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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No.) 1
ISHOPNOMARKUP.COM, INC.
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(Exact name of small business issuer in its charter)
Nevada 7375 06-1556852
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(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
683 Middle Neck Road, Great Neck, NY 11021 (516) 487-5444
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(Address of principal place of business or intended principal place of business)
Yousef Neissani, 683Middle Neck Road,
Great Neck Road, NY 11021 (516) 487-5444
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(Name, Address and telephone number of agent for service)
COPIES TO:
Miles Garnett, Esq., 66 Wayne Avenue, Atlantic Beach, NY 11509 (516)371-4598
Approximate date of proposed sale to the public: AS SOON AS PRACTICABLE AFTER
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THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If this form is filed to register additional securities for an offering
Pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(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. [ ]
Page 1
<PAGE>
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.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock 5,000,000 $10.00 $50,000,000.00 $13,200.00
------------ ---------- ------ -------------- ----------
Title of each Share amount Proposed maximum Proposed maximum Amount of
class of securities to be offering price aggregate offering registration fee.
to be registered registered per unit price
</TABLE>
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (~23O.457
of thin chapter) relied upon, if' the basin of the calculation in not
otherwise evident from the information presented in the table. If the filing
fee is calculated pursuant to Rule 457(o) under the Securities Act, only the
title of the clans of securities to be registered, the proposed maximum
aggregate offering price for that class of securities and the amount of
registration fee need to appear in the Calculation of Registration Fee table.
Any difference between the dollar amount of securities registered for such
offerings and the dollar amount of securities sold may be carried forward on a
future registration statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends thin registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
Page 2
<PAGE>
PROSPECTUS
ISHOPNOMARKUP. COM, INC.
5,000,000 shares of Common Stock
This is our initial public offering of common stock. The initial public
offering price is $10.00 per share. No public market currently exists for our
common stock. We are selling 5,000,000 shares of common stock which have $.001
par value per share. This represents 4.3% of the total outstanding shares
based on the maximum amount of the offering. We are a Nevada corporation.
We will sell the shares ourselves. We do not plan to use underwriters or pay
any commissions. We will be selling our shares in a direct participation
offering and no one has agreed to buy any of our shares. We are offering a
minimum of 25,000 shares at the offering price of $10.00 per share. The total
minimum offering proceeds will be $250,000. The minimum offering proceeds will
be held in escrow until we reach the minimum offering. If we reach the minimum
offering, all escrowed proceeds will be released and used for the purposes
described later in this prospectus. If we do not reach the minimum offering,
we will return all proceeds to the subscribers along with the pro-rata
interest earned on their funds. The offering will remain open until June 30,
2001, unless we decide to cease selling efforts prior to that date.
The securities offered hereby are highly speculative and involve a high degree
of risk. See the caption "Risk Factors" commencing on page 8.
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
--------------------
The date of this Prospectus is , 2000
--------------------
Page 3
<PAGE>
TABLE OF CONTENTS
Summary 5
Our Company 5
Management's Discussion and Analysis
of Financial Condition and Plan of Operations 7
Risk Factors 8
We have experienced losses since our inception
and expect such losses to continue for the foreseeable future 8
Our business is subject to seasonal economic conditions 9
Our quarterly revenues and operating results may fluctuate
Significantly 9
We will need additional capital in the near future
and such capital may be unavailable or too costly 9
Control of the corporation will remain in the hands
of present management 10
A failure to service customers could have a drastic
effect on our business 10
Use of Proceeds 10
Capitalization 14
Dilution 15
Business 17
Principal Shareholders 19
Management 21
Certain Transactions 26
Description of Securities 27
Shares Eligible for Future Sale 29
Available Information 30
Dividend Policy 31
Stock Transfer Agent 31
Experts 31
Legal Matters 31
Index to Financial Statements F-1
Page 4
<PAGE>
Summary
Our Company
iShopNoMarkup.com, Inc. is a Nevada corporation formed on August 20, 1999 for
the purpose of developing a shopping mall on the internet. We expect to offer
products on the internet by providing goods to be shipped directly from the
supplier.
We have an equity interest in four other companies. Some or all of the
officers and directors of iShopNoMarkup.com, Inc., referred to hereafter as
"iShopNoMarkup.com", are also officers, directors and shareholders of the
following companies. ClLine.com, Inc., a Nevada corporation, was organized on
December 10, 1999. It was formed by insiders and affiliates of
iShopNoMarkup.com. It is an online business to business and business to
consumer website specializing in offering products and services related to the
construction industry. As of June 30, 2000, ClLine.com, Inc. was a 49% owned
subsidiary of iShopNoMarkup.com. Subsequently, much of the stock owned by
iShopNoMarkup.com was distributed pro rata to all our stockholders.
