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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amended
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CROSSNET VENTURES, INC.
(Name of small business issuer in its charter)
NEVADA 98-0218023
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Bruce Elliot, President
68, World Trade Center,
Colaba, Bombay, India 400005 SEC File No.: 333-36906
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(Name and address of principal executive
offices, principal place of business and
agent for service of process)
Registrant's telephone number, including area code: 91-22-494-0129
Approximate date 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, 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. |__|
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. |__|
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (1) PRICE (1) FEE (1)
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Common Stock 2,500,000 shares $1.50 $3,750,000 $1001.25
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(1) Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457 under the Securities Act.
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 SECTION 8(a), MAY DETERMINE.
COPIES OF COMMUNICATIONS TO:
Michael A. Cane, Esq.
2300 W. Sahara Blvd., Suite 500
Las Vegas, NV 89102
(702) 312-6255
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The information contained in this document is subject to completion
or amendment. A registration statement relating to the securities
being sold has been filed with the Securities and Exchange
Commission. These securities may not be sold, nor may offers to buy
be accepted, prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of these
securities in any state in which such an offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of that state.
SUBJECT TO COMPLETION, Dated September 7, 2000
PROSPECTUS
CROSSNET VENTURES, INC.
2,500,000 SHARES
COMMON STOCK
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We are offering to sell 2,500,000 shares of our common stock at an
offering price of $1.50 per share. This is the initial public
offering of shares of our common stock and will proceed for a period
of 60 days. Our board of directors, however, reserves the right to
extend this offering for an additional 60 day period upon a majority
vote.
Our common stock is presently not traded on any market or securities
exchange.
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Proceeds before
Offering Price Commissions Expenses
-------------- ----------- ---------------
Per Share $1.50 $0.00 $1.50
Total $3,750,000 $0 $3,750,000
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The purchase of the securities offered through this prospectus
involves a high degree of risk. See section entitled "Risk Factors"
on pages 4 - 8.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
We do not presently have any agreement with any underwriter and we
are offering this common stock on a self-underwritten basis without
any minimum or maximum purchase requirements. Management may enter
into an underwriting agreement for this offering at a later date.
The Date Of This Prospectus Is: September 7, 2000
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TABLE OF CONTENTS
PAGE
Summary ........................................................... 3
Risk Factors ...................................................... 4
Social Or Political Conditions In India ....................... 4
Ability to Attract Users To Our Web Site ...................... 4
Hiring and Retention of Key Personnel.......................... 5
Ability to Enter Agreement with Effective Internet Service
Provider .................................................... 5
Immediate And Substantial Dilution of Investment............... 5
Lack of Operating History Expectation of Continued Losses...... 5
Lack of Profitability.......................................... 6
Need for Additional Financing.................................. 6
Government Regulation of the Internet.......................... 6
Multiple and Foreign Regulation................................ 7
Lack of Market and Volatility of Stock Price................... 7
Telecommunications Infrastructure In India..................... 7
Use of Proceeds ................................................... 8
Determination of Offering Price ................................... 9
Dilution .......................................................... 9
Selling Shareholders .............................................. 10
Plan of Distribution .............................................. 10
Legal Proceedings ................................................. 11
Directors, Executive Officers, Promoters and Control Persons ...... 11
Security Ownership of Certain Beneficial Owners and Management .... 13
Description of Securities ......................................... 14
Interest of Named Experts and Counsel ............................. 15
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities ...................................... 15
Organization Within Last Five Years ............................... 15
Description of Business ........................................... 16
Plan of Operations ................................................ 27
Description of Property ........................................... 30
Certain Relationships and Related Transactions .................... 31
Market for Common Equity and Related Stockholder Matters .......... 31
Executive Compensation ............................................ 33
Financial Statements .............................................. 37
Changes in and Disagreements with Accountants ..................... 38
Available Information ............................................. 38
Until ______, all dealers that effect transactions in these
securities whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the dealer'
obligation to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
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SUMMARY
Our Business and Business Strategy
Our business plan is to develop and market an Internet portal web
site that will focus on the worldwide Indian community who have
access to the Internet. Our web sites will be designed to include
unique content of interest and relevance to members of the Indian
community. The address of our web site will be IndiaAt.com. We
have only recently formulated our business plan and commenced the
development of our web site. Our business operations are therefore
in the start-up phase and we have yet to earn any revenues. We are
offering shares of our common stock through this offering in order to
finance the implementation of our business plan to develop the
IndiaAt.com web site into a commercially viable and profitable
Internet business.
Our objective is to establish our web site as the premium Internet
portal for the resident and non-resident Indian community, charging a
subscription fee to members. We plan to , market our web site to
advertisers and electronic commerce marketers plus earn additional
revenues from advertising and electronic commerce transactions.
Securities Being Offered Up to 2,500,000 shares of common stock at an
offering price of $1.50 per share.
Minimum Number of Shares None
To be Sold in this Offering
Securities Issued
And to be Issued 10,000,000 shares of common stock are issued
and outstanding as of the date of this
prospectus. There will be 12,500,000 shares
of our common stock issued and outstanding if
all shares offered through this prospectus
are sold. This number excludes a total of
750,000 shares of common stock subject to
outstanding options
Use of Proceeds The net proceeds we will receive from the
sale of the shares of common stock offered
through this prospectus will be approximately
$3,325,000 US, if the maximum numbers of
shares are sold, after deducting offering
expenses. The principal purpose of this
offering is to increase our working capital
in order that we can proceed with the
development of our IndiaAt.com Internet
portal business.
-----------------------------------
We were incorporated as a Nevada corporation on November 10, 1998 and
then acquired our business plan in September 1999 from Mr. Bruce
Elliott, our president and one of our directors. Our principal
executive offices are located at 68, World Trade Center, Colaba,
Bombay, India 400005. Our telephone number is 91-22-494-0129. Our
under-construction web site is located at www.indiaat.com.
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RISK FACTORS
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and the other
information in this prospectus and any other filings we may make with
the United States Securities and Exchange Commission in the future
before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could
be seriously harmed. The trading price of our common stock could
decline due to any of these risks, and you could lose all or part of
your investment.
If Social Or Political Conditions In India Change, Our Business
Operations May Be Adversely Affected
We expect to establish our web site operations in India and to derive
a substantial portion of our revenues from the domestic Indian
market. Social and political conditions in India are more volatile
than in more developed countries. Historically, volatility has been
caused by:
1. significant governmental influence over many aspects of local
economies;
2. political uncertainty;
3. unexpected changes in regulatory requirements;
4. slow or negative growth;
5. imposition of trade barriers.
We may not be able to develop and expand our business in accordance
with our business plan if unforeseen political and social changes in
India impact on the use of the Internet in India, the ability of
companies to provide Internet services in India and the overall
growth of the Indian economy. We have no control over these
matters. Volatility resulting from these matters may decrease our
ability to expand our web site operations in India, adversely affect
Internet availability to Indian consumers, create uncertainty
regarding our operating climate and adversely affect our customers'
advertising budgets. All of which may adversely impact our business.
If We Are Unable To Attract Users To Our Web Site, Our Business,
Financial Condition And Results Of Operations Will Be Harmed
We will not be able to earn revenues unless we are successful in
attracting users to our web site. Our web site operations are
presently in the development stage and we have not launched our web
sites in the public market. Accordingly, we presently do not have
any brand name recognition among consumers. We plan on initiating
marketing efforts to establish brand recognition for our web site in
order to attract users to our web sites once our web sites are
accessible to the public. Our success in marketing our web site will
depend on our success in providing high quality content, features and
functionality. We will also have to continually improve the
responsiveness, functionality and features of our web sites and
develop products and services that are attractive to users and
advertisers. If we fail to promote our web site successfully or if
visitors to our network or advertisers do not perceive our services
to be of high quality, then we will not be able to attract users to
our web sites or achieve projected usage or revenues. This would have
an adverse effect on our business, financial condition and results of
operations.
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If We Are Unable To Hire And Retain Key Personnel, Then We May Not Be
Able To Implement Our Business Plan
We depend on the services of our senior management and key technical
personnel. In particular, our success depends on the continued
efforts of our president and chief executive officer, Bruce Elliott,
and our chief operating officer, Yogesh Parekh. The loss of the
services of Mr. Elliott, Mr. Parekh or any of our key management,
sales or technical personnel could have an adverse effect on our
business, financial condition and results of operations. In addition,
our success is largely dependent on our ability to hire highly
qualified managerial, sales and technical personnel within India.
Our business plan contemplates that we will be able to hire
programmers and web site developers located in India at salaries
which are less than salaries which we would expect to pay in
developed countries. These individuals are in high demand and
increased demand could result in salaries increasing. Accordingly,
we may not be able to attract the staff we need within our budget.
If We Are Unable to Enter Into An Agreement With An Effective
Internet Service Provider, Then We May Not be Able to Generate
Visitor Traffic and Revenue And Our Business May Suffer
Our planned business operations will require that we are able to
enter into an agreement with an effective Internet service provider
which has the capability to provide Internet services within India
and around the world. Once we commence operations, our business will
depend on the continued, uninterrupted operation of the computer
systems and networks that will operate our web site and will enable
us to reach a world-wide audience. If we are not able to secure a
qualified Internet service provider or maintain continued,
uninterrupted operations, we may not be able to generate visitor
traffic and consumer awareness of our web sites as planned, with the
result that we would experience a delay in earning revenues or a
decrease in revenues.
Because The Price Per Share Of This Offering Significantly Exceeds
The Net Tangible Book Value Per Share, You Will Suffer Immediate And
Substantial Dilution If You Participate In This Offering
The public offering price per share of this offering significantly
exceeds the net tangible book value per share of our common stock.
The offering price is $1.50 per share. The net tangible book value
per share of our common stock will equal approximately $0.317 if all
shares offered are sold, based on the tangible book value per share
of our common stock on December 31, 1999. Each new investor will
suffer dilution equal to $1.183 per share, representing dilution of
78.9% of the purchase price. Accordingly, investors purchasing
shares in this offering will suffer immediate and substantial
dilution of their investment.
Because We Have Only Recently Commenced Business Operations, We Face
A High Risk Of Business Failure
We were incorporated in November 1998, but only acquired our business
plan in September 1999. We commenced business operations in December
1999. We are presently in the process of establishing our web site
operations. Our web site is not yet fully operational or accessible
to the public and we have not yet earned any revenues. Accordingly,
we have only a limited operating history with which to evaluate our
business. You should consider the risks, expenses and uncertainties
that an early stage company like ours faces. These risks include our
ability or inability to:
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1. establish awareness of our web site with the Indian community;
2. generate content of interest and relevance to the Indian
community;
3. attract a large number of advertisers from a variety of
industries who are prepared to advertise on our web sites;
4. convince new users to pay a subscription fee to access our
web pages;
5. establish relationships with electronic commerce marketers;
and
6. respond effectively to competitive pressures.
If we are unsuccessful in addressing these risks, our business,
financial condition and results of operations will be adversely
affected and our business may fail.
Because We Are Still Developing Our Web Site, We Expect Our Losses To
Continue
To date, we have not been profitable or made any income whatsoever.
As of December 31, 1999, we had an accumulated deficit of
approximately $58,810. While we continue to work on the development
of our web site, we expect to incur increased operating expenses and
thus significant losses until operating revenues can be earned. If
we are not able to generate significant revenues from our web site
operations, then we will not be able to achieve profitability.
If We Do Not Obtain Additional Financing, Our Business May Fail
Our business plan calls for increased expenses associated with the
development and marketing of our web site operations. We anticipate
that revenues from operations will initially be insufficient to cover
these expenses. Accordingly, we are likely to have substantial
additional capital requirements after this offering is complete, and
we can provide no assurance that such funding will be available if
and when needed. Obtaining additional financing will be subject to a
number of factors, including:
1. market conditions;
2. our operating performance; and
3. investor sentiment.
These factors may make the timing, amount, terms and conditions of
additional financing unattractive for us. If we are unable to raise
additional capital, we may not be able to implement our business plan
and our business may fail.
If We Become Subject To Burdensome Government Regulations Affecting
The Internet, Our Business Could Be Adversely Affected
To date, governmental regulations have not materially restricted use
of the Internet in our markets. However, the legal and regulatory
environment that pertains to the Internet is uncertain and may
change. Uncertainty and new regulations could increase our costs of
doing business and prevent us from delivering our products and
services over the Internet. The growth of the Internet may also be
significantly slowed. This could delay growth in demand for our
network and limit the growth of our revenues. In addition to new laws
and regulations being adopted, existing laws may be applied to the
Internet. New and existing laws may cover issues that include:
1. sales and other taxes;
2. user privacy;
3. pricing controls;
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4. characteristics and quality of products and services;
5. consumer protection;
6. cross-border commerce;
7. libel and defamation;
8. copyright, trademark and patent infringement; and
9. other claims based on the nature and content of Internet
materials.
