potential investors should consider
whether or not these persons have adequate background and experience to develop
and operate this Company and to make it successful. In this regard, the
experience and ability of management are often considered the most significant
factors in the success of a business.
31
<PAGE>
PRINCIPAL STOCKHOLDERS
<TABLE>
37. Principal owners of the Company (those who beneficially own directly or
indirectly 10% or more of the common and preferred stock presently outstanding)
starting with the largest common stockholder. Include separately all common
stock issuable upon conversion of convertible securities (identifying them by
asterisk) and show average price per share as if conversion has occurred.
Indicate by footnote if the price paid was for a consideration other than cash
and the nature of any such consideration.
<CAPTION>
---------------------------------------------------------- -------------------- ------------------- ------------------------
Percentage of
Shares After Offering
Percentage Before
Name and Address of Shareholder Number of Shares Offering Minimum Maximum
---------------------------------------------------------- -------------------- ------------------- ------------------------
Principal Stockholders
---------------------------------------------------------- -------------------- ------------------- ----------- ------------
<S> <C> <C> <C> <C>
George V. Franich 1,500,000 37% 35.7% 29.7%
130A Cliff View Drive
Green Bay
Aukland, New Zealand
---------------------------------------------------------- -------------------- ------------------- ----------- ------------
Peter J. Caccioppoli 1,000,000 24.7% 23.8% 19.8%
90 Symonds Street, Level 2
Aukland, New Zealand
---------------------------------------------------------- -------------------- ------------------- ----------- ------------
All Officers and Directors as a group 2,500,000 61.7% 59.5% 49.5%
---------------------------------------------------------- -------------------- ------------------- ----------- ------------
Mathew Gardiner-Hill Community Trust (2) 1,000,000 24.7% 23.8% 19.8%
c/o Dr. Rhys Cullen, Trustee
90 Symonds Street, Level 2
Aukland, New Zealand
---------------------------------------------------------- -------------------- ------------------- ----------- ------------
Kavil University Ltd. 500,000 12.3% 11.9% 9.9%
2nd Floor, Raffea House
Kumul Highway
Port Vila, Vanuatu
---------------------------------------------------------- -------------------- ------------------- ----------- ------------
<FN>
(1) There are 4,050,000 shares of common stock presently outstanding. It is
assumed for the purposes of calculations that the minimum and maximum number of
shares is sold in this offering.
(2) The Matthew Gardiner-Hill Community Trust is a not for profit organization
(incorporated under the New Zealand Charitable Trusts Act 1957) that provides
college scholarships, high school bursaries, and funds teacher sabbaticals.
</FN>
</TABLE>
Dr. Rhys Cullen is Chairman of the Trust. Peter J Caccioppoli and George Franich
are the only other trustees.
38. Number of shares beneficially owned by Officers and Directors as a group:
Before Offering: 3,500,000shares (86.4% of total outstanding)
After Offering:
a) Assuming minimum securities sold: 3,500,000 shares (84.54% of total
outstanding)
b) Assuming maximum securities sold: 3,500,000 shares (70.0% of total
outstanding)
32
<PAGE>
MANAGEMENT RELATIONSHIPS, TRANSACTIONS AND REMUNERATION
39. (a) If any of the Officers, Directors, key personnel or principal
stockholders are related by blood or marriage, please describe.
George and Anthony Franich are brothers.
(b) If the Company has made loans to or is doing business with any of its
Officers, Directors, key personnel or 10% stockholders, or any of their
relatives (or any entity controlled directly or indirectly by any such persons)
within the last two years, or proposes to do so within the future, explain.
(This includes sales or lease of goods. property or services to or from the
Company, employment or stock purchase contract., etc.) State the principal terms
of any significant loans, agreements, leases, financing or other arrangements.
We have not made loans to, and are not doing business with, any of our
officers, directors, key personnel, 10% stockholders, or any of their relatives
(or any entity controlled directly or indirectly by any such persons).
(c) If any of the Company's Officers, Directors, key personnel or 10%
stockholders has guaranteed or co-signed any of the Company's bank debt or other
obligations, including any indebtedness to be retired from the proceeds of this
offering. explain and state the amounts involved.
The sub-lease of our offices in Auckland, New Zealand has been
guaranteed personally by Peter Caccioppoli.
40. (a) List all remuneration by the Company to Officers, Directors and key
personnel for the last fiscal Year:
We were incorporated on March 2, 1999. Since that date, the company has
paid NZ$94,558 in aggregate salaries to all officers, directors, and key
personnel.
Peter Caccioppoli is paid US$24,000 per year.
Antony Franich is paid US$18,000 per year.
Since November 1999, we paid US$10,000 per month for Dr. Cullen's
services.
George Franich will commence working full time for Cyberuni starting in
January 2000 at an annual salary of US$90,000. We have not yet reached an
agreement with our directors concerning bonuses, benefits, or other terms of
their future compensation.
No final contracts have been negotiated with any of our directors.
(b) If remuneration is expected to change, or has been unpaid in prior years,
explain
All past remuneration has been paid. Annual remuneration increases may
be awarded in the next three years for the directors and key personnel if the
Board of Directors believes such increases are appropriate. However, there are
no definite plans or contracts that have been negotiated with respect to
salaries, bonus or other remuneration for our directors or officers for the next
three years.
33
<PAGE>
(c) If any employment agreements exist or are contemplated, describe:
No employment agreements exist or are contemplated other than that with
George Franich, Anthony Franich, Peter Caccioppoli, and Dr. Cullen.
41. (a) Number of shares subject to issuance under presently outstanding stock
purchase agreements, stock options, warrants or rights.
None.
(b) Number of common shares subject to issuance under existing stock purchase or
option plans but not yet covered by outstanding purchase agreements, options or
warrants.
None.
(c) Describe the extent to which future stock purchase agreements, stock
options, warrants or rights must be approved by shareholders.
Neither the Articles of Incorporation, Bylaws, nor the Certificate of
Determination specifically provide approval rights for shareholders with regard
to future stock purchase agreements, stock options, or warrants.
42. If the business is highly dependent on the services of certain key
personnel, describe any arrangements to assure that these persons will remain
with the Company and not compete upon any termination:
No such arrangements have been made.
