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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE __, 2000
REGISTRATION NO. 33-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERNETSTUDIOS.COM, INC.
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(Exact name of Registrant as specified in its charter)
Nevada 13-4009696
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(State or other jurisdiction (I.R.S. Employee I.D. Number)
of incorporation or organization)
1351 4TH STREET, SUITE 227, SANTA MONICA, CALIFORNIA 90401
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(Address of Principal Executive Office, including Zip Code)
1999 STOCK INCENTIVE PLAN (U.S.)
1999 STOCK INCENTIVE PLAN (NON-U.S.)
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(Full title of the agreement)
(310) 394-4025
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(Telephone number, including area code, of agent for service)
COPIES TO:
DAVID L. FICKSMAN, ESQ.
LOEB & LOEB LLP
1000 WILSHIRE BOULEVARD, SUITE 1800
LOS ANGELES, CALIFORNIA 90017
(213) 688-3698
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum Amount of
Title of securities to Amount to be offering price aggregate offering registration
be registered registered(1)(2) per unit(3) price fee
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<S> <C> <C> <C> <C>
Common Stock 2,250,000 $13.91 $31,297,500.00 $8,262.54
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(1) This Registration Statement shall also cover any additional shares of
common stock which becomes issuable under the Plans being registered
pursuant to this Registration Statement by reason of any stock
dividend, stock split, recapitalization or any other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the Registrant's outstanding shares of
common stock.
(2) Includes 2,250,000 shares of common stock issuable under the 1999 Stock
Incentive Plan (U.S.) and the 1999 Stock Incentive Plan (Non-U.S.).
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h), based on the average of the high and
low prices on June 22, 2000.
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INTRODUCTORY STATEMENT
InternetStudios.com, Inc., a Nevada corporation, hereby files this
registration statement on Form S-8 relating to 2,250,000 shares of our common
stock issuable in connection with our 1999 Stock Incentive Plan (U.S.) and our
1999 Stock Incentive Plan (Non-U.S.) (together, the "Plans"). Also, this
registration statement is intended to register for reoffer and/or resale shares
of common stock that may be acquired in the future under the Plans by affiliates
of InternetStudios.com, Inc., as defined by Rule 405 under the Securities Act.
The materials constituting the reoffer prospectus have been prepared
pursuant to Part I of Form S-3, in accordance with General Instruction C to Form
S-8.
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REOFFER PROSPECTUS
INTERNETSTUDIOS.COM, INC.
Common Stock
Up to 2,250,000 Shares
This Prospectus relates to up to 2,250,000 shares of common stock of
InternetStudios.com, Inc. that will be acquired pursuant to our 1999 Stock
Incentive Plan (U.S.) and our 1999 Stock Incentive Plan (Non-U.S.) by, and which
may be offered for resale from time to time by, people named under "Selling
Security Holders" in the over the counter market, where our common stock
currently is traded, or in negotiated transactions, at prices and on terms then
available.
We will not receive any of the proceeds from the sale of our common
stock (hereinafter, the "Securities"), except that we will receive funds from
the exercise of options. We will pay all of the expenses associated with the
registration of the Securities and this Prospectus. The Selling Security Holders
will pay the other costs, if any, associated with any sale of the Securities.
Our common stock is quoted on the over the counter market under the
symbol "ISTS." On June 22, 2000, the last reported sale price per share of our
common stock, as quoted on the over the counter market, was $13.81.
Our principal executive office is located at 1351 4th Street, Suite
227, Santa Monica, California 90401.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
No dealer, sales representative or any other person has been authorized
to give any information or to make any representation not contained in this
Prospectus in connection with this offering other than those contained in this
Prospectus, and if given or made, such information or representation must not be
relied upon as having been authorized by us or the Selling Security Holders.
This Prospectus does not constitute an offer to sell or a solicitation of any
offer to buy, common stock by anyone in any jurisdiction in which an offer or
solicitation is not authorized, or in which the person making an offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such an offer or solicitation. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create an
implication that the information contained in this Prospectus is correct as of
any time after the date of this Prospectus.
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The date of this Prospectus is June 22, 2000.
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TABLE OF CONTENTS
Available Information.......................................................2
Incorporation by Reference..................................................2
Risk Factors................................................................3
Selling Security Holders...................................................14
Use of Proceeds............................................................15
Plan of Distribution.......................................................15
Position of the Commission Regarding Indemnification.......................16
AVAILABLE INFORMATION
We have filed a registration statement on Form S-8 with the Securities
and Exchange Commission under the Securities Act. This Prospectus omits some
information and exhibits included in the registration statement, copies of which
may be obtained upon payment of a fee prescribed by the Commission or may be
examined free of charge at the principal office of the Commission in Washington,
D.C.
We are subject to the informational requirements of the Exchange Act,
and in accordance therewith file reports and other information with the
Commission The reports and other information filed by us with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at 7 World Trade Center, New York,
New York 10048, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and 11th floor, 5670 Wilshire Boulevard, Los Angeles, California
90036. Copies of that material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission at http://www.sec.gov.
INCORPORATION BY REFERENCE
The following documents previously filed by us with the Commission are
incorporated in this Prospectus by reference:
(1) Our registration statement on Form 10, as amended;
(2) Our quarterly report on Form 10-Q filed on May 15, 2000;
(3) Our current report on Form 8-K filed on April 25, 2000;
(4) Our annual report on Form 10-K filed on March 30, 2000; and
(5) The description of our common stock contained in our registration
statement under Section 12 of the Exchange Act of 1934 relating to our common
stock, including any amendment or report filed for the purpose of updating such
description.