If We Become Subject To Claims Regarding Foreign Laws And
Regulations, Our Business May Be Adversely Effected
Because we will have employees, property and business operations in a
number of countries, we may be subject to the laws and the court
systems of a number of different jurisdictions. In addition, these
laws may be changed or new laws may be enacted in the future.
International litigation is often expensive, time consuming and
distracting. Accordingly, any of the foregoing could have an adverse
effect on our business, financial condition and results of
operations.
If A Market For Our Common Stock Is Developed, Our Stock Price May Be
Volatile
There is currently no market for our common stock and we can provide
no assurance that a market will develop at a later date. If a market
later develops, we anticipate that the market price of our common
stock will be subject to wide fluctuations in response to several
factors, including:
1. actual or anticipated variations in our results of
operations;
2. our ability or inability to generate new revenues;
3. increased competition; and
4. conditions and trends in the Internet and electronic commerce
industries.
Further, we anticipate that our common stock may be traded on the
Nasdaq OTC Bulletin Board. Companies traded on the OTC Bulletin
Board have traditionally experienced extreme price and volume
fluctuations. There is no assurance that our common stock will be
traded on the OTC Bulletin Board. If our common stock is traded on
the OTC Bulletin Board, our stock price may be adversely impacted by
factors that are unrelated or disproportionate to our operating
performance. These market fluctuations, as well as general
economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely
affect the market price of our common stock.
If The Telecommunications Infrastructure In India Is Not Improved,
Our Business Will Be Limited In It's Growth
Access to the Internet requires a relatively advanced
telecommunications infrastructure. The telecommunications
infrastructure in many parts of India is not as well-developed as in
the United States or other countries. The quality and continued
development of the telecommunications infrastructure in India will
have a substantial impact on our ability to deliver our services and
on the market acceptance of the Internet in India in general. If
further improvements in the Indian telecommunications infrastructure
are not made, the Internet will not gain broad market acceptance in
India. If access to the Internet in India does not continue to grow
or grows more slowly than we anticipate, our business, financial
condition and results of operations will be adversely affected.
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Forward-Looking Statements
--------------------------
Many statements made in this prospectus are forward-looking
statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are
important factors that could cause actual results to differ
materially from those expressed or implied by these forward-looking
statements, including those discussed under this section entitled
Risk Factors.
This prospectus contains market data related to our business and the
Internet. This market data includes projections that are based on a
number of assumptions. The assumptions include that:
1. no catastrophic failure of the Internet will occur;
2. the number of people online and the total number of hours spent
online
3. will increase significantly over the next five years, especially
in India;
4. the value of online advertising dollars spent per online user
hour will
5. increase;
6. the download speed of content will increase dramatically; and
7. Internet security and privacy concerns will be adequately
addressed.
If any one or more of the foregoing assumptions turns out to be
incorrect, actual results may differ from the projections based on
these assumptions. The Internet-related markets may not grow over the
next three to four years at the rates projected by our market data,
or at all. The failure of these markets to grow at these projected
rates may have a material adverse effect on our business, results of
operations and financial condition, and the market price of our
common stock.
The forward-looking statements made in this prospectus relate only to
events as of the date on which the statements are made.
USE OF PROCEEDS
The net proceeds we will receive from the sale of the shares of
common stock offered by us will be approximately $3,325,000 US, if
the maximum numbers of shares are sold, after deducting offering
expenses.
The principal purpose of this offering is to increase our working
capital in order for us to proceed with the development of our
IndiaAt.com Internet portal business. As of the date of this
prospectus, we have not made any specific expenditure plans with
respect to the proceeds of this offering. Accordingly, our management
will have significant flexibility in applying the net proceeds of the
offering. We may use a portion of the net proceeds to acquire or
invest in complementary businesses, technologies, services or
products; however, we currently have no commitments or agreements
with respect to any such transactions. Pending any use, the net
proceeds of this offering will be invested in short-term, interest-
bearing securities. No part of the proceeds of this offering are
expected to be used to discharge any indebtedness.
The actual expenditures of the proceeds of the offering may differ
substantially from the estimated use of proceeds. The actual
expenditures of the proceeds of this offering will be determined by
our board
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of directors in the best interests of advancing our
business. The actual expenditures will also vary from the estimated
use of proceeds if less than all of the shares offered are sold.
We anticipate that the net proceeds from the offering will be
sufficient to meet our financial requirements for only a short period
of time. Accordingly, we anticipate that we will require substantial
additional capital to fund our contemplated business plan in the near
future.
We expect the proceeds from this offering applied toward working
capital to be used as follows:
General Working Capital $ 800,000
Portal / Hosting Development (V. 2.0.) $ 750,000
Purchase of Content $ 775,000
Marketing / Sales $ 1,000,000
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Total proceeds $ 3,325,000
We anticipate expenses associated with the offering, including legal,
accounting and stock transfer agent expenses, will be approximately
$50,000 US.
DETERMINATION OF OFFERING PRICE
The $1.50 per share offering price of our common stock was
arbitrarily determined based on our current perceived financing
needs. There is no relationship whatsoever between this price and
our assets, earnings, book value or any other objective criteria of
value.
DILUTION
Our net tangible book value as of December 31, 1999 was approximately
$635,190, or $0.064 per share of our common stock. Net tangible book
value per share is determined by dividing the amount of our total
tangible assets less total liabilities by the number of shares of
common stock outstanding at that date. Dilution in net tangible book
value per share represents the difference between the amount per
share paid by purchasers of common stock in this offering and the net
tangible book value per share of common stock immediately after the
completion of this offering. After giving effect to the issuance and
sale of the shares of common stock offered by us and after deducting
the estimated offering expenses payable by us, our pro forma net
tangible book value as of December 31, 1999 would have been
$4,345,190, or $0.348 per share. This represents an immediate
increase in net tangible book value of $0.284 per share to existing
stockholders and an immediate dilution of $1.152 per share to new
investors purchasing shares in this offering.
The following table illustrates the pro forma per share dilution
assuming the maximum number of shares offered is sold.
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Public offering price $1.50 per share
(before deduction of offering expenses)
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Net offering proceeds $3,710,000
(after deduction of offering expenses)
Net tangible book value per share on December 31, $0.064 per share
1999
Increase in net tangible book value per share $0.284 per share
attributable to this offering
Performa net tangible book value per share at $0.348 per share
December 31, 1999
Dilution per share to new investors $1.152 per share
Dilution as a percentage 76.8%
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SELLING SHAREHOLDERS
There are no selling shareholders in this offering of common stock.
All stock will be sold by CrossNet.
PLAN OF DISTRIBUTION
This offering of common stock is being sold by our officers and
directors without the benefit of an underwriter. We will not pay any
commission on any sales of any shares by our officers and directors.
Management, however, may enter into an underwriting agreement for
this offering at a later date and at that time pay a commission to
any participating underwriters.
We are offering the shares on a self-underwritten basis. There is no
minimum number of shares required to be sold in this offering.
In order to subscribe for shares, an investor must complete and
execute the form of subscription agreement attached to this
prospectus and deliver the executed subscription agreement to us
together with payment of the purchase price for the shares payable to
Crossnet Ventures, Inc. by cashier's or certified check.
We may complete the offering through multiple closings at any time
after receipt of subscription agreements. We may reject or accept any
subscription in whole or in part at our discretion. We may close the
offering or any portion of the offering, without notice to
subscribers. We may immediately use the proceeds obtained from the
offering.
Upon our acceptance of a subscription agreement, we will deliver to
each subscriber a copy of the fully executed agreement evidencing the
number of shares subscribed for. If we do not accept any subscription
or any portion of a subscription, the amount of the subscription not
accepted will be returned by us to the subscriber.
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LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings. Our agent for
service of process in Nevada is Michael A. Cane, 2300 West Sahara
Avenue, Suite 500, Box 18, Las Vegas, Nevada 89102
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their respective ages as of
April 20, 2000 are as follows:
Directors:
Name of Director Age
------------------- ---
Bruce Elliott 51
Yogesh Parekh 38
Howard Thomson 52
Logan Anderson 45
Jost Steinbruchel 59
Executive Officers:
Name of Officer Age Office
------------------- --- ------
Bruce Elliott 51 President and
Chief Executive Officer
Yogesh Parekh 38 Chief Operating Officer
Howard Thomson 52 Chief Financial Officer,
Secretary and Treasurer
The following information sets forth the names of our officers and
directors, their present positions, and certain of their biographical
information.
Bruce Elliott is our president and chief executive officer and is a
member of our board of directors. Mr. Elliott was appointed to our
board of directors on October 30, 1999. Mr. Elliott was appointed as
our president and chief executive officer on November 1, 1999. Mr.
Elliott is the founder and executive director of the WorldWide Web
Institute International, a company that provides global Internet
training and consulting. Mr. Elliott has been the chief executive
officer of the World Wide Web Institute International from 1997 to
present. The World Wide Web Institute International is an Internet
training and consulting organization in Asia with 22 locations
operational in India and Malaysia. The WorldWide Web Institute
International was recently granted status as a Microsoft e-commerce
knowledge partner in India. Mr. Elliott is also a co-founder of
Internet ProLink, a large Swiss based Internet access provider. Mr.
Elliott was chief operating officer of Internet ProLink from 1995 to
1998. Internet ProLink was acquired by PSInet, a large American
Internet service provider, in 1998.
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Yogesh Parekh is our chief operating officer and is a member of our
board of directors. Mr. Parekh was appointed to our board of
directors on January 24, 2000. Mr. Parekh has been our chief
operating officer since January 24, 2000. Mr. Parekh is presently a
partner and the chief operating officer of Ad Factors, an advertising
agency in India. Mr. Parekh co-founded Ad Factors in March 1985.
Ad Factors is a large financial ad agency in India. Prior to
joining Ad Factors, Mr. Parekh was a partner in Sky-Ads, an
advertising and marketing business, from March 1983 to March 1985.
Howard Thomson is our chief financial officer, secretary and
treasurer and is a member of our board of directors. Mr. Thomson was
appointed to our board of directors on November 11, 1998. Mr.
Thomson has been our chief financial officer, secretary and treasurer
since November 11, 1998. Mr. Thomson was employed from 1981 to 1998
in senior management positions with the Bank of Montreal, including 5
years as Branch Manager, 4 years as Regional Marketing Manager and 5
years as Senior Private Banker. Mr. Thomson retired from the Bank of
Montreal in 1998. Mr. Thomson resided in London, England prior to
joining the Bank of Montreal and was employed by the National
Westminster Bank in England for 13 years. Mr. Thomson was a
director of Skinvisible, Inc., a publicly reporting company from
April 3, 1998 to August 1, 2000. Skinvisible, Inc. developed and is
marketing an anti-bacterial skin care product and the whose common
stock is traded on the OTC Bulletin Board. Mr. Thomson has also been
and continues to serve as a director and the secretary and treasurer
of Worldbid Corporation, a publicly reporting company, since February
15, 1999.
Logan B. Anderson is a member of our board of directors. Mr.
Anderson was appointed a director of CrossNet on November 11, 1998
and was our president from November 11, 1998 to November 1, 1999.
Mr. Anderson graduated in 1977 from Otago University, New Zealand,
with a bachelor's degree of commerce in accounting and economics. He
is an associated chartered accountant in New Zealand and was employed
by Coopers & Lybrand in New Zealand from 1977 to 1980 and in Canada
from 1980 to 1982. From 1982 to 1992, Mr. Anderson was comptroller
of Corhart Management Group, Inc., a management service company which
was responsible for the management of a number of private and public
companies. Mr. Anderson has been principal of several private
financial consulting service companies since 1993, including Amteck
Financial Services Corp. from 1993 to 1996; International
Distribution Corporation from 1996-1999; and Amteck Management
(Bermuda) and Amteck Financial Consultants Inc. from 1999 - present.
Mr. Anderson has been an officer and director of a number of private
and public companies in the past 12 years, including PLC Systems,
Inc. and 3D-Systems Inc. Mr. Anderson is also a director and the
president of Worldbid Corporation, a publicly reporting company.
Jost Steinbruchel is a member of our board of directors. Mr.
Steinbruchel was appointed to our board of directors on October 30,
1999. Since 1984, Mr. Steinbruchel has operated his own company, ULI
FINANCE S.A., in Geneva, Switzerland specializing in financial
engineering in international trade throughout a wide network of
banking relations, principally in Europe, China, Australia and
Africa. Previously, he spent 20 years of his professional career as
an executive in international banking with Lloyds of London, Citicorp
and Credit Suisse. Mr. Steinbruchel has a law degree from Sorbonne,
Paris. Mr. Steinbruchel is also a director of Skinvisible, Inc, a
publicly reporting company.
Term of Office
Our Directors are appointed for terms of one year to hold office
until the next annual general meeting of the holders of our common
stock, as provided by the Nevada Revised Statutes, or until removed
from office in accordance with our bylaws. Our officers are
appointed by our board of directors and hold office until removed by
the board.
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Significant Employees
We have no significant employees other than the officers and
directors described above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person
known to us to own more than 5% of our outstanding common stock as of
April 20, 2000, and by the officers and directors, individually and
as a group. Except as otherwise indicated, all shares are owned
directly.