Accordingly, iShopNoMarkup.com's percentage equity interest in ClLine.com,
Inc. has been reduced to 5%. ClLine.com, Inc. is no1longer considered a
subsidiary of iShopNoMarkup.com. iShopNoMarkup.com has an equity interest of
1,029,000 shares in ClLine.com, Inc. ClLine.com, Inc. is carried on our books
at a value of $38,000. E-Z Procurement.com, Inc. is a startup business to
business internet company specializing in the purchasing of industrial and
commercial materials for it's clients. It uses an on-line auction in which
prospective suppliers compete with each other to make the lowest bid. E-Z
Procurement.com, Inc. was organized on June 8, 2000 by insiders and affiliates
of iSbopNoMarkup.com. iShopNoMarkup.com has a 10% equity interest in E-Z
Procurement.com, Inc. This represents a value on iShopNoMarkup.com's books of
$2,729. iTechlnternet.com, Inc. is a startup commerce and website design
company that was organized on January 21, 2000 by insiders and affiliates of
iShopNoMarkup.com. iShopNoMarkup.com has an equity interest of 2,000,000
shares in iTechlnternet.com, Inc. This represents an equity interest of 16% in
iTechlnternet.com, Inc. We carry this equity on our books at a value of
$2,000. JewelryEngine.com, Inc. (dlb/a IAndOnlyDiamond.com) is a startup
retail e-commerce company that is intended to sell diamonds and jewelry on the
internet. JewelryEngine.com, Inc. was formed on January 21, 2000 by insiders
and affiliates of iShopNoMarkup.com. iShopNoMarkup.com maintains a 14% equity
interest in JewelryEngine.com, Inc. We own by 500,000 of its shares, which are
carried on our books at a value of $500. ClLine.com, mc, E-Z Procurement.com,
Inc. and JewelryEngine.com, Inc. have had no operating revenue since their
inception. Because iTechlnternet.com, Inc. has provided website design and
maintenance services to iShopNoMarkup.com and the other two companies,
iTechlnternet.com, Inc. has had operating revenue that it received in exchange
for such services.
Company Total shares Total shares Owned by Percentage
Outstanding iShopNoMarkup.com Ownership
ClLine.com 21,000,000 * 1,029,000 5%
E-Z Pro.com 5,000,000 500,000 10%
iTechinternet.com 12,200,000 2,000,000 16%
JewelryEngine.Com 3,700,000 500,000 14%
*Prior to current private placement
Page 5
<PAGE>
We maintain our principal office at 683 Middle Neck Road, Great Neck, NY
11021, Tel. (516) 487-5444.
The Offering
Common Stock offered
for sale hereby Up to a maximum of 5,000,000 shares by us.
Offering Price $10.00 per share offered to the public.
The shares are being sold on a "best
efforts" basis.
Terms of the Offering There is a minimum offering of 25,000
shares at $10.00 per share resulting in proceeds
of $250,000. Offering proceeds will be held in
escrow until subscriptions reach the minimum
offering amount. If we reach the minimum
offering amount, all escrowed proceeds will be
released and used for the purposes described
under the caption "Use of Proceeds." If we do
not reach the minimum offering amount, we will
return all proceeds to the subscribers along
with the pro-rata interest earned on their
funds. The offering will remain open until June
30, 2001, unless we decide to terminate the
selling efforts prior to this date. The minimum
subscription is 250 shares.
Common Preferred
Authorized and Stock Stock
-------------- ------ ---------
Outstanding Authorized: 200,000,000 20,000,000
----------- Outstanding
Shares of Prior Offering 111,832,544 none
--------- After Offering* 116,832,544 none
Stock
------
*Assuming the maximum amount of the offering has been subscribed.
Unless otherwise indicated, the information in this prospectus, irrespective
of the date referenced, assumes that there is no exercise of outstanding
options or warrants to purchase additional shares.
Plan of Distribution This is a direct participation with a minimum
offering requirement, and with no commitment by
anyone to purchase any shares. The shares will
be offered and sold on a "best efforts" basis by
our principal executive officers and directors,
although we may retain the services of one or
more NASD registered broker/dealers as selling
agent(s) to effect offers and sales on our
behalf. The broker/dealers will receive a
commission on their sales. None have been
retained as of this date
Page 6
<PAGE>
Use of Proceeds Assuming that the entire offering will be sold,
then up to the first $73,000 that we raise will
be used to pay the expenses of the offering. The
priority for funds raised in excess of that
amount will be applied in the following order
(i) marketing; (ii) personnel; (iii) website
technology; (iv) working capital; and (v)
expansion.
Management's Discussion and Analysis of Financial Condition
and Plan of Operations
The following discussion should be read in conjunction with our financial
statements.
General
We are a development stage company with a limited operating history. We were
incorporated in August 20, 1999 and have conducted limited business operations
as we have had limited cash and assets. On Dec 10, 1999 we acquired 10,290,000
shares or 49% interest in CILine.eom, Inc. by issuing 2,000,000 shares of its
common stock. Subsequently much of the stock owned by iShopNoMarkUp.com, Inc.
has been distributed to all of its stockholders. CILine.com, Inc is no longer
a subsidiary. To date, we have concentrated on raising the necessary capital
in order to develop our business strategy. As of September 30, 2000, we
generated $5,000 in revenues in an individual business proposition. However,
this was not based on transaction fees which we represent to be our prime
method of generating revenue from our e-commerce business. Our fiscal year is
March 31. The financial information contained in this prospectus is for the
period from August 20, 1999 (the inception) to Mar4h 31, 2000 audited and from
April 1, 2000 to September 30, 2000 unaudited.
We have a limited operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stages of development. This is particularly true for companies in new
and rapidly evolving markets such as online shopping and internet industries.
From our inception through the present time we have utilized funds obtained
through private placements totaling approximately $2.3 million. Accordingly,
we have recorded $5,000 revenues and have incurred net losses from operations
totaling approximately $4.3 million from inception through September 30, 2000.
The Company will not carry inventory and accordingly, will not have
conventional cost of sale.
Selling, general and administrative expense was $4.2 million form Aug. 20th,
to Sept. 30, 2000. This includes $2.5 million stock and stock option
compensation, which we awarded and granted during this period. Administrative
expense includes organizational cost, legal fees, rent, payroll, depreciation
and amortization and numerous incidental items.