All reports and other documents that we file pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act of 1934 prior to the filing of a
post-effective amendment which indicates that all securities offered hereunder
have been sold or which deregisters all such securities then remaining unsold
are
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incorporated by reference in this registration statement and to be a part
hereof from the date of filing of such reports and documents.
Copies of all documents which are incorporated by reference will be
provided without charge to anyone to whom this Prospectus is delivered upon a
written or oral request to InternetStudios.com, Inc., 1351 4th Street, Suite
227, Santa Monica, California 90401, Attn: Corporate Secretary, (310) 394-4025.
RISK FACTORS
WE HAVE A LIMITED OPERATING HISTORY.
We are a development stage company with no revenues and minimal
operating history. The investors in our common stock must consider the risks and
difficulties frequently encountered by early stage companies, particularly in
new and rapidly evolving markets such as online commerce and the Internet. Such
risks include:
- competition;
- whether the concept of buying and selling film distribution rights
online will be accepted by the industry;
- whether we can compete successfully with others pursuing the same
line of business;
- whether we can successfully develop and extend the OnlineFilmSales.
com. brand identity;
- whether we can attract or retain users and advertisers;
- whether we can generate significant Web-based commerce revenue from
our users and advertisers;
- whether we can anticipate and adapt to a developing market;
- whether we can effectively manage rapidly expanding operations
should our operations rapidly expand;
- whether our server and networking systems will efficiently handle
our Web traffic;
- the possibility of technical difficulties, system downtime, Internet
brownouts, security risks, computer hackers;
- the amount and timing of operating costs and capital expenditures
relating to expansion of our business, operations and
infrastructure;
- whether we can maintain or achieve higher rates for advertising;
- whether we can successfully develop and upgrade our web site,
technology and transaction-processing systems;
- whether we can provide acceptable customer service;
- whether we can respond to competitive developments;
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- the possibility of unforeseen price competition for our services, or
reductions in market prices for Web-based advertising;
- our dependence upon key personnel; and
- our dependence on the reliability and growing use of the Internet
for commerce and communication and general economic conditions.
We cannot be certain that our business strategy will be successful or
that we will successfully address these risks. In the event that we do not
successfully address these risks, our business, prospects, financial condition
and results of operations will be materially and adversely affected.
WE CANNOT PREDICT WHETHER WE WILL BE SUCCESSFUL BECAUSE OUR BUSINESS MODEL IS
UNPROVEN.
We are in the process of developing and refining our business model and
there is a risk that the business model will not prove to be successful. As
currently proposed, our business model depends upon our ability to attract the
filmed entertainment rights marketplace to an online venue, which in turn will
require achieving of a critical mass of buyers and sellers. The potential
profitability of this business model is unproven, and, to be successful, we
must, among other things, develop and market solutions that achieve broad market
acceptance by the filmed entertainment rights industry and related advertisers.
There can be no assurance that the filmed entertainment rights industry will
adopt the Internet as a viable commercial or advertising medium or that our
onlinefilmsales.com web site will achieve broad market acceptance sufficient to
make our business profitable or even viable. Accordingly, no assurance can be
given that our business model will be successful or that we can sustain net
revenue growth or achieve or sustain profitability.
WE ANTICIPATE FUTURE LOSSES.
We expect to incur net losses for the foreseeable future. The extent of
these losses will depend, in part, on the amount and rates of growth in our net
revenue from e-commerce and advertising. We expect our operating expenses to
increase significantly, especially in the areas of sales and marketing and brand
promotion. Consequently, to achieve profitability we will need to generate
increased quarterly net revenue. As a result of our early stage of development,
we believe that period-to-period comparisons of our operating results are not
meaningful and that our operating results for any period should not be relied
upon as an indication of future performance. To the extent that (a) net revenue
does not grow at anticipated rates, (b) increases in our operating expenses
precede or are not subsequently followed by commensurate increases in net
revenue or (c) we are unable to adjust operating expense levels accordingly, our
business, prospects, financial condition and results of operations will be
materially and adversely affected. There can be no assurance that our operating
losses will not increase in the future or that we will ever achieve or sustain
profitability.
OUR FUTURE OPERATING RESULTS ARE UNPREDICTABLE.
As a result of our lack of operating history, we cannot forecast
accurately our revenues, operating expenses and operating results. Accordingly,
we may be unable to adjust our expenditures in a timely manner to compensate for
any unexpected revenue shortfall. We may also be unable to increase our spending
and expand our operations in a timely manner to compensate for any unexpected
revenue shortfall.
Our annual and quarterly operating results may fluctuate significantly
as a result of numerous factors, many of which are outside of our control. These
factors include, but are not limited to:
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- fluctuating demand for filmed entertainment rights;
- whether the filmed entertainment rights industry accepts the
Internet as a venue for transacting in filmed entertainment rights;
- the level of traffic on our web site;
- the amount and timing of capital expenditures and other costs
relating to the expansion of our operations;
- whether we can upgrade our systems in a timely and effective manner;
- the introduction of new or enhanced services by us or our
competitors;
- whether we can attract new personnel in a timely and effective
manner and to retain existing personnel;
- the accuracy of our predictions regarding the online filmed
entertainment rights marketplace;
- price competition;
- technical difficulties with our web site;
- costs relating to future acquisitions;
- seasonality;
- governmental regulations related to use of the Internet as a means
of commerce; and
- general economic conditions and economic conditions specific to the
filmed entertainment rights industry, the Internet or all or a
portion of the technology market.
Due to the foregoing factors, we believe that quarter-to-quarter
comparisons of our operating results are not an accurate indication of our
future performance. It is likely that our operating results for any period may
fail to meet or exceed the expectations of our investors. In that event, the
value of our common stock would likely be materially adversely affected.
RISKS ASSOCIATED WITH POSSIBLE MERGERS, CONSOLIDATIONS, OR ACQUISITIONS.