Note: After reviewing the above, potential investors should consider whether or
not the compensation to management and other key personnel directly or
indirectly, is reasonable in view of the present stage of the Company's
development.
LITIGATION
43. Describe any past, pending or threatened litigation or administrative action
which has had or may have a material effect upon the Company's business,
financial condition. or operations, including any litigation or action involving
the Company's Officers, Directors or other key personnel. State the names of the
principal parties, the nature and current status of the matters, and amounts
involved. Give an evaluation by management or counsel, to the extent feasible,
of the merits of the proceedings or litigation and the potential impact on the
Company's business, financial condition or operations.
There is no past, pending or threatened litigation or administrative
action which has had or may have a material effect upon our business, financial
condition or operations.
34
<PAGE>
FEDERAL TAX ASPECTS
44. If the Company is an S corporation under the Internal Revenue Code of 1986
and it is anticipated that any significant tax benefits will be available to
investors in this offering. indicate the nature and amount of such anticipated
tax benefits and the material risks of their disallowance. Also, state the name,
address and telephone number of any tax advisor that has passed upon these tax
benefits. Attach any opinion or description of the tax consequences of an
investment in the securities by the tax advisor.
Not applicable because we are not an S corporation.
MISCELLANEOUS FACTORS
45. Describe any other material factors, either adverse or favorable, that will
or could affect the Company or its business (for example, discuss any defaults
under major contracts, any breach of bylaw provisions, etc.) or which are
necessary to make any other information in this Prospectus not misleading or
incomplete.
All material factors that we are aware of have been disclosed in this
prospectus.
35
<PAGE>
FINANCIAL STATEMENTS
46. Provide the financial statements required by Part F/S of this Prospectus
section of Form
MANAGEMENT'S DISCUSSION AND ANALYSIS
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
cyberuni.org, Inc.
We have audited the accompanying consolidated balance sheet of cyberuni.org,
Inc. ("cyberuni") and subsidiary as of July 31, 1999, and the related
consolidated statements of operations and comprehensive income, shareholders'
equity and cash flows for its fiscal year from inception, March 2, 1999 to July
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits 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
misstatements. 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
cyberuni and subsidiary as of July 31, 1999, and the consolidated results of
their operations and comprehensive income and their cash flows for its fiscal
year from inception, March 2, 1999 to July 31, 1999, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company's ability to continue as going
concern is primarily dependent on its ability to raise financing. There is
substantial doubt about the ability of the Company to continue as a going
concern if it is not able to raise financing. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Los Angeles, California
October 15, 1999
/s/ Hollander, Lumer & Co., LLP
-------------------------------
HOLLANDER, LUMER & CO., LLP
36
<PAGE>
Cyberuni.org, Inc. and Kavil University Ltd.
Consolidated Balance Sheet
JULY 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 35,120
Deferred offering costs 28,016
Prepaid expenses 11,153
---------
TOTAL CURRENT ASSETS 74,289
---------
PROPERTY AND EQUIPMENT 3,334
OTHER ASSETS
Course materials 251,262
Web-development 7,152
Trademark 3,185
Goodwill 1,000
---------
TOTAL OTHER ASSETS 262,599
---------
TOTAL $ 340,222
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,490
Due to related parties 114,579
---------
TOTAL CURRENT LIABILITIES 129,069
---------
SHAREHOLDERS' EQUITY
Series A Convertible Preferred Stock, $5 par value;
authorized -5,000,000 shares;
issued and outstanding - 50,000 shares 250,000
Common stock, no par value; authorized - 50,000,000 shares;
issued and outstanding- 4,000,000 shares 40,000
Deficit during the development stage (73,296)
Accumulated other comprehensive income (551)
Less: Common stock of parent company held by a subsidiary (5,000)
---------
TOTAL SHAREHOLDERS' EQUITY 211,153
---------
TOTAL $ 340,222
=========
37
<PAGE>
Cyberuni.org, Inc. and Kavil University Ltd.
Consolidated Statement of Operations
From Inception on March 2, 1999 to July 31, 1999
REVENUE
Registration $ 6,468
Naming rights 4,494
-----------
TOTAL REVENUE 10,962
-----------
EXPENSES
Advertising 36,608
General and administrative 48,053
-----------
TOTAL EXPENSES 84,661
-----------
LOSS BEFORE OTHER INCOME (73,699)
OTHER INCOME
Interest income 403
-----------
NET LOSS (73,296)
-----------
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustments (551)
-----------
COMPREHENSIVE INCOME $ (73,847)
===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 3,500,000
BASIC AND DILUTED LOSS PER SHARE $ ( 0.02)
38
<PAGE>
<TABLE>
Cyberuni.org, Inc. and Kavil University Ltd.
Statement of Shareholders Equity
<CAPTION>
Preferred Stock Common Stock Accumulated Comprehensive Total
Shares Amount Shares Amount Deficit Income
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock issued in March 1999 $ -- 4,000,000 $ 40,000 $ -- $ -- $ 40,000
for cash ($ .01/share)
Series A Convertible Preferred
Stock issued in June 1999 in 50,000 250,000 250,000
exchange for courses material ($
5/share)
Purchased of common stock by a (500,000) (5,000) (5,000)
subsidiary company
Foreign currency translation (551) (551)
adjustment
Net loss ` (73,296) (73,296)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, July 31, 1999 50,000 $ 250,000 3,500,000 $ 35,000 $ (73,296) (551) $ 211,153
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
39
<PAGE>
Cyberuni.org, Inc. and Kavil University Ltd.
Consolidated Statement of Cash Flows
From Inception on March 2, 1999 to July 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (73,296)
Adjustments to reconcile net loss to net cash used
in operating activities:
Foreign currency translation adjustment (551)
Changes in operating assets and liabilities:
Increase (decrease) in:
Prepaid expenses (11,153)
Deferred charges (28,016)
Accounts payable and accrued expenses 14,490
---------
NET CASH USED IN OPERATING ACTIVITIES (98,526)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of course material (1,262)
Payment of web-development (7,152)
Purchase of property and equipment (3,334)
Trademark (3,185)
Goodwill (1,000)
---------
NET CASH USED IN INVESTING ACTIVITIES (15,933)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from related party 114,579
Common stock issued 40,000
Purchased of common stock by a subsidiary (5,000)
---------
NET CASH USED IN INVESTING ACTIVITIES 149,579
---------
INCREASE IN CASH AND CASH EQUIVALENTS 35,120
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD --
---------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 35,120
=========
OTHER CASH INFORMATION
Interest received $ 403
=========
NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of Series A Convertible Preferred Stock
in exchange for course material $ 250,000
=========
40
<PAGE>
Notes to Consolidated Financial Statements
of Cyberuni.org, Inc. and Kavil University Ltd.