Page 7
<PAGE>
Plan of Operations for Fiscal 2001
We are a development stage company with $5,000 revenue since inception.
Currently our operating expenses are approximately $68,000 per month, which
includes maintenance of our website, office rent, administrative expenses, and
general working capital purposes. Our future level of operations will be
dependent on future cash availability. As of Sept.30, 2000 we had fifteen
employees.
Since inception, we have sold 58,246,795 shares of common stock for aggregate
gross proceeds of $2,319,459 and issued 51,585,748 shares to our founders and
employees as their compensation and 2,000,000 shares for an equity interest in
ClLine.com, Inc. We are currently using the funds from these private
placements to pay for our current expenses.
On the closing of this offering we intend to use approximately $50 million in
net proceeds to further our business plan by improving our website, marketing
our services and expanding our operations.
We have generated miniscule revenues from our website. We believe we will
begin generating revenues by January 2001, depending on the results of our
marketing attempts and this offering.
Liquidity and Capital Resources
As of Sept. 30, 2000, we had working capital of $ 313K with negative cash
flows from operations since inception of approximately $ 2.2 million. We
anticipate incurring losses from operations during the current fiscal year.
We intend to rely on funds available, funds from external sources and revenue
from operations until completion of this offering. We can provide no assurance
that revenue from operations will be sufficient to provide adequate working
capital to fund our current operating expenses or that external funding will
be available to us.
In fiscal year 2001, we anticipate having negative cash flows from operations.
And at the present time we cannot estimate when, or if, our operations will
generate positive cash flows from operations.
On the close of this offering, we intend to use approximately $50 million in
net proceeds to improve our website, market our services, expand our business
by hiring additional employees so we can institute our business plan, and for
general working capital purposes.
In the event that revenues are less than expected and we are unable to raise
additional financing, we may need to limit our operations or sell assets.
We do not have any significant credit facilities available with financial
institutions or other third parties and until we can generate positive cash
Page 8
<PAGE>
flow from operations. We will be dependent upon external sources for best
efforts financing. We can provide no assurance that we will be successful in
any future financing effort to obtain the necessary working capital to support
our operations. Therefore, on a short-term basis, or during calendar year
2001, we may require additional funding if this offering does not have its
anticipated result. Since we are not able to estimate when we will be able to
generate positive cash flows from operations, this funding will need to be
from external sources. On a long-term basis, or after calendar year 2001, we
may also require additional external financing depending upon the result of
this offering and revenues from operations.
Risk Factors
The securities offered hereby are highly speculative and involve substantial
risks. Prospective investors should carefully consider the following risk
factors before making an investment decision.
We have experienced losses since our inception and expect such tosses to
continue for the foreseeable future.
We were formed on August 20, 1999, and have only recently engaged in a new
enterprise. We have no history of operations and revenues, and must be
considered promotional and in the early development stage. We are subject to
many of the risks common to enterprises with limited or no operating history,
including but not limited to potential under-capitalization, limitations with
respect to personnel, financial and other resources, and limited customers and
revenue sources. There is absolutely no assurance that we will be able to
operate an e-commerce business. As a result of our lack of an operating
history in any business, we do not have historical financial data on which to
base operating expenses. We may be unable to adjust spending in a timely
manner to compensate for any unexpected shortfall of revenues. Accordingly,
any significant shortfall of demand for our products and services in relation
to our expectations would have an immediate adverse impact on our business,
operating results, and financial condition. The amount allocated to cover such
losses for the next twelve months is $816,000. The source of such funding is
from our reserves of cash and from the sale of securities in this offering.
Our business is subject to seasonal economic conditions.
We expect to experience seasonality in its business, due to a combination of
seasonal fluctuations in internet usage and traditional retail seasonality
patterns. Internet usage is expected to decline during the summer months.
Sales in the traditional retail sector are significantly higher in the fourth
calendar quarter of each year due to the Christmas shopping season. Therefore,
we may experience more pronounced cash flow problems in the first three
quarters of the calendar year compared to the fourth quarter. In addition, our
business is dependent upon discretionary income available for expenditure by
consumers. Discretionary income decreases during prolonged general economic
downturns, resulting in fewer expenditures. A general economic recession would
Page 9
<PAGE>
likely have a material adverse effect on our financial condition.
Our quarterly revenues and operating results may fluctuate significantly.
The operating results for our internet companies have fluctuated in the past,
and our operating results may change materially in the future. The amount
allocated for operations to allow for such fluctuations for the next twelve
months is $816,000. The source of such funding is from our reserves of cash
and from the sale of securities in this offering. Fluctuations could affect
the market price of our common stock. Fluctuations may depend upon a variety
of factors, including the incurrence of capital costs and costs associated
with the introduction of new products and services. Other factors that may
contribute to changes in operating results include:
* the pricing and mix of services that we offer;
* market acceptance of new products and services;
* changes in operating costs;
* changes in pricing policies and product offerings by our competitors;
* introduction of alternative technologies;
* growth in demand for internet access services;
* effects of potential future acquisitions; and
*one-time costs associated with acquisitions.
Due to the foregoing factors, we believe that period-to-period comparisons of
our operating results are not necessarily meaningful and that these
comparisons should not be relied upon as indicators of future performance.
We will need additional capital in the near future and such capital may
be unavailable or too costly.
Our future capital requirements will depend upon many factors, including the
development of new systems, the progress of our research and development
efforts, and the expansion of our sales and marketing efforts. We believe that
current and future available capital resources will be adequate to fund our
operations for at least twelve months following this offering. The amount
allocated for such requirement is $816,000. The source of such funding is from
our reserves of cash and from the sale of securities in this offering. There
can be no assurance, however, that we will not require additional financing
prior to such time. There can be no assurance that any additional financing
will be available to us on acceptable terms, or at all. If additional funds
are raised by issuing equity securities, further dilution to the existing
stockholders will result.