Our future performance will depend in part upon our ability to
integrate with other companies in order to leverage those relationships into
additional user traffic for our web site, advertising agreements and sources of
revenue. As part of our business strategy, we may merge or consolidate with or
acquire complementary businesses, products or technologies. Should we undertake
a merger or consolidation strategy, either based upon an exchange of stock
basis, a cash basis or a combination of stock and cash, the purchasing
stockholders' ownership interests in our common stock will be diluted, perhaps
substantially, depending on the terms of the merger or consolidation.
Mergers and consolidations of businesses as well as acquisitions
involve numerous risks and uncertainties, including, without limitation:
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- material adverse effects on reported results of operations from
merger-related charges and amortization of goodwill and purchased
technology;
- inability to maintain customers or goodwill of a consolidated
business;
- difficulties in the integration of operations, personnel,
technologies, products and the information systems of the
consolidated companies;
- diversion of management's attention from other business concerns;
- risks of entering geographic and business markets in which we have
no or limited prior experience; and
- potential loss of key employees of consolidated organizations.
There can be no assurance that we will be able to merge or consolidate
any businesses, or that if done, we will be able to integrate the merged or
consolidated businesses or technology or otherwise successfully leverage the new
businesses into additional user traffic for our web site, advertising agreements
or sources of revenue. Such failures could have a material adverse effect on our
business, prospects, financial condition and results of operations. In addition,
we may have to compete for merger or consolidation targets with other companies
with similar growth strategies. Some of these competitors may be larger and have
substantially greater financial and other resources than we have. Competition
for these merger or consolidation targets likely could also result in increased
prices of such targets and a diminished pool of companies available for merger
or consolidation. If we choose to use a material amount of cash for merger or
consolidation, we may be required to obtain additional financing earlier than
would otherwise be the case, and there can be no assurance that such financing
will be available on favorable terms, or at all.
WE DEPEND ON OUR ABILITY TO ATTRACT KEY PERSONNEL.
We depend on the continued services and performance of our senior
management and other key personnel, most of who have worked together for only a
short period of time. The loss or unavailability of any of these individuals for
any significant period of time could have a material effect on our business,
prospects, financial condition and results of operations. Our performance also
depends on our ability to attract, hire, train, retain and motivate other
highly-skilled technical, managerial, editorial, merchandising, marketing and
customer service personnel. Competition for such personnel is intense, and there
can be no assurance that we will be able to successfully attract, integrate or
retain sufficiently qualified personnel. The failure to attract, retain, and
integrate such personnel could have a material adverse effect on our business,
prospects, financial condition and results of operations.
OUR MANAGEMENT OWNS A SIGNIFICANT PERCENTAGE OF OUR COMPANY AND WILL BE ABLE TO
EXERCISE CONTROL OVER OUR COMPANY.
Our management, in the aggregate, beneficially owns approximately
18.15% of the shares of our outstanding capital stock. As a result, these
stockholders will possess a significant voting block which can be used to elect
directors and/or approve or block significant corporate transactions. Such share
ownership may also have the effect of delaying or preventing a change in control
of our company, impeding a merger, consolidation, takeover or other business
combination involving our company or discouraging a potential acquirer from
making a tender offer or otherwise attempting to obtain control of our company,
thereby having a material adverse effect on the value of our common stock. In
addition,
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investors may have difficulty obtaining the necessary stockholder vote required
for corporate actions contrary to the wishes of the management.
YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.
To the extent outstanding warrants and options to purchase our common
stock are exercised or additional equity securities are issued at a price below
the price of a share in this offering, you may experience dilution.
WE HAVE NOT PAID AND DO NOT ANTICIPATE PAYING DIVIDENDS.
We have never declared or paid any cash dividends on our capital stock
to date and we do not anticipate paying any cash dividends on our capital stock
in the foreseeable future.
OUR MARKETS ARE HIGHLY COMPETITIVE.
The Internet and online commerce is new, rapidly evolving and intensely
competitive. Our current and new competitors can launch new sites quickly and
inexpensively. No substantial barriers to entry into this industry exist.
Increased competition from these and other sources could require us to respond
to competitive pressures by establishing pricing, marketing and other programs
or seeking out additional strategic alliances or acquisitions that may be less
favorable to us than would otherwise be established or obtained, and thus could
have a material adverse effect on our business, prospects, financial condition
and results of operations. We believe that the principal competitive factors in
our market are:
- filmed entertainment rights industry connections;
- brand recognition;
- selection;
- variety of value-added services;
- ease of use, site content;
- user and advertiser fulfillment;
- reliability;
- quality of search tools;
- customer service; and
- technical expertise.
Many of our current and potential competitors have substantially longer
operating histories, larger customer bases, greater brand recognition, and
significantly greater financial, marketing and other resources than we have. Key
competitors include FilmAxis.com, Reelplay.com, FilmBazaar.com, ShowBizData.com
and ScreenExchange.com. There can be no assurance that our competitors will not
develop services that are superior to ours or achieve greater market acceptance.
Our failure to provide services that achieve success in the short term could
materially and adversely affect our business, prospects, financial condition and
results of operations.
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In addition, we compete with filmed entertainment rights transaction
venues such as film festivals, subscription data bases and trade magazines. The
online venues competing with us may be acquired by, receive investments from, or
enter into other commercial relationships with, larger, more established and
more adequately financed companies as the use of the Internet and other online
services increases.
We are aware that certain of our competitors have and may continue to
adopt aggressive pricing policies and devote substantially more resources to web
site and systems development than we do. Increased competition may result in
reduced operating margins, loss of market share and a diminished brand
franchise.
A SYSTEM FAILURE COULD CAUSE DELAYS OR INTERRUPTIONS OF SERVICE TO OUR
CUSTOMERS.