Percentage of Common
Stock Beneficially Owned
Name and Address Amount and Nature Prior to After
Title of Class of Beneficial Owner of Beneficial Owner Offering Offering
-------------- ------------------- ------------------- -------- --------
Common Stock Bruce Elliott 3,000,000 shares 29.30% 23.77%
Director, President 150,000 options
Chief Executive Officer
4, Rue Des Barques
4207, Geneva,
Switzerland
Common Stock Yogesh Parekh 2,000,000 shares 20.47% 16.60%
Director, 200,000 options
Chief Operating
Officer
233 North Palo Cedro Drive
Diamond Bar, CA 91765
Common Stock Howard Thomson 150,000 shares 2.33% 1.89%
Director, Secretary 100,000 options
and Treasurer
1521 Purcell Drive
Coquitlam, BC V3E 3B6
Common Stock Logan Anderson 1,800,000 shares 18.14% 14.72%
Director 150,000 options
P.O. Box 1998G
Seven Mile Beach
Grand Cayman, BWI
Common Stock Jost Steinbruchel 700,000 shares 7.44% 6.04%
Director 100,000 options
Rue de l'Arquebuse 8
Case Postale 5359
1211 Geneva, Switzerland, 11
Common Stock All Officers and
Directors 7,650,000 shares 77.67% 63.02%
as a Group 700,000 options
(5 persons)
-----------------------------------------------------------------------------
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Under Rule 13d-3, certain shares may be deemed to be beneficially
owned by more than one person. I If, for example, persons share the
power to vote or the power to dispose of the shares, they may be
deemed to beneficially own those shares as well. In addition, shares
are deemed to be beneficially owned by a person if the person has the
right to acquire the shares within 60 days of the date as the
information is provided. An example of this would be the right to
acquire shares upon exercise of an option. In computing the
percentage ownership of any person, the amount of shares outstanding
is deemed to include the amount of shares beneficially owned by such
person and only such person by reason of these acquisition rights.
As a result, the percentage of outstanding shares of any person as
shown in this table does not necessarily reflect the person's actual
ownership or voting power with respect to the number of shares of
common stock actually outstanding at April 20, 2000.
As of April 20, 2000, there were 10,000,000 shares of our common
stock issued and outstanding. In addition, there were 750,000 shares
subject to options exercisable within 60 days of the date of this
registration statement. Thus, all percentage calculations in this
table are based on 10,750,000 outstanding shares.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 25,000,000 shares of common
stock at a par value of $0.001 per share.
The following description of our capital stock is not complete and is
subject to and qualified in its entirety by our articles of
incorporation and bylaws, which are included as exhibits to the
registration statement of which this prospectus forms a part, and by
the provisions of applicable Nevada law.
Common Stock
As of April 20, 2000, there were 10,000,000 shares of our common
stock issued and outstanding that were held by approximately 21
stockholders of record.
Holders of our common stock are entitled to one vote for each share
on all matters submitted to a stockholder vote. Holders of common
stock do not have cumulative voting rights. Therefore, holders of a
majority of the shares of common stock voting for the election of
directors can elect all of the directors. Holders of our common
stock representing a majority of the voting power of our capital
stock issued and outstanding and entitled to vote, represented in
person or by proxy, are necessary to constitute a quorum at any
meeting of our stockholders. A vote by the holders of a majority of
our outstanding shares is required to effectuate certain fundamental
corporate changes such as a liquidation, merger or an amendment to
our Articles of Incorporation.
Holders of common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally
available funds. In the event of a liquidation, dissolution or
winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and
after providing for each class of stock, if any, having preference
over the common stock. Holders of our common stock have no pre-
emptive rights, no conversion rights and there are no redemption
provisions applicable to our common stock.
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INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or
certified any part of this prospectus or having given an opinion upon
the validity of the securities being registered or upon other legal
matters in connection with the registration or offering of the common
stock was employed on a contingency basis, or had, or is to receive,
in connection with the offering, a substantial interest, direct or
indirect, in the registrant or any of its parents or subsidiaries.
Nor was any such person connected with the registrant or any of its
parents or subsidiaries as a promoter, managing or principal
underwriter, voting trustee, director, officer, or employee.
Michael A. Cane of Cane & Company, LLC, our independent legal
counsel, has provided an opinion on the validity of our common stock.
Sarna & Company, independent certified accountants, audited the
financial statements and presented their report with respect to the
audited financial statements. Sarna & Company's report was given
upon their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada
Revised Statutes and our Bylaws. We have been advised that in the
opinion of the Securities and Exchange Commission indemnification for
liabilities arising under the Securities Act 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 is asserted by one of our directors, officers, or
controlling persons in connection with the securities being
registered, we will, unless in the opinion of our legal counsel the
matter has been settled by controlling precedent, submit the question
of whether such indemnification is against public policy to a court
of appropriate jurisdiction. We will then be governed by the court's
decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated as a Nevada corporation in November 1998. We
commenced operations in September 1999 when we acquired our business
plan from Mr. Bruce Elliott, our President and one of our directors.
We completed a $650,000 private placement in December 1999 to fund
the commencement of our business operations.
Our former president, Logan Anderson, was also our sole promoter upon
our inception. Other than the purchase of his stock and the
consulting agreement described below, Mr. Anderson has not entered
into any agreement with us in which he is to receive or provide any
thing of value.
The services of Mr. Logan Anderson, a member of our board of
directors, are provided pursuant to a consulting agreement dated
January 1, 2000. The services provided to us by Mr. Anderson include
advising our management on our business and financial affairs and
advising our management on our overall corporate direction. Mr.
Anderson is required to devote approximately 15% of his business time
to our business until such time as our positive working capital
equals or exceeds $750,000, at which time Mr. Anderson has agreed to
devote approximately 50% of his business time to our business. We
currently pay Mr. Anderson a consulting fee of $1,000 per month.
This consulting fee will increase
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<PAGE>
to $5,000 per month upon Mr. Anderson being required to devote 50% of
his business time to our business. Mr. Anderson's consulting agreement
is for a one-year term expiring January 1, 2001. We may terminate this
consulting agreement at our option at any time upon payment to Mr.
Anderson of an amount equal to the greater of $30,000 or an amount equal
to six times Mr. Anderson's consulting fee at the date of termination.
Mr. Anderson paid a purchase price of $0.001 per share for each of
the 3,800,000 shares issued to him on July 24, 1999. Mr. Anderson
later transferred 2,000,000 shares to Mr. Yogesh Parekh, a director
and our chief operating officer, at a price of $0.001 per share.
DESCRIPTION OF BUSINESS
Our business plan is to develop and market an Internet web site
business for the worldwide Indian Internet community through our
IndiaAt.com Internet address. We have only recently formulated our
business plan and commenced our business. Our business operations
are in the start-up phase and we have yet to earn any revenues. We
are offering shares of our common stock through this offering in
order to finance the implementation of our business plan to develop
the IndiaAt.com web site into a commercially viable and profitable
Internet web site.
We are proposing to develop our web site as an Internet portal site
that will focus on the needs of persons in the worldwide Indian
community with access to the Internet. We believe that there is a
significant market opportunity as the on-line needs of the Indian
community have not been met by current Internet businesses.
Our web site will be designed to include unique content of interest
and relevance to members of the Indian community. Our objective is
to establish our web site as the premium Internet portal for
products, services and information of interest to the worldwide
Indian community. We spent $12,964 on research and development
activities for the year ended December 31, 1999 and nothing from our
inception date of November 10, 1998 to December 31, 1998,
We plan to charge subscription fees to members of the Indian
community who use our web site. We will develop our web site in a
format that will enable us to market the site to advertisers and
electronic commerce marketers. Our objective is to earn additional
revenues from advertising on our web site and from electronic
commerce transactions.
INDUSTRY BACKGROUND
Growth of the Internet and the World Wide Web
The Internet and the World Wide Web are experiencing dramatic growth
in terms of the number of users. The growth in the number of web
users and the amount of time users spend on the web is being driven
by the increasing importance of the Internet as a communications
medium and an information resource and a sales and distribution
channel. As Internet usage continues to grow, advertisers and
electronic commerce marketers are increasingly using the web to
locate customers, advertise and facilitate transactions.
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Growth of Online Electronic Commerce
The Internet is dramatically affecting the methods by which consumers
and businesses are buying and selling goods and services. Electronic
commerce offers the opportunity to establish new competitive
standards by expanding distribution channels, integrating internal
and external processes and offering a cost-effective method of
providing products and services. The Internet provides online
merchants with the ability to reach a global audience and to operate
with minimal infrastructure, reduced overhead and greater economies
of scale, while providing consumers and businesses with a broad
selection of products and services, increased pricing power and
unparalleled convenience. As a result, a growing number of parties
are transacting business on the Internet.
Advertising on the Internet
The Internet allows advertisers to more precisely target desired
audiences while tracking impression levels, user demographics and
effectiveness of advertisements. As a result, a growing number of
businesses are marketing their products and services on the Internet.
Internet Portals
Internet portals are networks of web sites that are organized around
a central home page. The home page of the portal site generally
includes access to Internet directories and search engines as well as
added commodity tools such as weather, news feeds, stock quotes and
personal home pages. Internet directories list web sites by specific
topics of interest and contain links to these sites. Search engines
capture, store and index web site information in order to retrieve
web site listings in response to a user's inquiry.
Internet sub-portals are networks of web sites which are focused on
specific subjects or areas of interest and are linked to the
principal Internet portal site. Users can access sub-portals through
the portal's home page or directly from search engines, Internet
directories or links from other sites.
The advantage of Internet portals to users is that these portals
provide users with basic information and static links to a broad
variety of topics. However, because most portals have many similar
tools and features and provide limited content, there is very little
differentiation between existing Internet portals.
The Indian Internet Community
Asia represents one of the fastest growing Internet usage markets in
the world. More particularly, we believe that Internet usage in
India is on the verge of dramatic growth. Internet usage in India
doubled in 1998.
We anticipate that the number of Indian people using the Internet
will expand dramatically now that the government has allowed private
Internet service providers to commence business inside the country.
In addition, there are approximately 25,000,000 non-resident Indians
living abroad, of which approximately 20% are computer literate and
connected to the Internet.
Our Market Opportunity
We believe that now is an opportune time to develop and market an
Internet portal business focused on the resident and non-resident
Indian on-line community for the following reasons:
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<PAGE>
1. The number of Internet users in the domestic and non-resident
Indian communities is rapidly increasing. Internet usage in
India is dramatically increasing and is anticipated to grow
faster than in developed nations over the next several years.
Accordingly, there is a significant opportunity to offer
Internet services to this new on-line community;
2. While there has been a dramatic growth in the number of on-line
Indian Internet users, the vast majority of existing Internet
web sites remain focused on the English speaking markets and the
domestic and non-resident Indian communities have been under-
serviced by existing Internet based businesses. Accordingly, we
believe there is an unmet market demand from the on-line Indian
community;
3. There has yet to emerge a dominant Internet portal business
focused on the Indian community. Accordingly, we perceive there
exists the opportunity to become one of the first companies to
develop an Internet portal business focused on the Indian
community;
4. An on-line community focused on the Indian population will offer
businesses and advertisers the ability to directly reach the
Indian community, with the results of improved advertising
efficiency and improved likelihood of successful sales. We
perceive that there is a demand from advertisers and electronic
commerce marketers to reach the Indian community through the
Internet that is presently not being met by existing Internet
Web sites. Accordingly, we perceive there exists the
opportunity to earn significant advertising and electronic
commerce revenues from an Indian portal business that is
successful in targeting the Indian community.
Our Business Plan
Our objective is to develop a web site that will be the largest
vertical Internet consumer portal for both the domestic and non-
resident Indian communities. Our plan to accomplish this objective
is comprised of the following components:
1. The first component of our business plan will be to develop the
web site. We plan to include content of interest and relevance
to the Indian community that is not presently available on the
Internet in an organized and accessible format. We will also
target the Indian expatriate community by tailoring the content
of our site such that it is oriented for the tastes and
interests of this on-line community.
2. The second component of our business plan calls for the
marketing of our site in order to attract Internet users from
the Indian community. We will attempt to attract users who will
pay a subscription fee in order to access the information,
products and services on our site. In order to achieve this
objective, we will have to successfully convince new users that
the content of our web site is sufficiently unique and of value
to justify the commitment by the user to pay a subscription fee.
3. The third component of our business plan is to capitalize on the
usage of our web site by the Indian community in order to earn
revenue from advertisers and electronic commerce activities
placed on the site.
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Development of Our Web Site
We plan to develop our Internet portal web site to be a forum for
members of the Indian on-line community to access products,
information and services. In the first phase of our development, we
are planning to develop a central home page and a series of sub-
portal pages on the following topics of interest to the Indian
community:
1. music,
2. religion and scripture,
3. alternative medicine,
4. books/publications,
5. food and entertainment.