Control of the corporation will remain in the hands of present management.
Page 10
<PAGE>
Subject to the limitations of Nevada corporate law, current management will
have control of us through their aggregate stock ownership and will have the
right to perpetuate their status as officers and directors and therefore
conduct our business and affairs.
A failure to service customers could have a drastic effect on our business.
We may fall short of our target response time for customer shipment. Success
in e-commerce is dependent on this requirement. We are actually dependent on
suppliers to ship directly for us. We are not carrying any inventory. Their
reaction time is critical to our operation. Sub-optimal customer service would
damage our reputation and lead customers to transfer their business to other
sources. On any given day, a surge of activity or failure of our suppliers to
ship promptly could cause us to fail to provide adequate customer service.
There can be no assurance that we will be able to serve our customers
adequately, and the failure to do so could have a material adverse effect on
our business, financial condition, and operating results.
Use of Proceeds
We estimate that the net proceeds from this offering, after deducting offering
expenses of approximately $73,000, will be approximately $49,927,000 if we
receive the maximum amount. We plan to use these proceeds to increase our
marketing efforts, upgrade our technology infrastructure, add personnel,
expand our operations, and provide additional working capital. If we raise
less than the maximum amount, then we intend to carry out a portion of our
plan, as long as we receive at least the minimum amount. In the table below,
we have detailed the amount that we will spend on each item if we receive the
maximum or minimum amount of funding.
Page 11
<PAGE>
<TABLE>
<CAPTION>
Amount of Net Proceeds Required
at 25% at 50% at 75% at 100
------ ------ --------- ----
<S> <C> <C> <C> <C>
Company Proceeds from
the Offering $12,500,000 25,000,000 37,500,000 $50,000,000
Less: Offering Expenses 73,000 73,000 73,000 73,000
---------------------------------------------------
Net Proceeds from
Offering $12,427,000 24,927,000 37,427,000 49,927,000
----------- ---------- ---------- ------------
Use of Net Proceeds:
Internet marketing 2,750,000 5,500,000 8,250,000 11,000,000
Traditional marketing 1,900,000 3,800,000 5,700,000 7,600,000
Web Site Development 500,000 1,000,000 1,500,000 2,000,000
Operations 1,250,000 2,500,000 3,750,000 5,000,000
Personnel 2,500,000 5,000,000 7,500,000 10,000,000
Expansion 500,000 1,000,000 1,500,000 2,000,000
Working capital 3,027,000 6,127,000 9,227,000 12,327,000
----------- ---------- ---------- ------------
Total Use of Net
Proceeds $12,427,000 $24,927,000 $37,427,000 $49,927,000
=========== =========== ============ ============
</TABLE>
We have not determined the timing and exact amounts of operating expenditures
at this time. We anticipate that proceeds from the offering, combined with
current working capital and operating revenue, should be sufficient to allow
us to continue operating for the foreseeable future.
If we receive significantly less than the maximum amount, or even no funding,
we believe that we will have sufficient funding to continue operations for the
foreseeable future, although we will have to reduce the rate at which we
expand our business.
We plan to use a significant portion of the funding to allow us to conduct
internet and traditional marketing of our products and services, subject to
all applicable regulations. Internet marketing may include banner ads,
strategic search placements including internet names, newsgroups, chat rooms,
bulletin boards, press releases, and targeted email. Traditional marketing may
include radio, cable or print, targeted mailing or phone calls, and cold
calling.
We plan to use a portion of the funding as salaries for additional key
personnel for us.
We expect offering expenses to include legal and accounting expenses,
registration and "Blue Sky" fees, printing costs, document delivery costs,
order fulfillment, transfer agent fees, and similar costs.
Page 12
<PAGE>
We plan to use a portion of the funding as working capital and for general
business purposes including accounts payable when cash flow is insufficient
for these purposes. The specific amounts to be allocated to working capital
and other purposes will be in our discretion. We reserve the right to alter
our use of proceeds depending on business conditions which are unforeseen at
this time.
Because we anticipate selling the shares through the efforts of our officers
and directors, the numbers above do not include any deductions for selling
commissions. If broker/dealers are used in the sale of shares, up to 10% of
any gross proceeds raised in this offering will probably be payable to one or
more NASD registered broker/dealers. In such event, net proceeds to us will be
decreased and the use of proceeds may be correspondingly reallocated, in our
sole discretion. There are no current agreements, arrangements, or other
understandings in connection with any of the foregoing.
Until we reach the minimum offering, subscription funds will be held in an
interest-bearing escrow account. Once we reach the minimum offering, the funds
will be released from escrow and used according to the plan above. To the
extent that the net proceeds are not used immediately, we intend to invest
them in short-term, investment-grade, interest-bearing securities. We do not
intend to use any proceeds to make loans to officers or directors.
Page 13
<PAGE>
Capitalization
This table represents our capitalization as of September 30, 2000 as adjusted
to give effect to this offering.