The performance of our server and networking hardware and software
infrastructure is critical to our business and reputation and our ability to
attract Web users, advertisers, new members and commerce partners to our web
site. Any system failure that causes an interruption in service or a decrease in
responsiveness of our web site could result in less traffic on our web site and,
if sustained or repeated, could impair our reputation and the attractiveness of
our brand. We cannot guarantee that our Internet access will be uninterrupted,
error-free or completely secure. Specifically, there is the risk that a computer
virus could infect the web site and prevent it from operating properly or that
our web site could be subject to unauthorized tampering by individuals not
associated with our company which may have a deleterious effect upon the
operation of the web site. In addition, our web site is vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure, Internet
breakdowns, break-ins, human error, sabotage, earthquakes and similar events. We
do not presently have a formal disaster recovery plan and do not carry
sufficient business interruption insurance to compensate our company for losses
that may occur. To mitigate these technical risks, we have installed anti-virus
software to immediately detect and disable software viruses, and we perform
daily backups of our local area network. Copies of these backups are stored
off-site. We also have installed an uninterrupted power source in the event of a
power failure.
Services based on sophisticated software and computer systems often
encounter development delays and the underlying software may contain undetected
errors that could cause system failures when introduced. Any system error or
failure that causes interruption in availability of content or an increase in
response time could result in a loss of potential or existing affiliates,
advertisers, content providers or end users and, if sustained or repeated, could
reduce the attractiveness of our content services to such entities or
individuals. System failures or slowdowns adversely affect the speed and
responsiveness of our web site and could diminish the experience for our
visitors, and thus, could reduce our commerce and revenue.
Our ability to provide effective Internet connections to our systems
and to manage substantially larger numbers of customers at higher transmission
speed is as yet unknown, and, as a result, we face risks related to our ability
to scale up to our hoped-for customer levels while maintaining superior
performance. If our usage of bandwidth increases, we will need to purchase or
lease additional servers and networking equipment and rely more heavily on this
equipment and Internet connections, the cost of which may be significant. The
occurrence of any of these events could result in interruptions, delays or
cessations in service, which could have a material adverse effect on our
business, prospects, financial condition and results of operations. In addition,
our reputation and the onlinefilms.com brand name could be materially and
adversely affected. We are making a fundamental prediction that Internet speeds
will increase in the future. The realization of this prediction will be a major
factor in the overall success of the internet commerce and, consequently, our
success. Although there is strong evidence that modem speeds will increase in
the future, the failure to realize increased Internet speeds could result in
slower than projected growth of our market, and consequently slower growth than
expected in our revenues.
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WE RELY ON OUTSIDE TECHNOLOGY VENDORS.
We do not have the in-house technological expertise needed to develop
and maintain a web site, and as a consequence we must rely on outside vendors
for this purpose. Our current vendor, MediaChase, Ltd., is designing and
constructing the OnlineFilmSales.com web site pursuant to a fee-for-services
agreement. In addition, MediaChase has constructed our ReporterTV.com web site
pursuant to a joint venture agreement. Our reliance on outside technology
vendors, including MediaChase, exposes us to the following risks:
- competition for access to qualified technology vendors;
- loss of negotiating position as vendor takes on a pivotal role in
our business;
- vendor price increases;
- vendor stability; and
- inability to reach agreement on terms of vendor-vendor relationship.
WE DEPEND ON CONTINUED GROWTH OF THE INTERNET AND ONLINE COMMERCE.
Our success will depend in large part on continued growth in, and the
use of, the Internet and the Web, particularly for commerce. There are critical
issues concerning the commercial use of the Internet, which remain unresolved.
The issues concerning the commercial use of the Internet, which we expect to
affect the development of a market for our services, include:
- security;
- reliability;
- ease of access and use;
- cost;
- quality of service; and
- increases in bandwidth availability.
If the Internet develops more slowly than we expect as a commercial or
business medium, it will materially adversely affect our business, prospects,
financial condition, and results of operations. In addition, if use of the
Internet does not continue to grow or grows more slowly than we expect, if the
infrastructure of the Internet does not effectively support the growth that may
occur, or if the Internet does not become a viable commercial market place, our
business, prospects, financial condition and results of operations could be
materially affected. Rapid growth in the use of the Internet is a recent
phenomenon and may not continue on a lasting basis.
RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our web site and develop new
features to meet customer demands and expectations as well as to incorporate
emerging technologies and protocols. Introducing new technology
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into our systems involves numerous technical challenges and substantial amounts
of personnel resources and often takes many months to complete. There can be no
assurance that we will be successful at integrating such technology into our web
site on a timely basis or without degrading the responsiveness and speed of our
web site or that, once integrated, such technology will function as expected.
The Internet is characterized by rapid technological change, changes in user and
customer requirements and preferences, frequent new product and service
introductions and the emergence of new industry standards, protocols and
practices that could render our existing web site, technology and systems
obsolete. We will be subject to the effects of changes in consumer tastes and
habits, the direction or effects of which cannot be foreseen. Even if we can
make necessary technological changes rapidly, there can be no assurance that
consumers and businesses will utilize an online directory service such as ours.
Our future success will depend on our ability to do the following:
- license leading technologies useful in our business;
- enhance our existing services;
- develop new services and technology that address the needs of our
customers; and
- respond to technological advances and emerging industry standards,
protocols and practices on a cost-effective and timely basis.
If we were unable to utilize emerging technologies effectively or adapt
our web site, proprietary technology and transaction systems to customer
requirements or emerging industry standards, our business, prospects, financial
condition and results of operations would be materially adversely affected.
SECURITY RISKS ASSOCIATED WITH OPERATING AN INTERNET-BASED BUSINESS.