We plan to develop additional sub-portal web site pages for the
following topics of interest once the web site pages comprising the
first phase of our development plan are operational:
1. Indian matrimonial service,
2. information services,
3. astrology,
4. directory of non-resident Indians,
5. financial news and trade exchange.
We will structure our web site such that each topic area will have
two levels of access. The first level of access will be available at
no cost to our subscribers and the second level of access will offer
premium services at a cost to users, including access to the
electronic commerce features of our site.
We plan to generate revenue from each of our services. To accomplish
this, we will charge subscription fees to our users and offer
electronic commerce services. In keeping with our objective of
making each topic area service a stand-alone web site, we will
develop each service into a portal of its own. To accomplish this we
will have:
1. one product manager and one content manager for each such sub-
portal;
2. a single web master overseeing all operations of the portal and
any sub-portals;
3. a market manager for marketing subscriptions.
Our web site will be presented in all major Indian languages and with
a very specialized Indian culture bias. Our objective is to ensure
that we deliver the unique content to the Indian community they
demand and which is not available from competitors. In order to
achieve this objective, we plan to design our site to incorporate the
following features:
1. customized global, regional and local content covering a variety
of topics in principal Indian languages;
2. a broad range of Indian language community features such as chat
areas, bulletin boards, personal and classified ads, that would
allow users to interact with each other;
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3. easy to use interfaces and consistent navigation experiences
that facilitate usage by the growing number of Indian on-line
users who will be using the Internet for the first time;
4. search capabilities that can be customized by country, region
and/or language;
5. sophisticated electronic commerce capabilities to facilitate
electronic commerce transactions between our users and
electronic commerce marketers.
Web Site Structure And Development
We plan to develop our web site using a portal web site structure
where one central page leads the user to various other web pages
containing information, services and products of interest. Users
will be directed to our home page at our www.IndiaAt.com web site.
From our home page, users will then be able to access our various
sub-portal pages as they are developed. Users will also be able to
access each sub-portal independently without going through our home
page.
First Phase of Our Web Site Development
We plan to focus on development of each of the following sub-portals
in our first stage of development:
1. IndiaAtMusic.com/e-Sanjeet.com.
-------------------------------
We plan to develop a specialized sub-portal for Indian music
that will provide content on a broad range of music from pure
classical music to popular Indian film music. We plan to enter
into distribution agreements with producers of Indian music in
order that we can offer Indian music in an "MP3" format from our
site.
There has recently been a growing interest in Indian music,
particularly in Indian pop music. While some music companies
are offering a few clips of music via their web sites, there
appears to be no Internet web site dedicated to distribution of
Indian music on the Internet. We plan to seek distribution
agreements with smaller Indian music companies who have the
quality of music, but do not have the distribution reach to
market their music products or are not themselves able to
distribute their music on the Internet. We will be required to
negotiate distribution agreements with these music companies for
the right to sell their music to our users via our web site.
We are proposing to generate revenues from this sub-portal from
the following activities:
a. advertising fees charged to music companies that will pay for
promoting their products on our sub-portal;
b. commissions generated on actual sales of music completed
through our web sites via distribution arrangements with
music companies;
c. advertising and other fees from artists and musicians who
will pay for marketing their music on our site.
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2. IndiaAtReligion/e-Bhagwan.com.
------------------------------
We plan to develop a sub-portal that will focus on Indian
religion. This sub-portal would include content on Indian
religion with its Apex trinity, namely Brahma, Vishnu and Sheba.
Additional topics will include Indian rituals, scriptures,
tantra, mantra and yantra, and other Indian religious subjects.
The objective of this sub-portal would be to attract Indian
users who desire Indian religious experience and enlightenment,
but do not have access to traditional daily Indian religious
rituals. We anticipate that this sub-portal would focus on
non-resident Indians who do not have the opportunity to engage
in traditional Indian religious rituals in their present
communities.
We are proposing this sub-portal would earn revenue generated
from the following activities:
a. Payments from religious foundations who want to fund such a
site for propagation of Indian religious precepts;
b. Payments from temple trusts who want to promote their unique
services for specific religious deities;
c. Payments from Indian devotees who want to visit temples and
perform rituals on-line through the Internet;
d. Commission from sales of devotional material, like joss and
incense sticks, holy books and religious artifacts completed
between our users and electronic commerce marketers via our
web sites.
3. IndiaAtHealth.com/e-Ayurved.com.
--------------------------------
We plan to develop a sub-portal devoted exclusively to Indian
alternative medicine systems known as "Ayurveda". Indian herbal
medicine, known as "Ayurveda", has a huge following because of
its perceived natural effectiveness and perceived lack of side
effects. There is presently no organized system for
distribution, sales and delivery of Indian herbal medicine.
This sub-portal would be focused on Indians residing outside of
India who do not have access to the manufacturers and
distributors of traditional Indian herbal medicine.
We anticipate this portal would generate revenues from the
following activities:
a. advertising fees and sales commissions from manufacturers of
Indian herbal medicines;
b. fees charged to our users who pay for consultations and
information via our web site;
c. fees charged to universities who are prepared to conduct
Internet courses on Indian herbal medicine via our web site;
d. fees charged to Indian herbal medicine doctors who want to
expand their practice via the Internet by using our web site.
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4. IndiaAtBooks/e-Kitaab.com.
--------------------------
We plan to develop a sub-portal dedicated to the Indian books
and publication industry. This industry is very vast, but has
not developed distribution channels on the Internet to the
extent that has been developed in North America and Europe for
English speaking books and publications. The rapid expansion in
the Internet has largely ignored publications in principal
Indian languages and which originate from India.
We plan to generate revenues from this sub-portal from various
book and magazine publishers who are able to sell books and
magazines to our users via our web site.
5. IndiaAtFood/e-Khana.com
-----------------------
We plan to develop a sub-portal dedicated exclusively to Indian
food. Indian food is gaining popularity worldwide. Content for
this sub-portal will include recipes and information on methods
of preparation, utensils, ingredients and cooking appliances for
various forms of cooking practices in India. We believe that
this sub-portal will be in demand due to the gaining increase in
the worldwide popularity of Indian food and the fact that there
appears to be little content on Indian food on the Internet at
present.
We plan to generate revenues from this sub-portal from the
following activities:
a. Commissions on videos and books on Indian cooking sold
through our web site;
b. Commissions from Indian cuisine appliance manufacturers who
market and sell their products via our web sites.
6. IndiaAtFilm/e-filmiduniya.com.
We plan to develop a sub-portal devoted to the Indian film
industry that is the largest in the world in terms of size and
number of films made per year. To date, and to our knowledge,
no one has attempted to market and distribute Indian films over
the Internet. Accordingly, we perceive a sizable market
opportunity due to the popularity of Indian films.
We plan to develop the sub-portal as an electronic film magazine
with news, views, clips on promotions, productions and star fan
clubs. We also plan to develop the sub-portal to offer
business-to-business possibilities. We believe that there are
large business-to-business possibilities in view of the fact
that the government of India has only recently declared the
Indian film industry an "Industry". Due to the Indian
regulatory regime, the Indian film industry has to date been
extremely unorganized and unregulated with no access to public,
institutional or bank funds. Accordingly, we perceive there is
a large opportunity to use our sub-portal for business-to-
business transactions.
We plan to generate revenues from this sub-portal through the
following activities:
a. commissions from film producers and distributors whose films
and videos are sold to our users via our web site;
b. commissions from sales of magazines, videos and CD's which
are sold via our web site.
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7. Indian News and Television.
---------------------------
We plan to develop a portal for Indian news and local
information. This sub-portal will be divided into a network of
sub-portals addressing principal Indian cities and regions such
as IndiaAtDelhi, IndiaAtMumbaai, IndiaAtCalcutta. It will also
address specific Indian areas of interest such as
IndiaAtTechnews, IndiaAtTechjobs. We plan to use this sub-
portal as a key element of our strategy to charge users
subscription fees for access to our site.
Second Phase of Our Web Site Development
During the second phase of our web site development, we plan to
develop the following sub-portals:
Internet Site Description
------------- -----------
E-Bazar.com A trading web site for Indian goods and services
E-Vanijyabazar.com A web site for the Indian financial and
investment market.
E-Pathshala.com An Internet school and learning resource for
Indian students.
E-Vdesi.com An Internet directory of Indians and Indian
businesses, in the format of a Yellow Pages
directory.
E-Jyotish.com A web site dedicated to Indian astrology.
E-Shadi.com A web site dedicated to Indian matrimonial
services.
E-Watan.com A web site dedicated to Indian information.
E-Dann.com A web site dedicated to Indian development
through donations
The sub-portal sites to be developed in our second phase of
operations are subject to the successful implementation of the sub-
portals to be developed in our first phase of operations and will be
subject to obtaining necessary financing.
Marketing
We anticipate that we will need to undertake significant marketing
efforts in order to attract on-line members of the Indian community
to our web site. A successful marketing effort will be essential to
our success as our business plan calls for our revenues to be earned
from subscription fees, advertising charges and commissions on
electronic commerce transactions. It will not be possible for us to
earn these revenues if we are not able to attract users to our site.
Our initial marketing focus will be a series of public presentations
targeted at the non-resident Indian community. We are planning
presentations in cities and countries where there are significant
populations of non-resident Indians. We will focus our presentations
on making non-resident Indians aware of the unique content of our
site. We plan to deliver a comprehensive information kit and CD-ROM
to all invitees who sign up as subscribers.
We will also market our web site through on-line advertising on
complementary Internet web sites. We may also market our web site
through conventional media, such as newspapers and magazines focused
on the Indian community, and through advertising mail-outs focused on
the non-resident Indian community.
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We believe that a successful marketing campaign would increase usage
of our web sites, as well as attract advertisers and electronic
marketers to our site.
Advertising And Electronic Commerce
We plan to earn revenues from advertising on our web site and from
electronic commerce transactions completed between our users and
marketers who offer their products and services through our site.
Our objective is to develop a network of web sites that will provide
a highly targeted platform for advertising and electronic commerce
over a broad range of consumer and business topics focused on the
Indian community.
We will attempt to establish relationships with advertisers who are
prepared to pay for advertising on our site. Our objective will be
to offer advertisers a unique opportunity to purchase advertising
that is focused on the Indian community. In order to achieve this
objective, we anticipate that we will contract with third party
auditing companies who will verify usage of our web sites in order
that we can substantiate use of our web sites by the Indian
community. We plan to establish an internal advertising sales force
that will initiate relationships with potential advertisers. We will
also consider using third party advertising agencies in order to sell
advertising.
We will develop our web site as an electronic commerce platform in
order that we can facilitate electronic commerce transactions. We
plan to initiate relationships with potential electronic commerce
marketers who are seeking to sell goods and services to the Indian
community. We will pursue relationships with electronic commerce
marketers in which we will enable the marketing and sale of goods and
services through our web site in consideration for the payment of a
fee or commission by the electronic commerce marketer. We anticipate
that any fees or commissions would be payable only upon completion of
sales through our web site or as a result of a referral through our
web site.
We are also considering the following activities with the objective
of earning revenue:
a. Business to consumer e-commerce transactions via on-line
malls and stores;
b. Business to business electronic commerce by providing
qualified leads to subscribers and sponsors;
c. Consumer to consumer electronic commerce via on-line auction
sales and exchange boards;
d. E-mail notification services to subscribers;
e. Hosting and production of television and radio broadcast over
the Internet for subscribers and sponsors which target the
overseas Indian community;
f. Personalization of sites for subscribers who want their own
personal web site;
g. Hosting of electronic commerce sites for subscribers.
Offices
We plan to set up the technical office for our IndiaAt.com web site
business in Hyderabad, India. We believe that Hyderabad is the best
location for our technical office because:
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a. Hyderabad is acknowledged as being the main software
development center in India.
b. Approximately 63% of the world's overseas Indians residing in
the United States come from the State of Andhra Pradesh to
which Hyderabad is the capital city. We view this connection
between Hyderabad and overseas Indians as being essential as
expatriate Indians will be dominant users of the Internet and
consumers in the short-term until Internet access within
India increases.
c. Our officers and directors have the business connections
within the city of Hyderabad necessary to execute our
business plan. The business office will be located in Bombay
and we plan to evaluate opening additional content
development offices to be located in Bombay, Delhi, Calcutta,
Madras, and Bangalore. These development offices are
essentially for assembling local content for the IndiaAt.com
portal and initiating commerce activities with local
businesses in these cities and regions.
We may also consider establishing one or more offices in North
America and/ or Europe. Any office outside India would be used
primarily for marketing our web site to members of the non-resident
Indian community and for promotional purposes.
Web Site Development
We plan to conduct the majority of the technical and content
development work in India because of the greater availability and
affordability of Indian technical expertise, local content and
journalists.
Competition
We will compete for users, advertisers and electronic commerce
marketers with a wide range of companies, including:
a. Internet portal companies, such as Excite, Yahoo and Lycos;
b. Internet search engines and directories, including AskJeeves
and LookSmart;
c. On-line content web sites focused on the Indian community,
including NRIOL.com, Rediff.com and Indiaabroad.com;
d. Publishers and distributors of conventional media, such as
newspapers, magazines, television and radio, which are
focused on the Indian community, including Rediff.com,
India123.com, IndiaWorld.com and IndiaExpress.com;
e. Web sites maintained by Internet services providers located
in India, including VSNL.com and satyam online.com;
f. General purpose consumer on-line services, including America
OnLine and MSN.