1. Description of business
Cyberuni.org, Inc. (the Company) was incorporated under the laws of the
State of California on March 2, 1999. The Company intends to deliver
over the internet university level courses that will be graded by its
own employed faculty, to students of existing colleges and universities
who will contract with the Company to provide the courses. The courses
and related materials ("cyberuni" courses) will be developed in house,
licensed from existing institutions or purchased from qualified
providers.
In addition the Company will provide a complete university program
online through Kavil University, a wholly owned subsidiary incorporated
in Republic of Vanuatu, a group of South West Pacific islands, by
offering cyberuni courses.
The Company is currently in the process of raising capital through
public offering of its Series A Convertible Preferred Stock (see Note
6). The proceeds from the offering will be used to develop an
infrastructure to provide online access, acquire course material,
recruit faculty members and market its services. Presently the Company
offers courses in literature and philosophy and is developing medical
and business courses.
2. Significant accounting policies
Fiscal year - The Company adopted a fiscal year ending July 31. These
consolidated financial statements include the transactions from the
inception of the Company, March 2, 1999 to July 31, 1999.
Principles of consolidation - The consolidated financial statements
include the accounts of Kavil University. All significant intercompany
transactions and balances have been eliminated.
Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Cash and cash equivalents - The Company considers all highly liquid
investments purchased with an original maturity of three months or less
to be cash equivalents.
Fair value of financial instruments - The Company's financial
instruments consist of cash equivalents, accounts payable, accrued
expenses, and due to related parties. The fair values of the Company's
financial instruments approximate the carrying value of the
instruments.
Long-lived assets - The Company evaluates the carrying value of
long-lived assets, including course material, whenever events or
changes in circumstances indicate that the carrying value of the asset
may be impaired. An impairment loss is recognized when estimated future
cash flows expected to result from the use of the assets, including
disposition, is less than the carrying value of the asset.
Property and equipment - Property and equipment is recorded at cost and
depreciation is computed on the straight-line method based upon the
estimated useful life of the related asset as follows:
Furniture, fixtures, and office equipment 5 years
Computers 3 years
41
<PAGE>
Course material - All expenses associated with acquiring course
material are capitalized and amortized using the straight-line method
over 5 years.
Cost of start-up activities - Costs of start-up activities, including
organization costs are charged to operations as incurred.
Trademark - All costs associated with registering trademark
"cyberuni.org" in New Zealand, Australia, and United States are
capitalized and amortized over 5 years. For the period ended July 31,
1999, the Company has not amortized the trademark.
Deferred offering costs - Deferred offering costs arose from certain
legal and other related fees in connection with the sale of the
Company's securities in its initial public offering. Upon successful
completion of the Company's initial public offering, these costs will
be charged to stockholders' equity. If unsuccessful, these cost will be
charged to operations.
Goodwill - Represents the excess of the costs of companies acquired
over the fair value of their net assets at dates of acquisition and is
being amortized on the straight-line method over 5 years. For the
period ended July 31, 1999 goodwill has not been amortized.
Revenue recognition - Registration fees will be recognized when the
agreement has been completed and all conditions have been accepted.
Enrollment fees paid by or on behalf of each student enrolled in
"Cyberuni" courses, will be deferred and amortized over the period of
the course but not more than one year. The Company also receives
revenue from naming rights. Naming rights are sold to sponsors which
gives them the right to name institutes, professorial chairs, and other
entities within Cyberuni. Revenue received from naming rights will be
deferred and amortized over the period of the sponsorship agreement or
contract.
Advertising expense- Advertising and promotional costs are expensed as
incurred. Advertising expenses include the costs of online and seminars
regarding "cloning the Huia".
Foreign currency translation - Both the Company and its subsidiary are
using New Zealand dollar as their functional currency. Assets and
liabilities are translated into US dollar at period-end exchange rates.
Income statement amounts are translated using monthly exchange rates
during the year. Gains and losses resulting from translating foreign
currency financial statements are accumulated in a separate component
of shareholders' equity until the subsidiary is sold or substantially
liquidated.
Income taxes - The Company uses the asset and liability method of
accounting for income taxes. Under this method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. This method also requires the recognition of future tax benefits
such as net operating loss carryforwards, to the extent that
realization of such benefits is more likely than not. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The Company is subject to income taxes in the United States of America
(the "US") and New Zealand. Taxes paid in New Zealand will be used as a
credit in calculating the US income taxes to the extent that US tax law
and tax treaty allows with New Zealand.
The Company's subsidiary, incorporated in the Republic of Vanuatu
("Vanuatu"), is not subject to any income taxes in Vanuatu.
42
<PAGE>
Net income per share - Basic earnings per share is computed using the
weighted average number of common shares. Diluted earnings per share is
computed using the weighted average number of common shares and
potentially dilutive common shares outstanding during the period.
Potentially dilutive common shares consist of convertible preferred
stock.
Recent accounting pronouncements - The Company does not anticipate any
accounting impact from recently adopted accounting pronouncements.
3. Disclosure of certain significant risks and uncertainties
Going concern - The Company's ability to continue as going concern is
primarily dependent on its ability to raise financing. The Company is
currently attempting to raise $5,000,000 from public offering of its
Series A Convertible Preferred Stock so that the Company can meet its
obligations and sustain its development activities. No assurance can be
given that the public offering will be successful.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
liabilities in the normal course of business. The financial statements
do not include any adjustments relating to the recoverability of the
recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
Subject to government regulations - Regulatory requirements may have to
be met in order to provide educational services in the international
market. The Company believes that currently it is exempt from any
government regulations in the U.S. because it does not participate in
any federal or state student aid or loan programs. However, in the
future, state laws and regulations could require the Company to meet
certain requirements. There is no assurance that the Company can meet
such requirements.