We will likely experience attempts by experienced programmers or
"hackers" to penetrate our network security, some of which will likely be
successful. If successful, such actions could have a material adverse effect on
our business, prospects, financial condition and results of operations. A party
who is able to penetrate our network security could misappropriate proprietary
information or cause interruptions in our web site. We may be required to expend
significant capital and other resources to protect against the threat of such
security breaches or to alleviate problems caused by such breaches. Concerns
over the security of Internet transactions and the privacy of users may also
inhibit the growth of the Internet generally, particularly as a means of
conducting commercial transactions. Security breaches or the inadvertent
transmission of computer viruses could expose our company to a risk of loss or
litigation and possible liability. To the extent that our activities or the
activities of others involve the storage and transmission of proprietary
information, security breaches could damage our reputation and expose us to a
risk of loss or litigation and possible liability. There can be no assurance
that contractual provisions attempting to limit our liability in such areas will
be successful or enforceable, or that other parties will accept such contractual
provisions as part of our agreements which could have a material adverse effect
on our business, prospects, financial condition and results of operations.
To mitigate these technical risks, we have installed anti-virus
software to immediately detect and disable software viruses, and we perform
daily backups of our local area network. We also maintain appropriate firewalls
and security measures to prevent unauthorized use of and tampering with our web
site and systems.
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WE DEPEND ON THE CONTINUED DEVELOPMENT OF A WEB INFRASTRUCTURE.
The success of our web site will depend in large part upon (a) the
continued development of a Web infrastructure with the necessary speed, data
capacity and security and (b) timely development of complementary products, such
as high speed modems for providing reliable Web access and services. Because
global commerce and online exchange of information on the Web and other similar
open wide area networks are new and evolving, it is difficult to predict with
any certainty whether the Web will support increasing use or will prove to be a
viable commercial marketplace. The Web has experienced, and is expected to
continue to experience, significant growth in the number of users and the amount
of content. Although the Internet is predicted to have tremendous growth in the
future, it is possible that new technology will be developed that will undermine
the usefulness of the Internet or the usefulness of our contemplated filmed
entertainment rights transaction venue business. To the extent that the Web
continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users, there can be no assurance that the
Web infrastructure will continue to be able to support the demands placed on it
by this continued growth or that the performance or reliability of the Web will
not be adversely affected by this continued growth. Even if such infrastructure,
standards or protocols or complementary products, services or facilities are
developed and the Web becomes a viable commercial marketplace, there can be no
assurance that we will not be required to incur substantial expenditures in
order to adapt our services to changing Web technologies.
In addition, the public in general may not accept the Internet as a
viable commercial marketplace for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. To the extent
that the Internet and online retail businesses and services continue to
experience significant growth in the number of users, their frequency of use or
in their bandwidth requirements, the infrastructure for the Internet and online
services may be unable to support the demands placed upon them. In addition, the
Internet and online retail businesses and services could lose their viability
due to delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity or due to increased
government regulation. Significant issues concerning the commercial use of the
Internet and online services technologies, including security, reliability,
cost, ease of use and quality of service remain unresolved and may inhibit the
growth of Internet businesses that utilize these technologies. Changes in, or
insufficient availability of, telecommunication services to support the Internet
or other online services also could result in a lower response times and
adversely affect usage of the Internet and other online services generally and
our services in particular.
UNCERTAINTY OF THE ACCEPTANCE OF THE WEB AS AN ADVERTISING MEDIUM.
The Internet as a marketing and selling medium has not been available
for a sufficient period of time to gauge its effectiveness as compared to
traditional means of marketing and selling. Many of our potential customers have
only limited experience with the Web as a sales medium. Entities that already
have invested substantial resources in other methods of conducting business may
be reluctant to adopt a new strategy that may limit or compete with their
existing efforts. If the market develops more slowly than expected, our
business, prospects, financial condition and results of operations could be
materially and adversely affected.
RISKS ASSOCIATED WITH BRAND DEVELOPMENT.
We believe that establishing and maintaining the onlinefilmsales.com
brand is critical to attracting and expanding our advertiser and user bases and
Web traffic and advertising and commerce relationships. We believe that the
importance of brand recognition will increase due to the growing number of
Internet sites and the low barriers to entry in our market. In order to attract
and retain Internet
11
<PAGE>
users, advertisers and commerce partners, and to promote and maintain the
onlinefilmsales.com brand in response to competitive pressures, we intend to
increase substantially our financial commitment to creating and maintaining
distinct brand loyalty among these groups. We expect our efforts to include
advertising and marketing and traditional media advertising campaigns directed
at the filmed entertainment rights industry. In addition, we may need to expend
additional resources to build the onlinefilmsales.com brand. If we do not
generate a corresponding increase in net revenue as a result of our branding
efforts or otherwise fail to promote our brand successfully, or if we incur
excessive expenses in an attempt to promote and maintain our brand, our
business, prospects, financial condition and results of operations, will be
materially and adversely affected. If members, visitors to our web site,
advertisers or businesses do not perceive our existing services to be of high
quality, or if we alter or modify our brand image, introduce new services or
enter into new business ventures that are not favorably received by such
parties, the value of our brand could be diluted, thereby decreasing the
attractiveness of our web site to such parties, which could have a material
adverse effect on our business, prospects, financial condition and results of
operations.
WE HAVE NOT IMPLEMENTED SOPHISTICATED MANAGERIAL, OPERATIONAL AND FINANCIAL
SYSTEMS, WHICH COULD EFFECT OUR ABILITY TO MANAGE GROWTH EFFECTIVELY.