The presence of established competitors could materially adversely
affect our ability to successfully implement our business plan, to
attract users and to earn revenues from our web site operations.
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<PAGE>
We have limited financial, marketing technical and other resources
that are necessary to implement our business plan. Many of our
current and potential competitors have significantly greater
financial, marketing, technical and other resources than we do. Our
competitors may be able to devote greater resources to the
development, promotion and sale of their web sites than we can. In
addition, our competitors may be able to offer the services and
information we are planning to provide at prices which are below the
prices offered by us or which may be free.
We will also compete with traditional advertising media, such as
newspapers, magazines, radio and television, for a share of
advertisers' total advertising budgets. If advertisers perceive the
Internet or our web sites to be an ineffective or limited as an
advertising medium, they may be reluctant to advertise on our site.
Additional factors that will affect our ability to compete against
our competitors will include:
a. Our ability to attract members of the on-line Indian
community to our web site.
b. Our ability to develop relevant and important content to the
Indian community.
c. Our ability to market our web site to advertisers.
d. Our ability to establish relationships with electronic
commerce marketers.
e. Our ability to convince members of the on-line Indian
community that our site is of sufficient value to justify
payment of a subscription fee by users.
Government Regulation
We anticipate that users from several states and international
jurisdictions will access our web site. There is a risk that our
activities may thus be the subject of government regulation from
multiple jurisdictions in the future or that governments will
interpret their laws as having jurisdiction over our business along
with others. Applicability of these laws may result in our being
prohibited from conducting transactions with users in certain states
or countries or that we may have to incur increased expense in order
to conduct business with users in certain states or countries.
Due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted with
respect to the Internet generally, covering issues such as user
privacy, pricing, and characteristics and quality of products and
services. Similarly, the growth and development of the market for
Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies
conducting business over the Internet. The adoption of any
additional laws or regulations may decrease the growth of commerce
over the Internet, increase our cost of doing business or otherwise
have a harmful effect on our business.
As our web site will be available over the Internet in multiple
states and foreign countries, and as the users of the web site are
resident in such states and foreign countries, such jurisdictions may
claim that we are required to qualify to do business as a foreign
company in each such state or foreign country. Failure to qualify as
a foreign company in a jurisdiction where required to do so could
subject us to taxes and penalties.
We are not aware of any environmental laws that will be applicable to
the operation of our Internet web site business.
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Inflation And Foreign Currency Exchange Rate Losses
If we are successful in earning revenues, we anticipate that a
significant portion of our revenue will be earned in Indian rupee.
As a result, our revenues may be impacted by fluctuations in value of
the Indian rupee relative to the U.S. dollar. In addition, a portion
of our monetary assets and liabilities and our accounts payable and
operating expenses will be denominated in Indian rupee. Therefore, we
are exposed to foreign currency exchange risks. However, while a
significant portion of our revenue may be in Indian rupee, a
significant portion of our operating expenses will also be in the
Indian rupee. As a result, we anticipate that we will not need to try
to reduce our exposure to exchange rate fluctuations by using hedging
transactions. Notwithstanding these factors, we may experience
economic loss and a negative impact on earnings and equity as a
result of foreign currency exchange rate fluctuations.
PLAN OF OPERATIONS
Our plan of operations for the twelve months following the date of
this registration statement is to complete the following objectives
within the time period specified:
A. We plan to establish a technical office in Hyderabad, India by
October 2000. We anticipate spending approximately $50,000 on
establishing our offices over the next twelve months;
B. We plan to complete development of our web site portal and sub-
portals as early as possible with the objective of having our
Internet portal site and the sub-portals comprising phase one of
our business plan in full operation by October 2000. We
anticipate spending approximately $740,000 on this development
over the next twelve months;
C. We plan to commence marketing our web site in October 2000 by
conducting targeted presentations to groups of non-resident
Indians. We also plan to undertake advertising and marketing
promotions in both traditional and Internet media during the
fourth quarter of 2000. We anticipate spending approximately
$300,000 on these marketing expenses over the next twelve
months;
D. We plan to commence marketing our web site to advertisers and
electronic marketers during the fourth quarter of 2000. We
anticipate spending approximately $1,300,000 on this expense
over the next twelve months.
E. We also anticipate spending approximately $75,000 on the
purchase of necessary plant and equipment for our business
operations over the next twelve months.
We thus anticipate that we will spend approximately $2,465,000 over
the next twelve-month period in pursuing our stated plan of
operations. Of these anticipated expenditures, we anticipate that
approximately $1,760,000 will be spent in the next six months. Our
existing cash reserves and the proceeds of this offering of our
common stock will be used to finance our plan of operations over the
next twelve months. We expect our first revenues during the fourth
quarter of 2000.
To become operational, we are relying upon monies from our existing
first round private placement offering. We anticipate taking the
following steps at the following costs during the fourth quarter of
2000:
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<PAGE>
1. Completion of Beta version of portal $50,000
2. Completion of marketing materials, mailings $20,000
3. Subscription sales to test market $20,000
4. Completion of sales kit materials $10,000
5. Road shows to set-up re-seller network $30,000
MARKETING PLAN - Description
We plan to set up a worldwide re-seller correspondent channel partner
network at various places of concentration of the non-resident
Indians. These resellers would be responsible for:
1. Selling & expanding our subscriber network;
2. Developing, obtaining and contributing local content;
3. Developing local e-commerce partners and products;
4. Executing the portal & sub-portals' e-commerce services
fulfillment;
5. Becoming local guides.
To achieve this we will explore a three-pronged approach:
1. A direct-mail response program and focused e-mail promotions;
2. Network marketing techniques;
3. Road shows.
1. Direct Mail
We will undertake a direct mail marketing program in order to create
awareness of our IndiaAt.com websites as well as gather subscriptions
in a cost effective manner. We currently have access to a database of
more than 500,000 non-resident Indians. In a phased manner, we plan
to organize this database geographically and send targeted direct
mail pieces to these prospective web site users. We also have access
to a database or more than 700 non-resident Indian associations
worldwide. Initially we plan to send out a few thousand pieces of
very innovative mailers to target what we call opinion leaders of the
India Diaspora. It is hoped that this will provide more effective
word-of-mouth publicity. A few of these direct pieces have already
been designed. Simultaneously we would also run focused e-mail
promotions.
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2. Network Marketing
Due to the polarized nature of our target audience, the marketing of
our portal lends itself to network marketing techniques. From the
responses received from the direct mail campaign as well as our
network of contacts, we intend to explore the possibility of network
marketing for expanding our subscriber networks. Every reseller
partner as well as subscribers would be offered attractive commission
incentives that they could pass down the line of resellers created by
them.
3. Road Shows
Subsequent to the initial response from our subscribers and resellers
and our fine tuning the products and services offered on the portal
from those responses, the primary vehicle for generating
subscriptions and e-commerce leads will be road shows in various
parts of the world where there is a significant population of persons
of Indian origin. The road shows will involve inviting a few hundred
people to a pre-determined venue and presenting the IndiaAt.com
services to them in an audiovisual format. A comprehensive
information kit including a CD would be presented to all attendees.
Initial designs for the information kit have already been made.
The extent of our marketing program and the number of road shows
which we will be able to undertake is conditional upon our achieving
sufficient funding from sales of our common stock. If we are unable
to raise sufficient financing, then we will scale back our marketing
program and road shows in order that we have sufficient funds from
our financings to pay for our marketing program.
We anticipate that we will hire twelve additional employees over the
next twelve-month period in implementing this plan of operations. We
expect these employees to include the following positions:
Position
--------
1. Chief Technical Officer
2. Director Sales and Marketing/ International
3. Director Sales and Marketing/ International
4. Director Sales and Marketing/ International
5. Director of Resource Guides
6. Web designer
7. Web developers (four in total)
8. Data base administrator
9. Portal project manager
We believe that we will be able to complete our stated plan of
operations if we are able to sell all of the shares of our common
stock that are offered in this offering. Our actual expenditures and
business plan may differ from the stated plan of operations. Our
board of directors may decide not to pursue this plan of operations.
In addition, we may modify our plan based on the available amount of
financing in the event that we cannot sell all of the offered shares
of common stock. We do not, however, have any arrangement in place
for any debt or equity financing that would enable us to meet our
stated plan of operations.
We had cash in the amount of $637,590 on December 31, 1999. We
anticipate that our monthly operating expenses will increase to
approximately $300,000 per month once we commence
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<PAGE>
implementation of
our plan of operations. We also expect that we will expend $75,000
on research and development over the next twelve months. In the
event we are not successful in completing any sales of our common
stock through in this offering, we anticipate that we could sustain
our business operations for less than three months without additional
equity financing based on our current cash position and anticipated
operating expenses. Due to our lack of operating history and minimal
revenues, there exits substantial doubt about our ability to continue
as a going concern.
We anticipate continuing operating losses in the foreseeable future.
We base this expectation in part on the expectation that we will
incur substantial development and operating expenses in completing
our stated plan of operations. Our future financial results are also
uncertain due to a number of factors, many of which are outside our
control. These factors include, but are not limited to:
1. Our ability to develop and implement a web site that is of
interest to the resident and non-resident Indian community;
2. Our ability to generate user customer traffic on our web
site;
3. Our ability to attract users who are prepared to pay a
subscription fee to access our web site;
4. Our ability to attract advertisers who are prepared to pay
for advertisements on our web site;
5. Our ability to attract electronic marketers who are
prepared to market their goods and services through our web
site;
6. The announcement or introduction of competing web sites;
and
7. General economic conditions and economic conditions
specific to the Internet and electronic commerce.
We believe the above discussion contains a number of forward-looking
statements. Our actual results and our actual plan of operations may
differ materially from what is stated above. Factors which may cause
our actual results or our actual plan of operations to vary include,
among other things, decisions of our board of directors not to pursue
a specific course of action based on its re-assessment of the facts
or new facts, changes in the Internet business or general economic
conditions and those other factors identified in this prospectus.
DESCRIPTION OF PROPERTY
We do not own any real property. Our personal property presently
consists of two Hewlett Packard personal computer systems. Our
principal executive offices have re-located from rental property at
Unit #106107, Shah & Nahar Industrial Estate of Dr. E. Moses Road,
Mumbai, 400018, India to a 370 sq. ft. office space at 68, World
Trade Center, Colaba, Bombay, India 400005. Rent is 20,000 Rupees
per month, or approximately US$441 per month. The lease term began
April 30, 2000 and terminates March 31, 2001. Our telephone number
is 91-22-494-0129.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Except as discussed below, none of the following parties has, since
our date of incorporation, had any material interest, direct or
indirect, in any transaction with us or in any presently proposed
transaction which has or will materially affect us:
1. Any of our directors or officers;
2. Any person proposed as a nominee for election as a director;
3. Any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached
to our outstanding shares of common stock;
4. Any of our promoters;
5. Any relative or spouse of any of the foregoing persons who
has the same house as such person.
We acquired our business plan from Mr. Bruce Elliott on September 30,
1999 when we entered into a consulting agreement with Mr. Elliott.
Mr. Elliott is our president and a member of our board of directors.
The consulting agreement provides that Mr. Elliot will perform the
following duties on a full-time basis in his various capacities:
1. Management and supervision of the development, marketing,
operations and implementation of the "IndiaAt.com" Internet
business;
2. General direction, supervision and management over the
business and financial affairs of our corporation;
3. Report directly to our board of directors; and
4. Such other duties as may be reasonably assigned to him from
time to time by or on behalf of the board of directors,
provided such duties are within the scope of our business.
The consulting agreement with Mr. Elliott is for a term of three
years and may be renewed by consent of the parties. The agreement
provides for us to pay US$6,000 per month for Mr. Elliott's services.
We may terminate this agreement if Mr. Elliott is in breach of a
material agreement term, or may terminate without cause upon payment
of $36,000. We may also terminate the agreement by delivery of
written notice to Mr. Elliott of our determination not to pursue the
IndiaAt.com business. Mr. Elliott may terminate at any time with
cause.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Present Public Market
There is presently no public market for our common stock. We
anticipate applying for trading of our common stock on the over the
counter bulletin board upon the effectiveness of the registration
statement of which this prospectus forms a part. However, we can
provide no assurance that our shares will be traded on the bulletin
board or, if traded, that a public market will materialize.
Holders of Our Common Stock
As of the date of this registration statement, we had 21 registered
shareholders.
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Stock Option Grants
To date, we have granted options to purchase 750,000 shares of common
stock, 700,000 of which have been issued to officers and directors.
Registration Rights
We have not granted registration rights to any persons.