Courses accreditation - Currently none of the Company's courses are
accredited in any jurisdiction. This could have a material adverse
effect on the Company's business and financial conditions. If the
Company attempts to accredit its courses, there can be no assurance
that they will achieve accreditation.
Dependence Upon Key Personnel: The success of the Company is largely
dependent on the personal efforts of Messrs. George Franich, Peter
Caccioppoli, and Rhys Cullen, the founders. The loss of these
individuals could have a materially adverse effect on the Company'
operation. Currently there are no employment agreement between the
Company and those officers.
The Year 2000 Matters: The Company's operations are dependent on the
Year 2000 readiness of third parties who do business with the Company.
The Company cannot guarantee that the systems of third parties on which
the Company relies will be Year 2000 compliant. Their failure to
convert their systems could disrupt the Company's systems. In addition,
the computer systems necessary to maintain the viability of the
Internet or any of the Web sites that direct users to the Company's
online site may not be Year 2000 compliant. Finally, computers used by
users to access the Company's Web site may not be Year 2000 compliant.
The Company cannot guarantee that its systems will be Year 2000
compliant or that the Year 2000 problem will not adversely affect its
business.
Other risks and uncertainties - The Company is subject to various risks
and uncertainties frequently encountered by companies in early stage of
development. Such risks and uncertainties include, but are not limited
to, its limited operating history, an evolving and unpredictable
developing online technology, and increasing number of competitors.
There can be no assurance that the Company will be successful in
addressing such risks.
43
<PAGE>
4. Property and equipment
Property and equipment consisted of computer and equipment. For the
period ended July 31, 1999 the property and equipment have not been
depreciated.
5. Related party transactions
Acquisition of subsidiary - In March 1999, the Company bought all
common stock outstanding of Kavil University from Regent Limited and
Satellite Holdings Limited. The shares were beneficially owned by Dr.
Rhys M. Cullen, a trustee of Matthew Gardiner-Hill Community Trust, a
shareholder of the Company. Kavil University was an inactive start-up
company. The acquisition was accounted for under the purchase method of
accounting, and accordingly the operating results of Kavil University
have been included in the accompanying consolidated financial
statements from the effective date of the acquisition.
Related party Transactions - Cyberuni received debt financing from the
Matthew Gardiner-Hill Community Trust to allow the Company to continue
operating until the Company received money from its public offering.
Matthew Gardiner-Hill Community Trust agreed to advance up to
NZD400,000 (equivalent to $210,000). The Company has to pay monthly
interest of NZD2,683 (equivalent to $1,408). This debt financing must
be repaid within three months after the public offering reaches escrow.
6. Shareholders' equity
Series A Convertible Preferred Stock - The convertible preferred stocks
have cumulative voting rights and preference upon liquidation, and is
convertible into common stock upon the occurrence of certain events.
Preferred stockholders are not entitled to preemptive rights to
purchase new issues of common shares and have no preference as to
dividends or interest
Purchase of course materials - On June 15, 1999, the Company entered
into agreement to sell 50,000 Series A Convertible Preferred Stock to
Tertiary Provider Limited for $250,000 cash. On October 15, 1999 the
Board of Directors agreed that Tertiary Provider Limited can satisfy
its purchase of preferred stock in the form of providing the Company
with material related to 15 courses, which the Company could offer
online.
Initial public offering - On October 15, 1999 the Company' board of
directors approved the offering of 1,000,000 shares of series A
preferred stock at $5.00 per share. These offering will be registered
under a form SB-1 filing with the United States Securities and Exchange
Commission.
44
<PAGE>
CYBERUNI.ORG, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED BALANCE SHEET
JULY 31, MARCH 31,
1999 2000
--------- ---------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 35,120 $ 1,814
Deferred offering costs 28,016 75,699
Prepaid expenses 11,153 10,500
--------- ---------
TOTAL CURRENT ASSETS 74,289 88,013
--------- ---------
PROPERTY AND EQUIPMENT 3,334 5,704
OTHER ASSETS
Courses materials and web-development 251,262 280,686
Web-development 7,152 7,152
Trademark 3,185 3,185
--------- ---------
TOTAL OTHER ASSETS 261,599 291,023
--------- ---------
TOTAL $ 339,222 $ 384,740
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,490 23,277
Due to related parties 114,579 219,055
--------- ---------
TOTAL CURRENT LIABILITIES 129,069 242,332
--------- ---------
LONG-TERM LIABILITIES
Convertible note -- 63,000
STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock,
$5 par value; authorized-5,000,000
shares; issued and
outstanding - 50,000 shares 250,000 250,000
Common stock, no par value;
authorized - 50,000,000
shares; issued - 4,000,000 shares and
outstanding - 4,000,000 shares 40,000 40,000
Deficit during the development stage (74,296) (204,821)
Accumulated other comprehensive income (551) (771)
Less: Common stock of parent company held by
a subsidiary (5,000) (5,000)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 210,153 79,408
--------- ---------
TOTAL $ 339,222 $ 384,740
========= =========
F-1
See Notes to Consolidated Financial Statements
45
<PAGE>
<TABLE>
CYBERUNI.ORG, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
<CAPTION>
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FROM INCEPTION AUGUST 1, 1999 FROM INCEPTION
MARCH 2, 1999 TO TO TO
JULY 31, 1999 MARCH 31, 2000 MARCH 31, 2000
--------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
REVENUE
Registration $ 6,468 $ -- $ 6,468
Naming rights 4,494 -- 4,494
--------------------------------------------------------------------
TOTAL REVENUE 10,962 -- 10,962
--------------------------------------------------------------------
EXPENSES
Advertising 36,608 1,910 38,518
General and administrative 49,053 128,615 177,668
--------------------------------------------------------------------
TOTAL EXPENSES 85,661 130,525 216,186
--------------------------------------------------------------------
LOSS BEFORE OTHER INCOME (74,699) (130,525) (205,224)
--------------------------------------------------------------------
OTHER INCOME
Interest income 403 -- 403
--------------------------------------------------------------------
NET LOSS (74,296) (130,525) (204,821)
--------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustments (551) (220) (771)
--------------------------------------------------------------------
COMPREHENSIVE INCOME $ (74,847) $ (130,745) $ (205,592)
====================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 3,500,000 3,500,000 3,500,000