We have not implemented sophisticated managerial, operational and
financial systems and controls. We are required to manage multiple relationships
with various strategic partners, technology licensors, users, advertisers and
other third parties. Our ability in this regard will be strained in the event of
rapid growth of our company or in the number of third party relationships, and
there can be no assurance that our systems, procedures or controls will be
adequate to support our operations or that our management will be able to manage
any growth effectively. To manage the expected growth of our operations and
personnel, we will be required to significantly improve or replace existing
managerial, financial and operational systems, procedures and controls, and to
expand, train and manage our growing employee base. We also will be required to
expand our finance, administrative and operations staff. Some key members of
management have other professional obligations beyond their obligations to our
company that may impact their ability to implement the necessary financial,
administrative and operational systems necessary for our success. There can be
no assurance that we will complete in a timely manner the improvements to our
systems, procedures and controls necessary to support our future operations,
that we will be able to hire, train, retain, motivate and manage required
personnel or that we will be able to successfully identify, manage and exploit
existing and potential market opportunities.
RISKS ASSOCIATED WITH POTENTIAL GENERAL ECONOMIC DOWNTURN.
Our success may be affected significantly by changes in local, regional
and national economic conditions. Factors such as inflation, labor and energy
costs, the availability and cost of suitable technical employees, fluctuating
interest and insurance rates, federal, state and local regulations and licensing
requirements can all have a material adverse effect on our business, prospects,
financial condition and results of operations.
OUR INTELLECTUAL PROPERTY PROTECTION MAY BE INADEQUATE TO PROTECT OUR
PROPRIETARY RIGHTS.
Our success depends significantly upon technologies and database
programs that make our web site user friendly and allow it to operate at
increased access speeds. We may seek to protect our software, documentation and
other written materials under trade secret, patent and copyright laws, but these
laws afford only limited protection. We currently have no patents or patents
pending and do not anticipate that patents will become a significant part of our
intellectual property in the foreseeable future. We also generally enter into
confidentiality or license agreements with our employees and consultants, and
generally control access to, and distribution of, our documentation and other
proprietary information.
12
<PAGE>
These precautions may not afford us sufficient or complete protection, and
despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use our proprietary information without authorization or to
develop similar technology independently. Also, there can be no assurance that
patents owned by other entities, whether existing, pending or not yet filed,
will not have a material adverse effect on our ability to do business. Effective
trademark, service mark, copyright and trade secret protection may not be
available in every country in which our services are distributed or made
available through the Internet, and policing unauthorized use of our proprietary
information may not be possible on an economic basis.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving, and there can be no assurance as to the future
viability or value of any of our proprietary rights. There can be no assurance
that the steps we have taken have prevented or will prevent misappropriation or
infringement of our proprietary information. Any such infringement or
misappropriation, should it occur, might have a material adverse effect on our
business, prospects, financial condition and results of operations. In addition,
litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or to determine the validity and scope of
the proprietary rights of others. Such litigation might result in substantial
costs and diversion of resources and management attention and could have a
material adverse effect on our business, prospects, financial condition and
results of operations.
OUR INTELLECTUAL PROPERTY MAY BE SUBJECT TO INFRINGEMENT CLAIMS.
There can be no assurance that our business activities will not or have
not infringed upon the proprietary rights of others, or that other parties will
not assert infringement claims against us. From time to time, we may be subject
to claims in the ordinary course of our business, including claims of alleged
infringement of the trademarks, service marks and other intellectual property
rights of third parties by us and the content generated by our members. Such
claims and any resultant litigation, should it occur, might subject us to
significant liability for damages and might result in invalidation of our
proprietary rights and even if these claims are not meritorious, could be time
consuming and expensive to defend and could result in the diversion of
management time and attention, any of which might have a material adverse effect
on our business, prospects, results of operations and financial condition.
RISK OF LIABILITY FOR ONLINE CONTENT.
Due to the fact that materials may be downloaded by users of our web
site and subsequently distributed to others, there is a potential that claims
will be made against us for defamation, negligence, copyright or trademark
infringement, personal injury or other theories based on the nature, content,
publication and distribution of such materials. Such claims have been brought,
sometimes successfully, against online service providers in the past. In
addition, the increased attention focused upon liability issues as a result of
these lawsuits and legislative proposals could impact the overall growth of
Internet use. We could also be exposed to liability with respect to the offering
of third-party content that may be accessible through our web site, or through
content and materials that may be posted on personal web sites or chat rooms, or
bulletin boards. Such claims might include, among others, that by directly or
indirectly providing hyperlinks to web sites operated by third parties, we are
liable for copyright or trademark infringement or other wrongful actions by such
third parties through such web sites. It is also possible that if any
third-party content information provided on our web site contains errors, third
parties could make claims against us for losses incurred in reliance on such
information. Even to the extent such claims do not result in liability to us, we
could incur significant costs in investigating and defending against such
claims. The imposition on us of potential liability for information carried on
or disseminated through our systems could require us to implement measures to
reduce our exposure to such liability,
13
<PAGE>
which may require the expenditure of substantial resources and limit the
attractiveness of our services to advertisers and users.
OUR SERVICES MAY BECOME SUBJECT TO GOVERNMENT REGULATION, AND CHANGES IN CURRENT
OR FUTURE LAWS OR REGULATIONS COULD RESTRICT THE WAY WE OPERATE OUR BUSINESS.
Laws and regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. The United States Congress
recently enacted Internet laws regarding children's privacy, copyrights,
taxation and the transmission of sexually explicit material. The European Union
recently enacted its own privacy regulations. The law of the Internet, however,
remains largely unsettled even in areas where there has been some legislative
action. It may take years to determine whether and how existing laws such as
those governing intellectual property, privacy, libel, pornography and taxation
apply to the Internet. In 1998, the United States Congress established the
Advisory Committee on Electronic Commerce, charged with investigating and making
recommendations to Congress regarding the taxation of sales by means of the
Internet. The adoption or modification of laws or regulations relating to the
Internet may decrease the growth in the use of the Internet, which could in turn
decrease the demand for our community or increase our cost of doing business
which could have a material adverse effect on our business, prospects, financial
condition and results of operation.