Dividends
There are no restrictions in our Articles of Incorporation or bylaws
that restrict us from declaring dividends. The Nevada Revised
Statutes, however, do prohibit us from declaring dividends where,
after giving effect to the distribution of the dividend:
1. We would not be able to pay our debts as they become due in
the usual course of business; or
2. Our total assets would be less than the sum of our total
liabilities, plus the amount that would be needed to satisfy
the rights of shareholders who have preferential rights
superior to those receiving the distribution.
We have not declared any dividends. We do not plan to declare any
dividends in the foreseeable future.
Rule 144 Shares
A total of 7,000,000 shares of our common stock will be available for
resale to the public after July 24, 2000 in accordance with the
volume and trading limitations of Rule 144 of the Act. In addition,
2,000,000 shares of our common stock will be available for resale to
the public after November 15, 2000 and 1,000,000 shares of common
stock after December 31, 2000, also in accordance with the volume and
trading limitations of Rule 144 of the Act.
In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of a company's common stock for at least
one year is entitled to sell within any three month period a number
of shares that does not exceed the greater of:
1. 1% of the number of shares of the company's common stock then
outstanding which, in our case, will equal approximately
100,000 shares as of the date of this prospectus; or
2. The average weekly trading volume of the company's common
stock during the four calendar weeks preceding the filing of
a notice on form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions
and notice requirements and to the availability of current public
information about the company.
Under Rule 144(k), a person who is not one of the company's
affiliates at any time during the three months preceding a sale, and
who has beneficially owned the shares proposed to be sold for at
least 2
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<PAGE>
years, is entitled to sell shares without complying with the
manner of sale, public information, volume limitation or notice
provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates
hold all of the 7,000,000 shares that may be sold pursuant to Rule
144 after July 24, 2000.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the compensation earned for services
rendered for our most recent fiscal year ended December 31, 1999 by
our chief executive officer and our next four most highly compensated
executive officers. The summary compensation reflects all
compensation awarded to, earned by, or paid to the officers by any
person for all services rendered in all capacities to CrossNet.
Annual Compensation Long Term Compensation
------------------- ----------------------
Other All
Annual Other
Com- Com-
pen- Restricted pen-
sa- Stock Options/* LTIP sa-
Name Title Year Salary Bonus tion Awarded SARs (#)payouts($)tion
---- ----- ---- ------ ----- ------ ------- ------- --------- ----
Bruce President 1999 $18,000 $0 0 0 0 0 0
Elliott
Director
Yogesh Chief 1999 $0 $0 0 0 0 0 0
Parekh Operating
Officer
Director
Howard Secretary 1999 $0 $0 0 0 0 0 0
Thomson Treasurer
Director
Logan Director 1999 $0 $0 0 0 0 0 0
Anderson
Jost Director 1999 $0 $0 0 0 0 0 0
Steinbruchel
Stock Option Grants
We did not grant any stock options to the executive officers named
above during our most recent fiscal year ended December 31,1999. All
options are fully vested and are presently exercisable in full. The
following table sets forth information with respect to stock options
granted to each of the named executive officers since December 31,
1999:
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<PAGE>
Number of Percentage
Securities of Total
Underlying Options Exercise
Options Granted to Price Expiration
Name Granted Employees (per Share) Date
---------------------- ---------- --------- ----------- -----
Bruce Elliott 150,000 20.0% $2.00 01/31/2003
President and Director
Howard Thomson 100,000 13.3% $2.00 01/31/2003
Chief Financial Officer
Secretary and Treasurer
Director
Yogesh Parekh 200,000 26.7% $2.00 01/31/2003
Chief Operating Officer
Director
Logan Anderson 150,000 20.0% $2.00 01/31/2003
Director
Jost Steinbruchel 100,000 13.3% $2.00 01/31/2003
Director
-----------------------------------------------------------------------
The percentage of total options is based on options to purchase
750,000 shares of common stock outstanding.
Exercises of Stock Options
None of the options granted to any of the Named Executive Officers
have been exercised.
Employment Agreements
As of August 8, 2000, we had five full-time employees, including Mr.
Bruce Elliott, our president and a director, Mr. Yogesh Parekh, our
chief operating officer and a director, and twelve part-time
employees, including Mr. Howard Thomson, our secretary, treasurer and
chief financial officer. In addition, Mr. Logan Anderson, one of our
directors, provides his services to us as a consultant on a part-time
basis.
The services of Mr. Bruce Elliott, our president and a member of our
board of directors, are provided pursuant to a consulting agreement
dated September 30, 1999. Mr. Elliott was not paid any additional
compensation to transfer his business plan. The sole consideration
for the transfer was the execution by us of the consulting agreement.
The services provided to us by Mr. Elliott include exercising general
direction and supervision of our business and financial affairs and
managing and supervising the development and marketing of our
business. Mr. Elliott provides his services to us on a full-time
basis, provided that Mr. Elliott is permitted to attend to the
further development and expansion of his World Wide Web Institute
business provided that his activities do not conflict with his duties
to us. We pay Mr. Elliott a consulting fee of $6,000 per month. Mr.
Elliott's consulting agreement is for a
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<PAGE>
three-year term expiring September 30, 2002. We may terminate Mr.
Elliott's consulting agreement at our option by payment to Mr.
Elliott of an amount equal to $36,000.
Mr. Elliott transferred the business plan for our IndiaAt.com
business upon execution of his consulting agreement. The transfer of
the business plan by Mr. Elliott to us is absolute and will not
revert to Mr. Elliott upon termination of the consulting agreement,
other than for termination by us in the event that we decide not to
pursue our IndiaAt.com business.
The services of Mr. Yogesh Parekh, our chief operating officer and a
member of our board of directors, are provided pursuant to a
consulting agreement dated February 1, 2000. The services provided
to us by Mr. Parekh include the management and supervision of the
development and marketing of our IndiaAt.com business and providing
general supervision and management of our day-to-day business
operations. Mr. Parekh provides his services to us on a full-time
basis. We pay Mr. Parekh a consulting fee of $10,000 per month. Mr.
Parekh's consulting agreement is for a two-year term expiring
February 1, 2002. We may terminate this consulting agreement at our
option by payment to Mr. Parekh of an amount equal to $60,000.
The services of Mr. Howard Thomson, our secretary, treasurer, chief
financial officer and a member of our board of directors, are
provided pursuant to an employment agreement dated January 1, 2000.
The services provided to us by Mr. Thomson include ensuring that our
corporate records are properly maintained and supervising and
advising on the conduct of our financial affairs and co-ordinating
our auditing functions. Mr. Thomson is required to devote
approximately 15% of his business time to our business until such
time that our positive working capital equals or exceeds $750,000, at
which time Mr. Thomson will devote approximately 50% of his business
time to our business. We currently pay Mr. Thomson a salary of
$1,000 per month. The salary will increase to $4,000 per month upon
Mr. Thomson being required to devote 50% of his business time to our
business. Mr. Thomson's employment agreement is for a one-year term
expiring January 1, 2001. We may terminate the employment agreement
at our option at any time upon payment to Mr. Thomson of an amount
equal to the greater of $30,000 or an amount equal to six times Mr.
Thomson's salary at the date of termination.
The services of Mr. Logan Anderson, a member of our board of
directors, are provided pursuant to a consulting agreement dated
January 1, 2000. The services provided to us by Mr. Anderson include
advising our management on our business and financial affairs and
advising our management on our overall corporate direction. Mr.
Anderson is required to devote approximately 15% of his business time
to our business until such time as our positive working capital
equals or exceeds $750,000, at which time Mr. Anderson has agreed to
devote approximately 50% of his business time to our business. We
currently pay Mr. Anderson a consulting fee of $1,000 per month.
This consulting fee will increase to $5,000 per month upon Mr.
Anderson being required to devote 50% of his business time to our
business. Mr. Anderson's consulting agreement is for a one-year term
expiring January 1, 2001. We may terminate this consulting agreement
at our option at any time upon payment to Mr. Anderson of an amount
equal to the greater of $30,000 or an amount equal to six times Mr.
Anderson's consulting fee at the date of termination.
We pay to Mr. Jost Steinbruchel, a member of our board of directors,
a fee of $1,000 per month in consideration for Mr. Steinbruchel's
acting as one of our directors. We do not have a consulting
agreement or employment agreement with Mr. Steinbruchel. Any
payments to Mr. Steinbruchel would cease upon Mr. Steinbruchel
ceasing to act as a director.
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Advisors
We have entered into an advisor agreement with Lord Meghnad
Jagdishandra Desai. Lord Desai has agreed to advise and provide
input to us on the development and marketing of our IndiaAt.com
business. Lord Desai will also advise us on the development of sub-
portals for our IndiaAt.com business in the areas of finance,
politics, sociology and other Indian external and internal affairs.
We have agreed to pay to Lord Desai a consulting fee of $2,100 per
month. In addition, we have agreed to grant to Lord Desai options to
purchase 50,000 shares of our common stock at a price of $2.00 per
share.
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FINANCIAL STATEMENTS
Index to Financial Statements:
1. Report of Independent Auditor
2. Audited Financial Statements:
a. Balance Sheet
b. Statement of Operations and Accumulated Deficit
c. Statement of Changes in Stockholders' Equity
d. Statement of Cash Flows
e. Notes to Audited Financial Statements
3. Supplemental Statement:
a. Statement of Operating Expenses
4. Un-audited Financial Statements:
a. Balance Sheet
b. Statement of Operations and Accumulated Deficit
c. Statement of Changes in Stockholders' Equity
d. Statement of Cash Flows
f. Notes to Financial Statements
5. Supplemental Statement:
a. Statement of Operating Expenses
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<PAGE>
CROSSNET VENTURES, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
WITH
INDEPENDENT AUDITOR'S REPORT THEREON
<PAGE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
----
Independent Auditor's Report. . . . . . . . . . . . . . 1
Financial Statements:
Balance Sheet . . . . . . . . . . . . . . . . . . . . 2
Statement of Operations
and Accumulated Deficit . . . . . . . . . . . . . . 3
Statement of Changes in Stockholders' Equity. . . . . 4
Statement of Cash Flows . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . 6-10
Supplemental Statement:
Statement of Operating Expenses . . . . . . . . . . . 12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Crossnet Ventures, Inc.
We have audited the accompanying balance sheet of Crossnet Ventures,
Inc., a development stage company, as of December 31, 1999 and 1998,
and the related statements of operations and accumulated deficit,
changes in stockholders' equity, and statement of cash flows for the
periods then ended. These financial statements are the responsibility
of Crossnet Venture's management. Our responsibility is to express an
opinion on these 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 misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Crossnet
Ventures, Inc. as of December 31, 1999 and 1998, and the results of its
operations, changes in stockholders' equity and cash flows for the
periods then ended, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental statement of
operating expenses is presented for the purposes of additional analysis
and is not a required part of the basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Sarna & Company
Sarna & Company
Westlake Village, California
January 20, 2000
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
DECEMBER 31,
------------
1999 1998
---- ----
Current Assets
Cash $ 637,590 $ 0
---------- ----------
Total Current Assets 637,590 0
Other Assets
Domain Names 2,000 0
Net Property and Equipment 2,000 0
TOTAL ASSETS $ 639,590 $ 0
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Total Current Liabilities $ 2,400 $ 0
Stockholders' Equity
Common Stock, $0.001 par value
100,000,000 shares authorized,
10,000,000 shares issued 10,000 0
Additional Paid In Capital 687,000 0
Accumulated deficit <59,810> 0
---------- ----------
Total Stockholders' Equity 637,190 0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 639,590 $ 0
See Notes to Financial Statements
2
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
Year Inception
Ended 11/10/98 to
12/31/99 12/31/98
---------- -----------
Revenues $ 0 $ 0
Operating Expenses <59,810> 0
--------- -----------
Loss Before Provision for <59,810> 0
Income Taxes
Provision for Income Taxes <0> 0
--------- -----------
Net Loss <59,810> 0
Deficit, December 31, 1998 <0> 0
Accumulated Deficit, December 31, 1999 $ <59,810> $ 0
========= ===========
Net Loss per Share $ <0.09> $ 0
========= ===========
Weighted Average Shares Outstanding 5,621,951 0
========= ===========
See Notes to Financial Statements
3
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Total
Common Stock Additional Accumulated Stock-
Dollar Paid in Deficit holders'
Shares Amount Capital Equity
------ ------ ---------- ----------- --------
Balances
December 31, 1998 ---- $ ---- $ ---- $ ---- $ ----
Common Stock Issued
First Offering
July 16,1999
$.001 per share 7,000,000 7,000 ---- ---- 7,000
Common Stock Issued
Second Offering
November 17,1999
$.02 per share 2,000,000 2,000 38,000 ---- 40,000
Common Stock Issued
Third Offering
December 31, 1999
$.65 per share 1,000,000 1,000 649,000 ---- 650,000
Net Loss
Period Ended
December 31, 1999 ---- ---- ---- (59,810) (59,810)
------------------------------------------------------
Balances
December 31, 1999 10,000,000 $ 10,000 $ 687,000 $ (59,810) $ 637,190
=======================================================
See Notes to Financial Statements
4
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Year Inception
Ended 11/10/98 to
12/31/99 12/31/98
-------- --------
Cash Flows from Operating Activities:
Net Loss $ <59,810> $ 0
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Increase <Decrease> in:
Accounts Payable and
Accrued Expenses 2,400 0
--------- --------
Net Cash Used by Operating Activities <57,410> 0
Cash Flows from Investing Activities:
Domain Names $ < 2,000> $ 0
--------- ---------
Net Cash Used by Investing Activities < 2,000> 0
Cash Flows from Financing Activities:
Net Proceeds from the Issuance of
Common Stock 697,000 0
Net Cash Provided by Financing Activities 697,000 0
--------- ---------
Net Increase in Cash 637,590 0
Cash at Beginning of Period 0 0
--------- --------
Cash at End of Period $ 637,590 $ 0
========= ========
Supplemental Disclosure: None
See Notes to Financial Statements
5
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
General
-------
Crossnet Ventures, Inc. (the "Company") was originally incorporated on
November 10, 1998 in the state of Nevada.