====================================================================
BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.04) $ (0.06)
====================================================================
<FN>
F-2
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
46
<PAGE>
<TABLE>
CYBERUNI.ORG, INC. AND SUBSIDIARY
(A development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION MARCH 2, 1999 TO JULY 31, 1999 AND THE PERIOD AUGUST 1, 1999 TO MARCH 31, 2000 (UNAUDITED)
<CAPTION>
Preferred Common
Stock Stock Accumulated Comprehensive
Shares Amount Shares Amount Deficit Income Total
----------- ------------ ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock issued $ -- 4,000,000 $ 40,000 $ -- $ -- $ 40,000
Series A Convertible
Preferred Stock issued
in exchange for 50,000 250,000 250,000
courses material
Purchased of common stock by
a subsidiary company (500,000) (5,000) (5,000)
Excess loss of purchased
subsidiary (1,000) (1,000)
Foreign currency translation
adjustment (551) (551)
Net loss from inception to
July 31, 1999 (73,296) (73,296)
Balance, July 31, 1999 50,000 250,000 3,500,000 35,000 (74,296) (551) 210,153
----------- ------------ ----------- ----------- ------------ ----------- ------------
Foreign currency translation
adjustment (220) (220)
Net loss for the period
ended March 31, 2000 (130,525) (130,525)
Balance, March 31, 2000
(unaudited) 50,000 $250,000 3,500,000 $ 35,000 $(204,821) $(771) $ 79,408
----------- ------------ ----------- ----------- ------------ ----------- ------------
<FN>
F-3
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
47
<PAGE>
<TABLE>
CYBERUNI.ORG, INC. AND SUBSIDIARY
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FROM INCEPTION AUGUST 1, 1999 FROM INCEPTION
MARCH 2, 1999 TO TO TO
JULY 31, 1999 MARCH 31, 2000 MARCH 31, 2000
---------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (74,296) $(130,525) $(204,821)
Adjustments to reconcile net loss to net cash used in operating
activities:
Foreign currency translation adjustment (551) (220) (771)
Changes in operating assets and liabilities:
Increase (decrease) in :
Prepaid expenses (11,153) 653 (10,500)
Deferred charges (28,016) (47,683) (75,699)
Accounts payable and accrued expenses 14,490 8,787 23,277
---------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (99,526) (168,988) (268,514)
---------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of course material (1,262) (29,424) (30,686)
Payment of web-development (7,152) -- (7,152)
Purchase of property and equipment (3,334) (2,370) (5,704)
Trademark (3,185) -- (3,185)
---------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (14,933) (31,794) (46,727)
---------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related party 114,579 104,476 219,055
Common stocks issued 40,000 -- 40,000
Purchase of common stocks by subsidiary (5,000) -- (5,000)
Issuance of convertible note -- 63,000 63,000
---------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES 149,579 167,476 317,055
---------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 35,120 (33,306) 1,814
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD -- 35,120 --
---------------------------------------------------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 35,120 $ 1,814 $ 1,814
===================================================
OTHER CASH INFORMATION
Interest received $ 403 $ -- $ 403
===================================================
NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of series A convertible preferred stocks in exchange
for courses material $ 250,000 $ -- $ 250,000
===================================================
<FN>
F-4
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of business
cyberuni.org, inc. (the Company) was incorporated under the laws of the
State of California on March2,1999. The Company intends to deliver over
the Internet university level courses that will be graded by its own
employed faculty, to students of existing colleges and universities who
will contract with the Company to provide the courses. The courses and
related materials ("cyberuni" courses) will be developed in house,
licensed from existing institutions or purchased from qualified
providers. In addition the Company will provide a complete university
program online through Kavil University, a wholly owned subsidiary
incorporated in Republic of Vanuatu, a group of South West Pacific
islands, by offering cyberuni courses.
The Company is currently in the process of raising capital through
public offering of its Series A Convertible Preferred Stock (see Note
6). The proceeds from the offering will be used to develop an
infrastructure to provide online access, acquire course material,
recruit faculty members and market its services. Presently the Company
offers courses in literature and philosophy and is developing medical
and business courses.
2. Significant accounting policies
Fiscal year - The Company adopted a fiscal year ending July 31.
Principles of consolidation - The consolidated financial statements
include the accounts of Kavil University and cyberuni.ac.nz. All
significant intercompany transactions and balances have been
eliminated.
Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Cash and cash equivalents - The Company considers all highly liquid
investments purchased with an original maturity of three months or less
to be cash equivalents.
Fair value of financial instruments - The Company's financial
instruments consist of cash equivalents, accounts payable, accrued
expenses, and due to related parties. The fair values of the Company's
financial instruments approximate the carrying value of the
instruments.
Long-lived assets - The Company evaluates the carrying value of
long-lived assets, including course material, whenever events or
changes in circumstances indicate that the carrying value of the asset
may be impaired. An impairment loss is recognized when estimated future
cash flows expected to result from the use of the assets, including
disposition, is less than the carrying value of the asset.
Property and equipment - Property and equipment is recorded at cost and
depreciation is computed on the straight-line method based upon the
estimated useful life of the related asset as follows:
Furniture, fixtures, and office equipment 5 years
Computers 3 years
Course material - All expenses associated with acquiring course
material are capitalized and amortized using the straight-line method
over 5 years.
49
<PAGE>
Cost of start-up activities - Costs of start-up activities, including
organization costs are charged to operations as incurred.
Trademark - All costs associated with registering trademark
"cyberuni.org" in New Zealand, Australia, and United States are
capitalized and amortized over 5 years. For the period ended March
31,2000, the Company has not amortized the trademark.
Deferred offering costs - Deferred offering costs arose from certain
legal and other related fees in connection with the sale of the
Company's securities in its initial public offering. Upon successful
completion of the Company's initial public offering, these costs will
be charged to stockholders' equity. If unsuccessful, these cost will be
charged to operations.