<TABLE>
<CAPTION>
Shares Shares Shares Shares
ACTUAL at 25% at 50% at 75% at 100%
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Stockholders' Equity
Preferred Stock, $.001 par value
Authorized 20,000,000 Issued and
Outstanding-No shares
Common Stock, $.001 par value
Authorized-200,000,000 Shares
Issued and Outstanding -
111,832,544 Shares 111,833
@25% 113,082,544 Shares 113,083
@50% 114,332,544 Shares 114,333
@75% 115,582,544 Shares 115,583
@100% 116,832,544 Shares 116,833
Additional Paid
in Capital- 5,153,733 17,652,483 30,151,233 42,649,983 55,148,733
Deficit Accumulated (4,681,837) (4,681,837) (4,681,837) (4,681,837) (4,681,837)
Treasury Stock (5,000) (5,000) (5,000) (5,000) (5,000)
--------- ---------- ---------- ---------- -----------
Total Stockholders
Equity $578,729 $13,078,729 $25,578,729 $38,078,729 $50,578,729
========= ========== =========== ========== ==========
</TABLE>
Page 14
Dilution
<PAGE>
We were initially capitalized by the sale of common stock to our founders. The
following table sets forth the difference between our founders and purchasers
of the shares in this offering with respect to the number of shares purchased
from us, the total consideration paid and the average price per share paid.
The table below assumes that 25% of the amount of the shares offered hereby
are sold.
<TABLE>
<CAPTION>
Shares Issued Total Consideration Average Price
Number Percent Amount Percent Per Share
--------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing Investors 111,832,544 98.9% $2,969,690 19.3% $0.03
New Investors 1,250,000 1.1% 12,427,000 80.7% $10.00
----------- ------ --------- ------
Total 113,082,544 100% $15,396,690 100% $0.14
</TABLE>
The table below assumes that 50% of the amount of the shares offered hereby
are sold.
<TABLE>
<CAPTION>
Shares Issued Total Consideration Average Price
Number Percent Amount Percent Per Share
--------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing Investors 111,832,544 97.8% $2,969,690 10.6% $0.03
New Investors 2,500,000 2.2% $24,927,000 84.4% $10.00
----------- ------ --------- ------
Total 114,332,544 100% $27,896,660 100% $0.25
</TABLE>
The table below assumes that 75% of the amount of the shares offered hereby
are sold.
<TABLE>
<CAPTION>
Shares Issued Total Consideration Average Price
Number Percent Amount Percent Per Share
--------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing Investors 111,832,544 96.8% $2,969,690 7.4% $0.03
New Investors 25,000 0.02% $250,000 08.17% $10.00
----------- ------ --------- ------
Total 115,582,544 100% $40,396,690 100% $0.35
</TABLE>
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<PAGE>
The table below assumes that 100% of the amount of the shares offered hereby
are sold.
<TABLE>
<CAPTION>
Shares Issued Total Consideration Average Price
Number Percent Amount Percent Per Share
--------- -------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Existing Investors 111,832,544 96.8% $2,969,690 7.4% $0.03
New Investors 25,000 0.02% $250,000 08.17% $10.00
----------- ------ --------- ------
Total 115,582,544 100% $40,396,690 100% $0.35
</TABLE>
As of September 30, 2000, the net tangible book value of our common stock was
$476,740 or less then $0.01 per share based on the 111,832,544 shares
outstanding. "Net tangible book value" per share represents the amount of
total tangible assets less total liabilities, divided by the number of shares.
After giving effect to the sale by us of 5,000,000 shares or 100% of shares
offered at an offering price of $10.00 per share our pro-forma net tangible
book value as of that date would be $50,476,740 or $.43 per share, based on
the 116,832,544 shares outstanding at that time. This represents an immediate
dilution (i.e. the difference between the offering price per share of common
stock and the net tangible book value per share of common stock after the
offering) of $9.57 per share to the new investors who purchase shares in the
offering.
After giving effect to the sale by us of 3,750,000 shares or 75% of shares
offered at an offering price of $10.00 per share our pro-forma net tangible
book value as of that date would be $37,976,740 or $.33 per share, based on
the 115,582,544 shares outstanding at that time. This represents an immediate
dilution (i.e. the difference between the offering price per share of common
stock and the net tangible book value per share of common stock after the
offering) of $9.67 per share to the new investors who purchase shares in the
offering.
After giving effect to the sale by us of 2,500,000 shares or 50% of shares
offered at an offering price of $10.00 per share our pro-forma net tangible
book value as of that date would be $25,476,740 or $.22 per share, based on
the 114,832,544 shares outstanding at that time. This represents an immediate
dilution (i.e. the difference between the offering price per share of common
stock and the net tangible book value per share of common stock after the
offering) of $9.78 per share to the new investors who purchase shares in the
offering.
After giving effect to the sale by us of 1,250,000 shares or 25% of shares
offered at an offering price of $10.00 per share our pro-forma net tangible
book value as of that date would be $12,976,740 or $.11 per share, based on
the 113,082,544 shares outstanding at that time. This represents an immediate
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dilution (i.e. the difference between the offering price per share of common
stock and the net tangible book value per share of common stock after the
offering) of $9.89 per share to the new investors who purchase shares in the
offering.
The following table represents the dilution per share based on the percentage
sold of the total amount of shares being offered.
Shares Shares Shares Shares
at 25% at 50% at 75% at 100%
Offering price $10.00 $10.00 $10.00 $10.00
Net tangible book value $NIL $NIL $NIL $NIL
Increase attributable to
the offering $0.11 $0.22 $0.33 $0.43
Net tangible book value
after giving effect to the
offering $0.11 $0.22 $0.33 $0.43
Per share Dilution to new
investors $9.89 $9.78 $9.67 $9.57
Percent Dilution per share 99% 98% 97% 96%
We do not intend to pay any cash dividends with respect to our common stock in
the foreseeable future. We intend to retain any earnings for use in the
operation of our business. Our Board of Directors will determine dividend
policy in the future based upon, among other things, our results of
operations, financial condition, contractual restrictions and other factors
deemed relevant at the time. We intend to retain appropriate levels of our
earnings, if any, to support our business activities.