The Company is engaged in the acquisition and development of a
proprietary commercial web site located at "www.indiaat.com". Through
its website, the Company plans to be the leading portal for access to
all information regarding India and it's people. Crossnet Ventures,
Inc. plans to earn revenues from advertising generated on this site,
electronic commerce transactions, and user subscription fees.
Basis of Presentation
---------------------
The Company reports revenue and expenses using the accrual method of
accounting for financial and tax reporting purposes.
Use of Estimates
----------------
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses.
Functional Currency
-------------------
Accounts denominated in foreign currencies have been remeasured into
the functional currency in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation",
using the U.S. dollar as the functional currency.
Foreign currency translation gains or losses are included in
net income.
Development Stage Company
-------------------------
Crossnet Ventures, Inc. meets the guidelines of SFAS No. 7 and as such
is classified as a development stage company.
6
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
Pro Forma Compensation Expense
------------------------------
Crossnet Ventures, Inc. accounts for costs of stock-based compensation
in accordance with APB No. 25, "Accounting for Stock Based
Compensation" instead of the fair value based method in SFAS No. 123.
No stock options have been issued by Crossnet Ventures, Inc.
Accordingly, no pro forma compensation expense is reported in these
financial statements.
Depreciation, Amortization and Capitalization
---------------------------------------------
The Company records depreciation and amortization when appropriate
using both straight-line and declining balance methods over the
estimated useful life of the assets (five to seven years).
Expenditures for maintenance and repairs are charged to expense as
incurred. Additions, major renewals and replacements that increase the
property's useful life are capitalized. Property sold or retired,
together with the related accumulated depreciation, is removed from the
appropriate accounts and the resultant gain or loss is included in net
income. Depreciation and amortization were not recorded at December
31,1999 as the Company's assets were not at the point of being ready
for their intended use.
Income Taxes
------------
The Company accounts for its income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Under Statement 109, a liability method is used whereby
deferred tax assets and liabilities are determined based on temporary
differences between basis used for financial reporting and income tax
reporting purposes. Income taxes are provided based on tax rates in
effect at the time such temporary differences are expected to reverse.
A valuation allowance is provided for certain deferred tax assets if it
is more likely than not, that the Company will not realize the tax
assets through future operations.
7
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
Fair Value of Financial Instruments
-----------------------------------
Financial accounting Standards Statement No. 107, "Disclosures About
Fair Value of Financial Instruments", requires the Company to disclose,
when reasonably attainable, the fair market values of its assets and
liabilities which are deemed to be financial instruments. The
Company's financial instruments consist primarily of cash and certain
investments.
Per Share Information
---------------------
The Company computes per share information by dividing the net loss for
the period presented by the weighted average number of shares
outstanding during such period.
Year 2000 Compliance
--------------------
The Year 2000 issue is the result of computer programs having been
written using two digits (rather than four) to define years. Computers
or other equipment with date-sensitive software may recognize "00" as
1900 rather than 2000. This could result in system failures or
miscalculations. If the Company or significant customers, suppliers or
other third parties fail to correct Year 2000 issues, the Company's
ability to operate could be affected.
The following disclosure is pursuant to the Year 2000 Readiness and
Disclosure Act.
Crossnet Ventures' Year 2000 program is designed to minimize the
possibility of Year 2000 interruptions. Any such interruption may have
a material adverse impact on the Company's future operating results.
In 1999, the Company established procedures to identify and assess
systems and processes vulnerable to Year 2000 problems. The Company
also developed procedures to monitor levels of compliance within its
stated goals of compliance.
8
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
In each area of vulnerability, various testing and readiness
methodologies are being used to identify and correct suspect systems,
processes or supplier interfaces. The Company has met its Year 2000
compliance goals prior to December 31, 1999.
Recently Issued Accounting Pronouncements
-----------------------------------------
Recently issued accounting pronouncements will have no significant
impact on the Company and its reporting methods.
NOTE 2 - PROVISION FOR INCOME TAXES
-----------------------------------
The provision for income taxes for the period ended December 31, 1999
represents the minimum state income tax expense of the Company, which
is not considered significant.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
--------------------------------------
Management Consulting Agreements
--------------------------------
The Company currently has a management consulting agreement with an
individual to perform the duties of President and Chief Executive
Officer. The term of the agreement is for 3 years at $6,000 per month.
9
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Litigation
----------
The Company is not presently involved in any litigation.
NOTE 4 - SUBSEQUENT EVENT
-------------------------
On January 1, 2000, the Company entered into an employment agreement
with a Director of the Company to perform the duties of Secretary,
Treasurer, and Chief Financial Officer. The term of this agreement is
1 year, at a salary of $1,000 per month, until such occasion the amount
of time devoted to the company increases to 50% of the employee's
business time, upon which the salary will increase to $4,000 per month.
On January 1, 2000, the Company entered into an additional consulting
agreement with a Director of the Company to advise management of the
Company's business and financial affairs. The term of this agreement
is 1 year, at a consulting fee of $1,000 per month, until such occasion
the amount of time devoted to the company increases to 50% of the
consultant's business time, upon which the consulting fee will increase
to $5,000 per month.
10
<PAGE>
SUPPLEMENTAL STATEMENT
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATING EXPENSES
Year Inception
Ended 11/10/98 to
12/31/99 12/31/98
-------- --------
Operating Expenses
Accounting $ 2,485 $ 0
Bank Charges 124 0
Legal Fees 6,155 0
Licensing Fees 10,000 0
Office Supplies 82 0
Project Management 18,000 0
Start-up costs expensed 10,000 0
Market Research 12,964 0
-------- --------
Total Operating Expenses $ 59,810 $ 0
======== ========
See Notes to Financial Statement
12
<PAGE>
CROSSNET VENTURES, INC.
FINANCIAL STATEMENTS
JUNE 30, 2000
<PAGE>
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
----
Accountant's Review Report. . . . . . . . . . . . . . . 1
Financial Statements:
Balance Sheet . . . . . . . . . . . . . . . . . . . . 2
Statement of Operations
and Accumulated Deficit . . . . . . . . . . . . . . 3
Statement of Changes in Stockholders' Equity. . . . . 4
Statement of Cash Flows . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . 6-10
Supplemental Statement:
Statement of Operating Expenses . . . . . . . . . . . 12
<PAGE>
ACCOUNTANTS' REVIEW REPORT
--------------------------
To the Board of Directors
Crossnet Ventures, Inc.
We have reviewed the accompanying balance sheet of Crossnet Ventures,
Inc., a development stage company, as of June 30, 2000 and the related
statements of operations and accumulated deficit, changes in
stockholders' equity, and statement of cash flows for the six months
then ended, in accordance with standards established by the American
Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of
Crossnet Ventures, Inc.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially
less in scope than an examination in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
Our review was made for the purpose of expressing limited assurance
that there are no material modifications that should be made to the
financial statements in order for them to be in conformity with
generally accepted accounting principles. The supplemental statement
of operating expenses is presented for the purposes of additional
analysis and is not a required part of the basic financial statements.
Such information has been subjected to the inquiry and analytical
procedures applied in the review of the basic financial statements, and
we are not aware of any material modifications that should be made
thereto.
/s/ Sarna & Company
Sarna & Company
Westlake Village, California
September 5, 2000
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
JUNE 30
-------
2000 1999
---- ----
Current Assets
Cash $ 177,043 $ 0
Notes Receivable 250,000
Prepaid Expenses 3,192 0
---------- ----------
Total Current Assets 430,235 0
Property and Equipment
Computer Equipment 43,659 0
Office Furniture 3,659
Less Accumulated Depreciation <3,366> 0
---------- ----------
Net Property & Equipment 43,952 0
Other Assets
Domain Names 3,190 0
---------- ----------
Net Property and Equipment 3,190 0
TOTAL ASSETS $ 477,377 $ 0
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 12,764 $ 0
---------- ----------
Total Current Liabilities 12,764 0
Stockholders' Equity
Common Stock, $0.001 par value
100,000,000 shares authorized,
10,000,000 shares issued 10,000 0
Additional Paid In Capital 687,000 0
Accumulated deficit <232,387> 0
---------- ----------
Total Stockholders' Equity 464,613 0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 477,377 $ 0
========== ==========
See Notes to Financial Statements
2
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
SIX MONTHS ENDED
JUNE 30
2000 1999
---- ----
Revenues $ 0 $ 0
Operating Expenses <179,736> 0
------------ ------------
Loss Before Other Income <179,736> 0
Other Income - Interest 7,159 0
------------ ------------
Loss Before Provision for <172,577> 0
Income Taxes
Provision for Income Taxes <0> 0
------------ ------------
Net Loss <172,577> 0
Accumulated Deficit, Beginning of Period <59,810> 0
------------ ------------
Accumulated Deficit, End of Period $ <232,387> $ 0
============ ============
Net Loss per Share $ <0.02> $ 0
============ ============
Weighted Average Shares Outstanding 10,000,000 0
============ ============
See Notes to Financial Statements
3
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Additional Accumulated Total
Dollar Paid in Deficit Stockholders'
Shares Amount Capital Equity
------ ------ ------- ------- ------
Balances
December 31, 1998 ---- $ ---- $ ---- $ ---- $ ----
Common Stock Issued
First Offering
July 16,1999
$.001 per share 7,000,000 7,000 ---- ---- 7,000
Common Stock Issued
Second Offering
November 17,1999
$.02 per share 2,000,000 2,000 38,000 ---- 40,000
Common Stock Issued
Third Offering
December 31, 1999
$.65 per share 1,000,000 1,000 649,000 ---- 650,000
Net Loss
Period Ended
December 31, 1999 ---- ---- ---- (59,810) (59,810)
--------------------------------------------------------
Balances
December 31, 1999 10,000,000 10,000 687,000 (59,810) 637,190
--------------------------------------------------------
Net Loss
Period Ended
June 30, 2000 ---- ---- ---- (172,577) (172,577)
--------------------------------------------------------
Balances
June 30, 2000 10,000,000 $10,000 $ 687,000 $ (232,387) $ 464,613
========================================================
See Notes to Financial Statements
4
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30
2000 1999
---- ----
Cash Flows from Operating Activities:
Net Loss $ <172,577> $ 0
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation 3,366 0
<Increase> Decrease in:
Notes Receivable <250,000> 0
Prepaid Expenses <3,192> 0
Increase <Decrease> in:
Accounts Payable and
Accrued Expenses 10,364 0
----------- -----------
Net Cash Used by Operating
Activities <412,039> 0
Cash Flows from Investing Activities:
Acquisition of Computer Equipment $ <43,659> 0
Acquisition of Office Furniture <3,659> 0
Acquisition of Domain Names <1,190> $ 0
----------- -----------
Net Cash Used by Investing Activities <48,508> 0
Net Decrease in Cash <460,547> 0
Cash at Beginning of Period 637,590 0
----------- -----------
Cash at End of Period $ 177,043 $ 0
=========== ===========
Supplemental Disclosure: None
See Notes to Financial Statements
5
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
General
-------
Crossnet Ventures, Inc. (the "Company") was originally incorporated on
November 10, 1998 in the state of Nevada.
The Company is engaged in the acquisition and development of a
proprietary commercial web site located at "www.indiaat.com". Through
its website, the Company plans to be the leading portal for access to
all information regarding India and it's people. Crossnet Ventures,
Inc. plans to earn revenues from advertising generated on this site,
electronic commerce transactions, and user subscription fees.
Basis of Presentation
---------------------
The Company reports revenue and expenses using the accrual method of
accounting for financial and tax reporting purposes.
Use of Estimates
----------------
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses.
Functional Currency
-------------------
Accounts denominated in foreign currencies have been remeasured into
the functional currency in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation",
using the U.S. dollar as the functional currency.
Foreign currency translation gains or losses are included in net
income.
Development Stage Company
-------------------------
Crossnet Ventures, Inc. meets the guidelines of SFAS No. 7 and as such
is classified as a development stage company.
6
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
Pro Forma Compensation Expense
------------------------------
Crossnet Ventures, Inc. accounts for costs of stock-based compensation
in accordance with APB No. 25, "Accounting for Stock Based
Compensation" instead of the fair value based method in SFAS No. 123.