Revenue recognition - The Company will have three major sources of
revenue; registration, enrollment fees and naming rights. Registration
fees will be recognized when the cash is received. Enrollment fees and
naming rights will be deferred and amortized over the period of the
course, for enrollment fees and over the period of sponsorship
agreement or contract, for naming rights.
Advertising expense- Advertising and promotional costs are expensed as
incurred. Advertising expenses include the costs of online and seminars
regarding "cloning the huia".
Foreign currency translation - Both the Company and its subsidiary are
using New Zealand dollar as their functional currency. Assets and
liabilities are translated into US dollar at period-end exchange rates.
Income statement amounts are translated using monthly exchange rates
during the year. Gains and losses resulting from translating foreign
currency financial statements are accumulated in a separate component
of shareholders' equity until the subsidiary is sold or substantially
liquidated.
Net income per share - Basic earnings per share is computed using the
weighted average number of common shares. Diluted earnings per share is
computed using the weighted average number of common shares and
potentially dilutive common shares outstanding during the period.
Potentially dilutive common shares consist of convertible preferred
stock.
Resent accounting pronouncements - The Company does not anticipate any
accounting impact from recently adopted accounting pronouncements.
3. Disclosure of certain significant risks and uncertainties
Going concern - The Company's ability to continue as going concern is
primarily dependent on its ability to raise financing. The Company is
currently attempting to raise $5,000,000 from public offering of its
Series A Convertible Preferred Stock so that the Company can meet its
obligations and sustain its development activities. No assurance can be
given that the public offering will be successful.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
liabilities in the normal course of business. The financial statements
do not include any adjustments relating to the recoverability of the
recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
Subject to government regulations - Regulatory requirements may have to
be met in order to provide educational services in the international
market. The Company believes that currently it is exempt from any
government regulations in the U.S. because it does not participate in
any federal or state student aid or loan programs. However, in the
future, state laws and regulations could require the Company to meet
certain requirements. There is no assurance that the Company can meet
such requirements.
50
<PAGE>
Courses accreditation - Currently none of the Company's courses are
accredited in any jurisdiction. This could have a material adverse
effect on the Company's business and financial conditions. If the
Company attempts to accredit its courses, there can be no assurance
that they will achieve accreditation.
Dependence upon key personnel -The success of the Company is largely
dependent on the personal efforts of Messrs. George Franich, Peter
Caccioppoli, and Rhys Cullen, the founders. The loss of these
individuals could have a materially adverse effect on the Company'
operation. Currently there are no employment agreement between the
Company and those officers.
The Year 2000 Matters - The Company's operations are dependent on the
Year 2000 readiness of third parties who do business with the Company.
The Company cannot guarantee that the systems of third parties on which
the Company relies will be Year 2000 compliant. Their failure to
convert their systems could disrupt the Company's systems. In addition,
the computer systems necessary to maintain the viability of the
Internet or any of the Web sites that direct users to the Company's
online site may not be Year 2000 compliant. Finally, computers used by
users to access the Company's Web site may not be Year 2000 compliant.
The Company cannot guarantee that its systems will be Year 2000
compliant or that the Year 2000 problem will not adversely affect its
business.
Other risks and uncertainties - The Company is subject to various risks
and uncertainties frequently encountered by companies in early stage of
development. Such risks and uncertainties include, but are not limited
to, its limited operating history, an evolving and unpredictable
developing online technology, and increasing number of competitors.
There can be no assurance that the Company will be successful in
addressing such risks.
4. Property and equipment
Property and equipment consisted of computer and equipment. For the
period ended July 31, 1999 the property and equipment have not been
depreciated.
5. Related party transactions
Acquisition of subsidiary - In March 1999, the Company bought all
common stock outstanding of Kavil University from Regent Limited and
Satellite Holdings Limited. The shares were beneficially owned by Dr.
Rhys M. Cullen, a trustee of Matthew Gardiner-Hill Community Trust, a
shareholder of the Company. Kavil University was an inactive start-up
company. The acquisition was accounted for as a merger of two entities
under common control that was recorded similarly to a pooling of
interest, and accordingly the operating results of Kavil University
have been included in the accompanying consolidated financial
statements from the effective date of the acquisition.
Due to related party - Due to related party represents advances
received from Matthew Gardiner-Hill Community Trust to allow the
Company to continue operating until the Company received money from its
public offering. Matthew Gardiner-Hill Community Trust agreed to
advance up to NZD500,000 (equivalent to $260,000) at an 8% annual
interest rate. The Company has to pay monthly interest of NZD2,683
(equivalent to $1,408). These advances have to be repaid within three
months after the public offering reaches escrow.
6. Shareholders' equity
Series A Convertible Preferred Stock - Series A Convertible Preferred
Stock has a par value of $5 per share. The holders of Preferred Stock
Series A have conversion right as follows:
51
<PAGE>
1. Right to convert and conversion price. Each share of Preferred
Stock, Series A shall be convertible, without the payment of
any additional consideration by the holder thereof and at the
option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or
any transfer agent for the Preferred Stock Series A into such
number of fully paid and nonassessable shares of Common Stock
as is determined by dividing $5 by the Conversion Price,
determined as hereinafter provided, in effect at the time of
conversion and by adding thereto the product determined by
dividing the amount of all accrued and unpaid dividends on
such share of Preferred Stock Series A by the lower of (1) $5
or (2) in the event of a conversion upon or following the
initial public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of
1933, as amended, the actual initial public offering price per
share. The Conversion Price for purposes of calculating the
number of shares of Common Stock deliverable upon conversion
without the payment of any additional consideration by the
holder of Preferred Stock, Series A shall initially be $5 per
share of Common Stock. Such initial Conversion Price shall be
subject to adjustment, in order to adjust the number of shares
of Common Stock into which Preferred Stock, Series A is
convertible, as hereinafter provided.