Business
Overview
iShopNoMarkup.com, Inc. was incorporated on August 20, 1999 under the laws of
the State of Nevada for the purpose of developing a shopping mall on the
Internet. We expect to offer products on the internet by providing goods
directly from the supplier, at no markup to the purchaser. We expect to
generate revenues by charging a transaction fee, through advertising, earning
a shipping markup, collecting database revenues and generating demographic
data sales and opt-in lists. We will not carry inventory. Our initial phase of
our business plan will focus on marketing of books, software, music, games and
videos due to the proven popularity of purchasing these items on the internet.
We made an application for our trademark in the U.S. Patent and Trademark
Office in September, 1999. The office of the Commissioner of Patents and
Trademarks has advised us that we are entitled to the registration of the
mark.
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We have signed letters of intent with suppliers of products to list
approximately 1,892,664 products on our web site. We expect to offer all these
products by late June, 2001 on our Web Site. Approximately 800,000 products
are available on our website. We believe we will eventually offer millions of
products from thousands of suppliers direct to the public at no markup,
enabling us to provide the lowest prices anywhere on or off the internet.
We maintain corporate headquarters in Great Neck, New York, and also have
branch offices in Hong Kong, Singapore and Sydney, Australia, and Bristol,
England. International offices were arranged through an agreement with Mr. Ian
Noakes, International Vice President for DTL. He is entitled to 25,000 stock
options for each office he opens for IshopNoMarkup.com, Inc. overseas.
Time Line for Web Site Development
Our current web site offers approximately 800,000 products for sale to
consumers from various manufacturers. We anticipate conducting mass e-mails
and other marketing programs to potential consumers to generate sales.
We believe that if the maximum offering is sold, then the proceeds of this
offering will be sufficient to fund our initial marketing plan, capital
expenditure and working capital needs for the next twelve months. We may
commence additional private or public offerings of our securities to raise
additional funds necessary for our expansion.
We expect to generate revenues from standard transaction fees that are built
into the customer price, from advertising fees and other revenue sources
listed above. We intend to offer millions of products direct from the
suppliers to a world wide base of consumers at no mark up. This will enable us
to provide the lowest retail prices.
Traditional Sales Model versus the Company's Sales Model
The traditional retail model for selling products involves a manufacturer who
sells to a distributor, who in turn marks up the product and sells to the
wholesaler, who marks up the product and sells to the retailer, who marks up
the product and sells to the consumer. Through this traditional sales model
the product can be marked up before reaching the consumer.
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There are internet retailers that also markup their products such as
Amazon.com. ISHOPNOMARKUP.COM, Inc. is eliminating markups on line thereby
offering low prices.
<TABLE>
<CAPTION>
MUSIC CD'S AUTOMOTIVES:
James Brown's VIDEOS: BOOKS Sony CD
All Time The 13TH Act! 4 DVDs: Changer Model#
Greatest Hits Floor Bible Matrix cdx-606
------------- -------- ------ ------ --------------
<S> <C> <C> <C> <C> <C>
IshopNoMarkup.com $12.89 $6.14 $26.24 $13.83 $178.12
Borders.com $13.58 $31.99
Amazon.com $13.99 $12.95 $31.99 $17.49
CDNow.com $13.49 $11.96 $19.98
[email protected] $12.45
Barnes&Nobles.com $39.99
Powell's books.com $39.99
Express.com $17.49
Discount Car Stereo.com $239.00
CircuitCity.com $219.95
Sound Distributors.com $235.00
</TABLE>
Note: Each item was compared to three competitors in that category. The empty
spaces are due to the other sites not having the product for comparison.
IShopNoMarkup.com's prices include the $1.50 transaction fee that is charged
on every item. Ishop has been lower in prices in most comparison, but not 100%
of the times.
All Comparison's are correct as of August 22, 2000.
Employees
As of September 30, 2000, we had 15 employees. We intend to use a portion of
the proceeds of this offering to pay salaries to employees, including our
officers. We intend to hire up to thirty additional employees in the two
months following close of this offering.
Principal Shareholders
The following table sets forth certain information regarding beneficial
ownership of our common stock as of September 30, 2000, by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Act of 1934 who is known by us to own beneficially 5% or more of
the common stock, (ii) each of our directors, and (iii) all directors and
executive officers as a group. Unless otherwise indicated, all persons listed
below have sole voting power and investment power with respect to such shares.
The total number of common shares authorized is 200,000,000 shares, each of
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which has $.001 par value. 111,832,544 common shares and no preferred shares
have been issued and are outstanding. The chart below lists the stock options
which may be exercised in the next 60 days.
Common Common
Preferred Shares Beneficially Shares Beneficially
Stock Owned Prior to Offering Owned after Offering
----------------------- --------------------
Name of Owner Number Number Percent Number Percent
------------- --------- --------- ----------- -------- -------
Anthony Knight 50,500,000 45% 50,500,000 43%
Yousef Neissani 45,500,000 41% 45,500,000 39%
Moussa Yeroushalmi 11,306,662 10% 11,306,646 10%
The above table reflects a transaction which occurred on November 6, 2000,
wherein Mr. Niessani transferred 5,000,000 shares to Mr. Yeroushalmi.