FOREIGN GOVERNMENTS MAY ATTEMPT TO REGULATE OUR TRANSMISSIONS OR PROSECUTE US
FOR VIOLATIONS OF THEIR LAWS, WHICH COULD SUBJECT US TO TAXES AND PENALTIES AND
RESULT IN OUR INABILITY TO ENFORCE CONTRACTS IN SUCH JURISDICTIONS.
Due to the global nature of the Web, it is possible that, although our
transmissions over the Internet originate primarily in the State of California,
the governments of other states and foreign countries might attempt to regulate
our transmissions or prosecute us for violations of their laws. There can be no
assurance that violations of local laws will be alleged or charged by state or
foreign governments, that we might not unintentionally violate such laws or that
such laws will not be modified or new laws enacted, in the future. In addition,
as our products and services are available over the Internet in multiple states
and foreign countries, such jurisdictions may claim that we are required to
qualify to do business as a foreign corporation in each such state or foreign
country. Currently, we are qualified to do business only in California and
Delaware, and our failure to qualify as a foreign corporation in any
jurisdiction where it is required to do so could subject us to taxes and
penalties and could result in our inability to enforce contracts in such
jurisdictions. Any such new legislation or regulation, the application of laws
and regulations from jurisdictions whose laws do not currently apply to our
business, or the application of existing laws and regulations to the Internet
and other online services could have a material adverse effect on our business,
prospects, financial condition and results of operations.
SELLING SECURITY HOLDERS
The Prospectus relates to possible sales by certain of our officers and
directors of shares of our common stock purchased by them through the exercise
of options of our common stock granted to them under our 1999 Stock Incentive
Plan (U.S.) and our 1999 Stock Incentive Plan (Non-U.S.). The following table
sets forth the name and position of each prospective Selling Security Holder who
is a director or executive officer of our company; the number of shares of
common stock owned as of the date of this prospectus, including shares which may
be acquired pursuant to the exercise of outstanding options and warrants; the
number of shares being offered and the number of shares and the percentage of
all outstanding shares owned assuming the sale of all the shares covered by this
Prospectus.
14
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Beneficially Owned Number of After Offering (2)
Prior to Offering (1) Shares -----------------------------
------------------------- Being Number of
Name and Position Number Percent Offered Shares Percent(2)
----------------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Robert Maclean, Chairman
of the Board 1,299,500 8.47% 175,000 1,124,500 7.32%
Mark Rutledge, Secretary,
Treasurer, Vice President of
Business Affairs and Director 1,285,000 8.38% 175,000 1,110,000 7.23%
Steven Fredericks, President
and Chief Financial Officer (3) 600,000 3.91% 200,000 400,000 2.60%
Michael Edwards, Director 175,000 1.14% 75,000 100,000 .65%
Heidi Lester, Chief Executive
Officer (4) 775,000 5.05% 175,000 600,000 3.91%
</TABLE>
(1) As used herein, the term beneficial ownership is defined by Rule 13d.3 under
the Securities Exchange Act of 1934 as consisting of sole or shared voting power
and/or sole or shares investment power subject to community property laws where
applicable.
(2) Based on 15,342,100 shares of our common stock outstanding as of June 5,
2000.
(3) Includes the Class B Membership Interest of OnlineFilmSales.com, LLC Mr.
Fredericks acquired as of March 28, 2000 which is convertible into 400,000
shares of our common stock.
(4) Includes the Class B Membership Interest of OnlineFilmSales.com, LLC Ms.
Lester acquired as of March 28, 2000 which is convertible into 600,000 shares of
our common stock.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Securities
offered hereby, except that we will receive funds from the exercise of options.
PLAN OF DISTRIBUTION
We are registering the Securities on behalf of the Selling Security
Holders. All costs, expenses and fees in connection with the registration of the
Securities offered hereby will be borne by us. Brokerage commissions and similar
selling expenses, if any, attributable to the sale of the Securities will be
borne by the Selling Security Holders (or their donees or pledgees).
The decision to sell any Securities is within the discretion of the
holder thereof, subject generally to our policies affecting the timing and
manner of sale of common stock by our affiliates. There can be no assurance that
any shares will be sold by Selling Security Holders.
15
<PAGE>
We anticipate that any sales of the shares offered by this Prospectus
by Selling Security Holders will be made to the public in the over the counter
market where our common stock currently is traded or on securities exchanges,
through automated quotation systems or in other markets where our common stock
may be traded, or in negotiated transactions. We anticipate that sales will be
at prices current when the sales take place or at negotiated prices.
The Selling Security Holders may effect transactions by selling
Securities directly to purchasers or to or through broker-dealers, which may act
as agents or principals. These broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the Selling Security Holders
and/or the purchasers of Securities for whom the broker-dealers may act as
agents or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
The Selling Security Holders and any broker-dealers that act in
connection with the sale of Securities might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by them while acting as principals might be deemed to be underwriting
discounts or commissions under the Securities Act. The Selling Security Holders
may agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the Securities against certain liabilities
including liabilities arising under the Securities Act.
Because Selling Securities Holders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling Security
Holders will be subject to the prospectus delivery requirements of the
Securities Act.
Selling Security Holders also may resell all or a portion of the
Securities in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of Rule 144. There is no present plan of distribution.
POSITION OF THE COMMISSION REGARDING INDEMNIFICATION
Our Articles of Incorporation provide for indemnification of officers
and directors.