2. Automatic conversion. Each share of Preferred Stock, Series A
shall automatically be converted into shares Common Stock, as
follows:
o At such time as the fiscal year-end balance sheet of
the corporation, prepared in accordance with GAAP,
shows a net tangible book value of $7.50 or more per
share for each share of the Preferred Stock, Series
A. said stock shall be automatically converted into
Common Stock of the corporation on a share-for-share
basis on the 60th day following the fiscal year end
of the fiscal year in which the book value per share
of Preferred Stock, Series A was found to be $7.50 or
more per share.
o If at any time while there are shares of Preferred
Stock, Series A issued and outstanding there is to be
a sale or transfer of all, or substantially all, of
the Corporation's properties or assets, or a sale of
at least 50% of all shares of the Corporation's
Common and Preferred Stock then outstanding
regardless of class or series, each share of the
Preferred Stock, Series A, shall be automatically
converted into Common Stock of the Corporation on a
share-for-share basis prior to said sale or transfer.
o Each outstanding share of Preferred Stock shall
automatically be converted, without any further act
of the corporation or its stockholders, into fully
paid and nonassessable shares of Common Stock on a
share-for-share basis upon the closing of a firm
underwritten public offering pursuant to an effective
registration statement under the Securities Act of
1933, as amended, covering the offering and sale of
the Common Stock for the account of the Corporation
in which the aggregate gross proceeds received by the
Corporation equals or exceeds $5,000,000.
Purchase of course materials - On June 15, 1999, the Company entered
into agreement to sell 50,000 Series A Convertible Preferred Stock to
Tertiary Provider Limited for $250,000 cash. On October 15, 1999 the
Board of Directors agreed that Tertiary Provider Limited can satisfy
its purchase of preferred stock in the form of providing the Company
with material related to 15 courses, which the Company could offer
online.
Initial public offering - On October 15, 1999 the Company' board of
directors approved the offering of 1,000,000 shares of series A
preferred stock at $5.00 per share. These offering will be registered
under a form SB-1 filing with the United States Securities and Exchange
Commission.
52
<PAGE>
MANAGEMENT'S DISCUSSION OF CERTAIN RELEVANT FACTORS
47. If the Company's financial statements show losses from operations, explain
the causes underlying these losses and what steps the Company has taken or is
taking to address these causes.
We are a start-up company. We were formed in March of 1999. We have not
started to aggressively advertise our services.
48. Describe any trends in the Company's historical operating results. Indicate
any changes now occurring in the underlying economics of the industry or the
Company's business which, in the opinion of Management, will have significant
impact (either favorable or adverse) upon the Company's results of operations
within the next 12 months and give a rough estimate of the probable extent of
the impact, if possible.
Not applicable because we are a start-up company and have no operating
results. Our subsidiary, Kavil University, registered 7 students in 1999 and
also received a total of $6,468 from naming rights from the Matthew
Gardinder-Hill Community Trust. With respect to changes and/or trends in the
underlying economics of the industry, that information is hard to gauge. To
date, there are no direct competitors with Cyberuni.org, and there are very few
competitors with our subsidiary, Kavil University. The minimal competition makes
it difficult to determine underlying economic changes, however, the rapid growth
of the Internet leads us to believe that favorable growth of both Cyberuni.org
and Kavil University is possible.
Cyberuni expects no significant revenues in the next 12 months.
Instead, the Company will rely on debt financing from the Matthew Gardiner-Hill
Community Trust, in the amount of one hundred thousand dollars, as well as debt
financing from Mr. George Franich and Mr. Rhys Cullen, in the total amount of
eighty thousand dollars. The debt financing will provide additional capital in
order to undergo a public offering in June 2002. In the interim, the Company
will concentrate on building its educational database and course content, as
well as to aggressively market courses to universities around the world.
49. If the Company sells a product or products and has had significant sales
during its last fiscal year, state the existing gross margin (net sales less
cost of such sales as presented in accordance with generally accepted accounting
principles) as a percentage of sales for the last fiscal year. What is the
anticipated gross margin for the next year of operations? If this is expected to
change, explain. Also, if reasonably current gross margin figures are available
for the industry, indicate these figures and the source or sources from which
they are obtained.
Not applicable.
50. Foreign sales as a percent of total sales for last fiscal year. Domestic
government sales as a percent of total domestic sales for last fiscal year:
Explain the nature of these sales, including any anticipated changes:
Not applicable.
53
<PAGE>
NOTIFICATION
Significant Parties
List the full names and business and residential addresses, as applicable,
for the following persons:
(a) the issuer's directors;
Mr. Peter Joseph Caccioppoli
Business Address
90 Symonds St., level 2
Auckland, New Zealand
Mr. Anthony Peter Franich
30 Maple St.
Avondale
Auckland, New Zealand
Mr. George Vidak Franich
130A Cliff View Drive
Green Bay
Auckland, New Zealand
(b) the issuer's officers;
President/Chief Executive Officer/ Chief Financial Officer
Mr. George Vidak Franich
130A Cliff View Drive
Green Bay
Auckland, New Zealand
Chief Operating Officer/Secretary
Mr. Peter Joseph Caccioppoli
Business Address
90 Symonds St., level 2
Auckland, New Zealand
(c) the issuer's general partners.
The issuer is a corporation and has no general partners.
(d) record owners of 5 percent or more of any class of the issuer's equity
securities;
Mr. Peter Joseph Caccioppoli
Business Address
90 Symonds St., level 2
Auckland, New Zealand
54
<PAGE>
Dr. Rhys Michael Cullen (as trustee of the Matthew Gardiner-Hill Community
Trust)
Business Address
90 Symonds St., level 2
Auckland, New Zealand
Mr. George Vidak Franich
130A Cliff View Drive
Green Bay
Auckland, New Zealand
Kavil University Ltd.
2nd Floor, Raffea House
Kumul Highway
Port Vila, Vanuatu
(e) beneficial owners of 5 percent or more of any class of the issuer's
equity securities;
Mr. Peter Joseph Caccioppoli
Business Address
90 Symonds St., level 2
Auckland, New Zealand
Dr. Rhys Michael Cullen (as trustee of the Matthew Gardiner-Hill Community
Trust)
Business Address
90 Symonds St., level 2
Auckland, New Zealand
Mr. George Vidak Franich
130A Cliff View Drive
Green Bay,
Auckland, New Zealand
Kavil University Ltd.
2nd Floor, Raffea House
Kumul Highway
Port Vila, Vanuatu
(f) promoters of the issuer;
Not applicable.