Name Number Option Price Date Exercisable
---- ---------- ------------ ----------------
Harriet VamVouris 4,000 $.50 Currently
Moussa Yeroushalmi 3,300,000 $.50 Currently
Jackline Yeroushalmi 200,000 $.50 Currently
Jasmine Yeroushalmi 200,000 $.50 Currently
Peter Moalem 151,543 $.50 Currently
Ian Noakes (DTL Resources) 100,000 $.50 Currently
My Renovations Corp. 93,700 $.50 Currently
Peter Moalem 100,000 $.50 Currently
Farzaneh Yeroushalmi 209,474 $.50 Currently
Nasir Sharifi 50,000 $.50 06/30/01
Nasir Sharifi 2,500 $.50 07/25/02
Bradford Hill 50,000 $.50 09/21/01
David Nick DiLucia 150,000 $.50 09/21/01
Vito Marrone 150,000 $.50 09/21/01
Warren Weiss 40,000 $.50 09/21/01
Mona Sharaf 3,288 $.50 12/22/01
Radni Davoodi 13,995 $.50 01/17/02
Ron Abrahams 1,000 $.50 01/17/02
Bart Colangeli 120,000 $.50 06/30/02
Danny & David Meyezadeh 3,500 $.50 06/30/02
George Mason 1,000 $.50 06/30/02
Jack Eisakharian 1,000 $.50 06/30/02
Alejandro Raigosa 2,500 $.50 07/25/02
Ashoo Singla 2,500 $.50 07/25/02
Bart Colangeli 2,500 $.50 07/25/02
Danielle Femine 2,500 $.50 07/25/02
Fabio Signorile 2,500 $.50 07/25/02
Gale Stephens 2,500 $.50 07/25/02
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<PAGE>
George Mason 2,500 $.50 07/25/02
Harriet Vamvouris 2,500 $.50 07/25/02
Jack Eisakharian 2,500 $.50 07/25/02
Jake Deloya 2,500 $.50 07/25/02
James Francois 2,500 $.50 07/25/02
Jesus Garcia 2,500 $.50 07/25/02
John Ramagosa 2,500 $.50 07/25/02
Ligia Gabriela Fonseca 2,500 $.50 07/25/02
Mashieh Kamyar 2,500 $.50 07/25/02
Michael Winterstein 2,500 $.50 07/25/02
Mona Sharaf 2,500 $.50 07/25/02
Nils Escobar 2,500 $.50 07/25/02
Pauline Williams 2,500 $.50 0 7/25/02
Radni Davoodi 2,500 $.50 07/25/02
Richard Romero 2,500 $.50 07/25/02
Stella Aghravi 2,500 $.50 07/25/02
------------
5,000,000
Management
There are currently three (3) occupied seats on the Board of Directors. The
following table sets forth information with respect to the directors and
executive officers.
DATE SERVICE
NAME AGE OFFICE COMMENCED
Anthony Knight 33 Chairman of the Board 8/20/99
Moussa Yeroushalmi 45 Chief Executive Officer, 10/15/99
President
Yousef Neissani 47 Chief Financial Officer & 8/20/99
Vice Chairman to the Board
of Directors
All directors will hold office until the next annual stockholder's meeting and
until their successors have been elected or qualified or until their death,
resignation, retirement, removal, or disqualification. Vacancies on the board
will be filled by a majority vote of the remaining directors. Our officers
serve at the discretion of the Board of Directors.
The Officers and Directors are set forth below.
Anthony Knight - Chairman of the Board and Director of Policy & Programming
Anthony Knight is the Chairman of the Executive Board of iShopNoMarkup.com,
Inc. He is also the CEO of CiLine. corn, Inc., a Business to Business and
Business to Consumer Internet Company specializing in construction on line.
Further, Mr. Knight is serving as the Chairman of the Executive Board of
Itechinternet.com, Inc. and CEO of E-Z Pro.com, Inc. He has previously worked
at Lehman Brothers, holds a BA in economics and a 4th degree Black belt from
the US Olympic team coach.
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Mr. Knight is also a principal shareholder of Knight Mitchell International
Business Corp. which engages in business, financial and management consulting
for venture stage, private stage and public companies.
He is also a partner and officer of First Western International Business Corp.
which specializes in international project finance facilitation.
For the part five years Mr. Knight has been involved in consulting and
management and has managed and operated the Y.H. Park Tae Kwon Do School chain
and the Studio One Karate School.
Mr. Knight has received commendations from US & State Senators, New York's
Gavernor Pataki, NY DA Brown, City Council and Assembly members, and has been
repeatedly featured in Newsday and other newspapers and national magazines for
his charity works.
Moussa Yeroushalmi - Chief Executive Officer, President and VP of Quality
Control
Moussa YeroushAlmi is the Chief Executive Officer of iShopNoMarkup.com, Inc.
Mr. Yeroushalmi is also the Chairman of ClLine.com, a startup business to
business and business to consumer internet web site that links contractors
with construction jobs, sub-contractors, equipment, insurance, bonding and
online bidding for residential, commercial and municipal jobs.
Mr. Yeroushalmi has an honorary degree from MIT in Civil Engineering for his
design and publication of pre-fabricated vertical joints and he has also
received a Masters Degree in Civil Engineering from Drexel University and a
Bachelor of Sciences in Civil Engineering from Villanova University.
Mr. Yeroushalmi has been a structural design supervisor at Bachtel Corp. for
the world's largest nuclear project, at that time. He later became project
manager and supervisor of several other nuclear power plants including Stone
and Webster, Bergen Patterson Power Plant Ca. and Ebasco Power Carp. For the
past five years Mr. Yeroushalmi waan employee of Yeroush Corporation where he
served as president and senior project manager of this construction company.