No stock options have been issued by Crossnet Ventures, Inc.
Accordingly, no pro forma compensation expense is reported in these
financial statements.
Depreciation, Amortization and Capitalization
---------------------------------------------
The Company records depreciation and amortization when appropriate
using both straight-line and declining balance methods over the
estimated useful life of the assets (five to seven years).
Expenditures for maintenance and repairs are charged to expense as
incurred. Additions, major renewals and replacements that increase the
property's useful life are capitalized. Property sold or retired,
together with the related accumulated depreciation, is removed from the
appropriate accounts and the resultant gain or loss is included in net
income. Depreciation and amortization were not recorded at March 31,
2000 as the Company's assets were not at the point of being ready for
their intended use.
Impairment of Long-Lived Assets
-------------------------------
The Company evaluates the recoverability of long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be disposed of". SFAS No. 121 requires recognition of
impairment of long-lived assets in the event the net book value of such
assets exceeds the future non-discounted cash flows attributable to
such assets.
7
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
---------------------------------------------------------------
Income Taxes
------------
The Company accounts for its income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Under Statement 109, a liability method is used whereby
deferred tax assets and liabilities are determined based on temporary
differences between basis used for financial reporting and income tax
reporting purposes. Income taxes are provided based on tax rates in
effect at the time such temporary differences are expected to reverse.
A valuation allowance is provided for certain deferred tax assets if it
is more likely than not, that the Company will not realize the tax
assets through future operations.
Fair Value of Financial Instruments
-----------------------------------
Financial accounting Standards Statement No. 107, "Disclosures About
Fair Value of Financial Instruments", requires the Company to disclose,
when reasonably attainable, the fair market values of its assets and
liabilities which are deemed to be financial instruments. The
Company's financial instruments consist primarily of cash and certain
investments.
Earnings Per Share Information
------------------------------
The Company computes basic earnings per share information by dividing
the net loss for the period presented by the weighted average number of
shares outstanding during such period. Common share equivalents are
not included in this calculation if the effect of their inclusion is
anti-dilutive.
Advertising Expense
-------------------
The company recognizes advertising expenses when incurred in accordance
with SOP 93-7 "Reporting on Advertising Costs." As such, the Company
expenses the cost of producing advertisements at the time the
production occurs, and expenses the costs of communicating advertising
in the period in which the advertising space or airtime is used.
8
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Comprehensive Income
--------------------
Effective at inception, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for reporting comprehensive income and its components in
financial statements. Comprehensive income, as defined, includes all
changes in equity (net assets) during a period from non-owner sources.
At June 30, 2000 and 1999, the Company did not have transactions that
were required to be reported in comprehensive income.
Recently Issued Accounting Pronouncements
-----------------------------------------
Recently issued accounting pronouncements will have no significant
impact on the Company and its reporting methods.
Capitalized Software
--------------------
Effective at inception, the Company has adopted the provisions of SOP
No. 98-1, "Software for Internal Use", issued by the American Institute
of Certified Public Accountants. Accordingly the Company has
capitalized computer software costs incurred during the application
development stage in accordance with this standard. These capitalized
costs consist primarily of direct materials, services and payroll
related costs associated with coding, installation to hardware and
testing of the Company's software. Costs incurred subsequent to the
Company's application development stage to enhance, manage, monitor and
operate the Company's website are expensed as incurred.
NOTE 2 - PROVISION FOR INCOME TAXES
-----------------------------------
The provision for income taxes for the period ended June 30, 2000
represents the minimum state income tax expense of the Company, which
is not considered significant.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
--------------------------------------
Management Consulting Agreements
--------------------------------
The Company currently has a management consulting agreement with an
individual to perform the duties of President and Chief Executive
Officer. The term of the agreement is for 3 years at $6,000 per month.
9
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 - COMMITMENTS AND CONTINGENCIES - CONTINUED
--------------------------------------------------
On January 1, 2000, the Company entered into an employment agreement
with a Director of the Company to perform the duties of Secretary,
Treasurer, and Chief Financial Officer. The term of this agreement is
1 year, at a salary of $1,000 per month, until such occasion the amount
of time devoted to the company increases to 50% of the employee's
business time, upon which the salary will increase to $4,000 per month.
On January 1, 2000, the Company entered into an additional consulting
agreement with a Director of the Company to advise management of the
Company's business and financial affairs. The term of this agreement
is 1 year, at a consulting fee of $1,000 per month, until such occasion
the amount of time devoted to the company increases to 50% of the
consultant's business time, upon which the consulting fee will increase
to $5,000 per month.
Litigation
----------
The Company is not presently involved in any litigation.
NOTE 4 - SUBSEQUENT EVENT
-------------------------
On September 7, 2000, the Company made a public offering to sell
2,500,000 of its common stock at a price of $1.50 per share. This is
the first public offering of shares and will proceed for a period of 60
days. The board of directors, however, has reserved the right to
extend this offering for an additional 60-day period upon a majority
vote.
10
<PAGE>
SUPPLEMENTAL STATEMENT
<PAGE>
CROSSNET VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATING EXPENSES
SIX MONTHS ENDED
JUNE 30
2000 1999
---- ----
Operating Expenses
Accounting $ 3,530 $ 0
Bank Charges 843 0
Consulting 8,739 0
Depreciation 3,366 0
Director Fees 12,000 0
Legal Fees 17,288 0
Marketing 4,128 0
Office Expense 112 0
Project Management 54,000 0
Promotion 200 0
Rent 7,805 0
Salaries 610 0
Telephone 2,600 0
Travel 60,856 0
Web Site & Design 3,659 0
-------- ---------
Total Operating Expenses $179,736 $ 0
======== =========
See Notes to Financial Statement
12
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no changes in or disagreements with our accountants.
AVAILABLE INFORMATION
We have filed a registration statement on form SB-2 under the
Securities Act of 1933 with the Securities and Exchange Commission
with respect to the shares of our common stock offered through this
prospectus. This prospectus is filed as a part of that registration
statement and does not contain all of the information contained in
the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of our
contracts, agreements or documents. We refer you to our registration
statement and each exhibit attached to it for a more complete
description of matters involving our company, and the statements we
have made in this prospectus are qualified in their entirety by
reference to these additional materials. You may inspect the
registration statement and exhibits and schedules filed with the
Securities and Exchange Commission at the Commission's principle
office in Washington, D.C. Copies of all or any part of the
registration statement may be obtained from the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York,
NY 10048 and 500 West Madison Street, Suite 1400, Chicago, IL 60661.
Please call the Commission at 1-800-SEC-0330 for further information
on the operation of the public reference rooms. The Securities and
Exchange Commission also maintains a web site at http://www.sec.gov
that contains reports, proxy statements and information regarding
registrants that file electronically with the Commission. Our
registration statement and the referenced exhibits can also be found
on this site.
38
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada
Revised Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its
shareholders for monetary liabilities applies automatically unless it
is specifically limited by a company's Articles of Incorporation.
This is not the case with our Articles of Incorporation. Excepted
from that immunity are: (a) a willful failure to deal fairly with the
company or its shareholders in connection with a matter in which the
director has a material conflict of interest; (b) a violation of
criminal law unless the director had reasonable cause to believe that
his or her conduct was lawful or no reasonable cause to believe that
his or her conduct was unlawful; (c) a transaction from which the
director derived an improper personal profit; and (d) willful
misconduct.
Our bylaws provide that we will indemnify our directors and officers
to the fullest extent not prohibited by Nevada law; provided,
however, that we may modify the extent of such indemnification by
individual contracts with our directors and officers; and, provided,
further, that we shall not be required to indemnify any director or
officer in connection with any proceeding, or part thereof, initiated
by such person unless such indemnification: (a) is expressly required
to be made by law, (b) the proceeding was authorized by our Board of
Directors, (c) is provided by us, in our sole discretion, pursuant to
the powers vested us under Nevada law or (d) is required to be made
pursuant to the bylaws.
Our bylaws provide that we will advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or
was a director or officer, of our company, or is or was serving at
the request of our company as a director or executive officer of
another company, partnership, joint venture, trust or other
enterprise, prior to the final disposition of the proceeding,
promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt
of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not
entitled to be indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer
of our company in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, if a determination is
reasonably and promptly made (a) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
parties to the proceeding, or (b) if such quorum is not obtainable,
or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the
facts known to the decision-making party at the time such
determination is made demonstrate clearly and convincingly that such
person acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of CrossNet.
An exception to this prohibition against advances applies when the
officer is or was a director of our company.
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ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 1,002
Federal Taxes $ NIL
State Taxes and Fees $ NIL
Transfer Agent Fees $ 500
Accounting fees and expenses $ 2,500
Legal fees and expenses $30,000
Blue Sky fees and expenses $ 5,000
Miscellaneous $ 1,500
----------
Total $40,002
==========
--------------------------------------------------------------------------
All amounts are estimates other than the Commission's registration fee.
We will pay all expenses of the offering listed above.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
We issued 7,000,000 common shares of our common stock on July 24,
1999 at a price of $0.001 per share to Mr. Logan Anderson, Mr. Jost
Steinbruchel and Mr. Elliott. Mr. Anderson, Mr. Steinbruchel and Mr.
Elliott are each directors of our company. The total proceeds of this
sale were $7,000. Mr. Elliott is our president and chief executive
officer. These shares were issued pursuant to Section 4(2) of the
Securities Act of 1933. The 7,000,000 shares of common stock are
"restricted" shares, as defined in the Securities Act. Mr. Elliott
was issued 3,000,000 shares and Mr. Steinbruchel was issued 200,000.
Mr. Anderson was issued 3,800,000 shares and subsequently transferred
2,000,000 shares to Mr. Yogesh Parekh, a director and our chief
operating officer, at a price of $0.001 per share.
We completed an offering of 2,000,000 shares of our common stock to
nine purchasers at a price of $0.02 per share on November 15, 1999.
We completed the offering pursuant to Regulation S of the Securities
Act. Each purchaser represented to us that he was a non-U.S. person
as defined in the regulation. We did not engage in a distribution of
this offering in the United States. Each purchaser represented his
intention to acquire the securities for investment only and not with
a view toward their distribution. Appropriate legends were affixed
to the stock certificate issued to each purchaser in accordance with
Regulation S. Each investor was given adequate access to sufficient
information about us to make an informed investment decision. None
of the securities were sold through an underwriter and accordingly,
there were no underwriting discounts or commissions involved. No
registration rights were granted to any of the purchasers.
The Registrant completed the issue of 1,000,000 common shares to a
total of nine purchasers pursuant to Regulation S of the Securities
Act on December 31, 1999. Each purchaser represented to us that the
purchaser was a non-U.S. person as defined in the regulation. We did
not engage in distribution of this offering in the United States.
Each purchaser represented their intention to acquire the securities
for investment only and not with a view to their distribution.
Appropriate legends were affixed to the stock certificates issued in
accordance with Regulation S. All purchasers were given adequate
access to
40
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sufficient information about us to make an informed
investment decision. None of the securities were sold through an
underwriter and accordingly, there were no underwriting discounts or
commissions involved. No registration rights were granted to any of
the purchasers.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------- --------------------
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Share Certificate
4.2 Form of Subscription Agreement
5.1 Opinion of Cane & Company, LLC, with consent to use
10.1 Consulting Contract between the Company and Mr. Bruce
Elliott
10.2 Consulting Contract between the Company and Mr. Logan
Anderson
10.3 Consulting Contract between the Company and Mr. Howard
Thomson
10.4 Consulting Contract between the Company and Mr. Yogesh
Parekh
10.5 Consulting Contract between the Company and Lord
Meghnad Jagdishandra Desai
23.1 Consent of Sarna & Company for use of Audited Financial
Statements
27.1 Financial Data Schedule
ITEM 28. UNDERTAKINGS.
None.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form SB-2 and
authorized this registration statement to be signed on its behalf by
the undersigned, in the City of Geneva, Country of Switzerland on
September 7, 2000.
CROSSNET VENTURES, INC.
/s/ Bruce Elliott
By: __________________________
Bruce Elliott, President
POWER OF ATTORNEY
ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Bruce Elliott, his true and lawful
attorney-in-fact and agent, with full power of substitution and re-
substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all pre- or post-effective amendments
to this Registration statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any one of them, or
their or his substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
the following persons in the capacities and on the dates stated
signed this registration statement.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Bruce Elliott President and Chief Executive September 7, 2000
------------------ Officer (Principal Executive
Bruce Elliott Officer) and Director
/s/ Howard Thomson Chief Financial Officer (Principal September 7, 2000
------------------ Financial/Accounting Officer) and
Howard Thomson Director
/s/ Yogesh Parekh Chief Operating Officer and September 7, 2000
------------------ Director
Yogesh Parekh
/s/ Logan Anderson September 7, 2000
------------------- Director
Logan Anderson
/s/ Jost Steinbruchel September 7, 2000
------------------- Director
Jost Steinbruchel