(g) affiliates of the issuer;
Peter Joseph Caccioppoli, Rhys Michael Cullen, the Matthew Gardiner-Hill
Community Trust, George Vidak Franich, and Kavil University are affiliates
of the issuer by virtue of their ownership of shares in Cyberuni.
55
<PAGE>
(h) counsel to the issuer with respect to the proposed offering:
William D Evers, Esq.
Evers & Hendrickson, LLP
155 Montgomery Street, 12th Floor
San Francisco CA 94104
(i) each underwriter with respect to the proposed offering;
There are no underwriters for the proposed offering, The Company does
reserve the right to engage underwriters in the future, although there are
no plans to do so at this time.
(j) the underwriter's directors.
Not applicable.
(k) the underwriter's officers.
Not applicable.
(1) the underwriter's general partners; and
Not applicable.
(m) counsel to the underwriter.
Not applicable.
Relationship with Issuer of Experts Named in Registration Statement
Not applicable.
Selling Security Holders
No part of the proposed offering involves the resale of securities by
affiliates or existing shareholders Cyberuni.
Changes and Disagreements with Accountants
We have no changes or disagreement with our accountants.
56
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Our articles of incorporation limit the liability of our directors for
monetary damages to the fullest extent allowed by California law. The effects of
this provision is that we and our shareholders may not recover monetary damages
against a director for breach of fiduciary duty of care, including those
resulting from negligence, with certain exceptions. Directors may still be
liable for monetary or other damages for breach of fiduciary duty for: I) acts
or omissions involving intentional misconduct or knowing and culpable violation
of law; ii) acts or omissions that a director believes to be contrary to the
best interests of the corporation or its shareholders or involve an absence of
good faith by the director; iii) any transaction in which a director received an
improper personal benefit; iv) acts or omissions showing a reckless disregard of
the director's duty to the corporation and its shareholders; v) acts or
omissions that constitute an unexcused pattern of inattention that amounts to an
abdication of duty; vi) liabilities arising out of transactions between the
corporation and a director; or vii) making improper distributions to
shareholders or loans to directors.
The Articles of Incorporation also allow Cyberuni to indemnify our
agents to the maximum extent permitted by law. Generally speaking, agents (such
as directors, officers and employees) must be indemnified if the agent prevails
on any claim made against him while acting as an agent. Our bylaws require that
all directors be indemnified to the maximum extent allowed by the California
Corporations Code. In cases where indemnification is required, the Company is
required to advance costs of attorneys fees and other expenses as well as costs
of litigation and settlement to the person indemnified. We have not entered into
indemnification agreements with any of our directors or officers at this time,
but we intends to do so in the near future. We also intend to purchase
director's and officer's liability insurance as is customary in the industry.
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company's expenses in connection with the Offering, are set forth
below. All of these amounts are estimates.
SEC registration fee $ 2,710
Legal fees and expenses $ 35,000
Accounting fees and expenses $ 25,000
Printing $ 5,000
Escrow agent fees $ 500
Miscellaneous $ 11,720
--------
Total $ 79,930
We will bear all the expenses shown above.
57
<PAGE>
Item 26. RECENT SALES OF UNREGISTERED SECURITIES
The following is a list of sales of our common stock and preferred
stock during the past three years that were not registered under the Securities
Act. None of these sales involved the use of or payments to an underwriter. In
all instances in which we issued shares under the exemption from the
registration requirements of the Securities Act under Section 4(2) of the
Securities Act, all purchasers had access to the type of information found in a
registration statement and all purchasers were sophisticated investors or
directors of Cyberuni.
On February 2, 1999, we sold four million shares of common stock to the
founders of the company: Mr. Franich purchased 1,500,000 shares for the price of
$15,000; Mr. Caccioppoli purchased 1,000,000 shares for the price of $10,000;
the Matthew Gardiner-Hill Community Trust purchased 1,000,000 shares for the
price of $10,000; and Kavil University purchased 500,000 shares for the price of
$5,000. These shares were issued in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act. No underwriters
were involved in the issuance and no commissions were paid.
On June 15, 1999, as part of a stock purchase agreement, we sold 50,000
shares of Series A Preferred Stock to Tertiary Providers Limited, in exchange
for 15 college level courses. The shares were sold at a per share price of
$5.00. This per share price is consistent with the offering price of the Series
A Preferred Stock being offered in this prospectus. The shares were issued in
reliance upon the exemption from registration provided under Regulation S of the
Securities Act.
Item 27. EXHIBITS
ITEM DOCUMENT PAGE
----
3(i) Articles of Incorporation 62
3(ii) Bylaws 64
4 Certificate of Determination Series A 82
5 Legality Opinion: to be filed by amendment 92
10 Material Contracts:
10(i) Stock Purchase Agreement 95
10(ii) Declaration of Trust 100
10(iii) Assignment and Conveyance of Beneficial Interest 103
10(iv) Escrow Agreement 105
10(v) Commercial Lease 112
15 Consent of Independent Auditors Letter 115
21 List of Subsidiaries 117
58
<PAGE>
Item 28. UNDERTAKINGS
a) We hereby undertake that we will:
1) File, during any period in which we offer or sell securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the bona fide
offering.
3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
e) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
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 small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
59
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe the registrant
meets all of the requirements of filing on Form SB-1 and authorized this
registration statement, Pre-effective Amendment No. 1, to be signed on its
behalf by the undersigned, in Auckland, New Zealand, on June 15, 2000.
Cyberuni.org, Inc.
By: /s/ George V. Franich By: /s/ Peter Caccioppoli
---------------------------------- ------------------------------------
GEORGE V. FRANICH PETER CACCIOPPOLI
Chief Executive Officer, Chief Operating Officer and
President and Secretary
Chief Financial Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement (pre-effective amendment no. 1) has been signed by the
following persons in the capacities and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ George V. Franich President, CEO, CFO and Chairman June 15, 2000
-----------------------------
GEORGE V. FRANICH
/s/ Peter Caccioppoli Secretary, COO and Director June 15, 2000
-----------------------------
PETER CACCIOPPOLI
/s/ Antony P. Franich Director June 15, 2000
-----------------------------
ANTONY P. FRANICH
60