Insofar as indemnification for liabilities arising under the Securities
Act might be permitted to directors, officers or persons controlling us under
the provisions described above, we have been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
16
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by us with the Securities and
Exchange Commission pursuant to the Exchange Act are incorporated herein by
reference:
(a) Our registration statement on Form 10, as amended;
(b) Our quarterly report on Form 10-Q filed on May 15, 2000;
(c) Our current report on Form 8-K filed on April 25, 2000;
(d) Our annual report on Form 10-K filed on March 30, 2000; and
(e) The description of our common stock contained in our registration
statement filed with the Commission under Section 12 of the Exchange Act, as
amended, including any amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by us pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all shares offered hereunder have been sold or
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
such documents.
Item 4. Description of Securities.
No description of the class of securities to be offered is required
under this item because the class of securities to be offered is registered
under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
Loeb & Loeb LLP has acted as our counsel in connection with this
offering, including the validity of shares that may be offered by this
prospectus. Michael A. Mayerson, a partner of Loeb & Loeb LLP is a director
designee of our company.
Item 6. Indemnification of Directors and Officers.
As authorized by Section 78.751 of the Nevada General Corporation Law,
we may indemnify our officers and directors against expenses incurred by such
persons in connection with any threatened, pending or completed action, suit or
proceedings, whether civil, criminal, administrative or investigative, involving
such persons in their capacities as officers and directors, so long as such
persons acted in good faith and in a manner which they reasonably believed to be
in our best interests. If the legal proceeding, however, is by or in our right,
the director or officer may not be indemnified in respect of any claim, issue or
matter as to which he is adjudged to be liable for negligence or misconduct in
the performance of his duty to us unless a court determines otherwise.
Under Nevada law, corporations may also purchase and maintain insurance
or make other financial arrangements on behalf of any person who is or was a
director or officer (or is serving at the request of the corporation as a
director or officer of another corporation) for any liability asserted against
such person and any expenses incurred by him in his capacity as a director or
officer. These financial arrangements may include trust funds, self insurance
programs, guarantees and insurance policies.
<PAGE>
Article 12 of our Articles of Incorporation provide that, no director
or officer of the Company will be personally liable to us or any of our
stockholders for damages for breach of fiduciary duty as a director or officer
involving any act or omission of any such director or officer; provided,
however, that Article 12 does not eliminate or limit the liability of a director
or officer (i) for acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada General Corporation Law.
Article 11 of our Bylaws provide that every director and officer will
not be liable for damages incurred in connection with his actions as a director
or officer to the fullest extent permitted by Nevada General Corporation Law.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
4.1* Articles of Incorporation.
4.2* Certificate of Amendment of Articles of Incorporation.
4.3* Certificate of Amendment of Articles of Incorporation.
4.4* By-laws.
4.5* Amended By-laws.
4.6** 1999 Stock Incentive Plan (U.S.)
4.7** 1999 Stock Incentive Plan (Non-U.S.)
5.1 Opinion of Loeb & Loeb LLP (including consent)
23.1 Consent of Loeb & Loeb LLP (included in Exhibit 5.1)
23.2 Consent of LaBonte & Co.
</TABLE>
-------------
*Previously filed as exhibits to the Registrant's Registration Statement on Form
10, as amended (File No. 000-27363) and incorporated herein by reference.
**Previously filed as exhibits to the Registrant's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1999 (File No. 000-27363) and
incorporated herein by reference.
<PAGE>
Item 9. Undertakings.
(1) We undertake:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this registration statement
or any material change to such information in this registration statement;
provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not
apply to the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or furnished to
the Commission by us pursuant to Section 13 or Section 15(d) of the Exchange Act
and that are incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered in the amendment, and
the offering of those securities at that time shall be deemed to be the initial
bona fide offering of those securities.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of this offering.
(2) We also undertake that, for purposes of determining any liability
under the Securities Act, each filing of our annual report pursuant to Section
13(a) or 15(d) of the Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the 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 us of expenses incurred or paid by a
director, officer or controlling person 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, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Santa Monica, California, on June 22, 2000.
InternetStudios.com, Inc.
By: /s/ Steven Fredericks
----------------------
Name: Steven Fredericks
President and Chief Financial
Officer
By: /s/ Mark Rutledge
----------------------
Name: Mark Rutledge
Secretary, Treasurer and Vice
President of Business Affairs
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert Maclean Director June 22, 2000
--------------------------
Robert Maclean
/s/ Steven Fredericks President and Chief June 22, 2000
-------------------------- Financial Officer
Steven Fredericks
/s/ Mark Rutledge Secretary, Treasurer, June 22, 2000
-------------------------- Vice President of
Mark Rutledge Business Affairs
and Director
/s/ Michael Edwards Director June 22, 2000
--------------------------
Michael Edwards
/s/ Heidi Lester Chief Executive Officer June 22, 2000
--------------------------
Heidi Lester
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.1* Articles of Incorporation.
4.2* Certificate of Amendment of Articles of Incorporation.
4.3* Certificate of Amendment of Articles of Incorporation.
4.4* By-laws.
4.5* Amended By-laws.
4.6** 1999 Stock Incentive Plan (U.S.)
4.7** 1999 Stock Incentive Plan (Non-U.S.)
5.1 Opinion of Loeb & Loeb LLP (including consent)
23.1 Consent of Loeb & Loeb LLP (included in Exhibit 5.1)
23.2 Consent of LaBonte & Co.
</TABLE>
------------------
*Previously filed as exhibits to the Registrant's Registration Statement on Form
10, as amended (File No. 000-27363) and incorporated herein by reference.
**Previously filed as exhibits to the Registrant's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1999 (File No. 000-27363) and
incorporated herein by reference.