Mr. Yeroushalmi has built, owned and has been a participant in corporations
that control over 400 shopping centers, medical centers, office buildings,
apartment buildings as well as 175 homes, libraries, colleges schools and a
host of other municipal projects.
Mr. Yeroushalmi has successfully negotiated multi-million dollar contracts
with the Marathon Administration in Washington, D.C., New York School
Authority, Health and Hospitals of the State of New York, The Dormitory
Authority and The Housing Authority.
Yousef Neissani - Chief Financial Officer
YousefNeissani is the CFO of iShopNoMarkup.com, Inc. and ClLine.com, Inc. For
the past 14 years Mr. Neissani has developed a national distributorship,
wholesale and retail operation, servicing many states across the US from
warehouses in New York and Connecticut.
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For the past five years Mr. Neissani has been serving as the CEO of Ultimate
Sound and Security, Inc. an auto electronic distributor based in Queens, New
York, carrying tens of thousands of products from many brand name
manufacturers. As such Mr. Neissani has forged invaluable relationships with
manufacturers that do regular business with USS. He also imports products that
are manufactured under the USS brand name. Mr. Neissani has B.S. in Math,
specializing in computer science and brings a wealth of knowledge and
experience in merchandising to iShop.
Ian Noakes is the director of the Company's operations and offices in
Australia, Hong Kong and Singapore. Mr. Noakes has been successfully involved
in Project Management with multinational companies. His responsibilities
included Country Management roles subsidiaries of multinational companies.
Mr. Noakes has helped successfully grow profitable businesses in the
Australian telecomm sector, including businesses that now have over 70% of the
Australian telecomm equipment sales market with current volume exceeding 80
million dollars via a major Australian manufacturer and business partner.
Mr. Noakes is the regional director of the Singapore based Concentric Asia
Pacific and has been involved with the company since 1993. He has been a
managing director at Gruntfo Pumps, Director of Sales and Marketing
development of West Pharmaceuticals and Cooper Industries, both based in
Singapore. Mr. Noakes holds a bachelor of Mechanical Engineering from Sydney
University and has worked for multinational corporations in executive
capacities in Jakarta, Indonesia, Hong Kong and Japan. Mr. Noakes speaks
fluent Japanese.
Advisory Board
Michael A. Gumport - Member of Advisory Board
Until Oct., 1999 Mr. Gumport was Chief Financial Officer and Director of FED
CORP.. a Kodak licensee, IBM partner and late venture phase leader in
optoelectronics where he was instrumental in finalizing agreements for FED's
final stages of Pre IPO funding. Formed in 1992, FEZ) has received over $35
million in government contacts and nearly $35 million in private investments
and has now finalized technical, commercial, and financial partnerships with
key industry loaders.
Mr. Gumport was instrumental in the company's strategic development and
successful funding. In addition to his position as Director of FED, he also
serves as a Director of Sage, Inc. Sage is a leader in flat panel interface
chip technology, and with Mr. Gumport's dedicated expertise Sage successfully
1PO'ed in November 1999 and trades on the NASDAQ National Market under the
Symbol: SAGI. FED also intends to be a publicly traded company and Mr. Gumport
has been a significant contributor to its success since 1995.
Previously, Mr. Gumport served as Senior VP and Senior Analyst,
Semiconductors, for Lehman Brothers from 1990 through 1998. In addition to
research coverage of chip industry leaders, he actively assisted in over $5
billion in chip industry financings and was awarded Lehman's "Most Innovative"
financial instrument cash reward.
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<PAGE>
Financings included funding for Alliance Semiconductor, Hallmark, Integrated
Device Technology, International Rectifier, Ramtron, STMicroelectronics, and
Xillnx. Mr. Gumport also supported financings for Intel, Aiphatec, ASE Test,
LS1 Logic, and Vitesse. Mr. Gumport organized the Lehman Tech. Expo.
Mr. Gumport was ranked by institutional in yes tar Magazine among the top
semiconductor analysts from 1984 to 1994 and was ranked #1 by the Wall Street
Journal for earnings accuracy in 1997. Mr. Gumport received his MBA from
Columbia Business School in 1976 and his BA from Amherst College in 1973. With
a track record of two recently successful IPO and Pre IPO financings and over
$5 billion in financings with Lehman Brothers, Mr. Gumport brings a wealth
of knowledge, experience and know how to ishop.
Executive Compensation
The following table sets forth the compensation paid to our officers and
directors since inception through September 30, 2000.
Name Capacities in Which Value of
Remuneration was Salary Stock Compensation
Received
---------------------------------------------------------------------------
Anthony Knight Chairman of the Board $90,426 $50,500
and Director of Policy
& Programming
Moussa Yeroushalmi Chief Executive Officer $50,750 $32,660
Yousef Neissani Chief Financial Officer $62,500 $ -0-
Directors receive no cash compensation for their services to us as directors,
but are reimbursed for expenses actually incurred in connection with attending
meetings of the Board of Directors. Outside directors may receive a nominal
salary in the future.
Employment Agreements
We have entered into written employment agreements with our officers and key
employees which set forth the terms and conditions of their employment. All
employment agreements provide that the executive officers may resign at any
time, and that we may terminate the officer or employee at any time.
Stock Options
1999 Stock Option Plan
We have adopted a 1999 Stock Option Plan which provides for the issuance of
options to purchase up to 5,000,000 shares of common stock. The purposes of
the plan are to attract and retain the best available personnel for positions
of substantial responsibility, to provide additional incentive to employees
and consultants and to promote the success of our business. The plan is
administered by the Board of Directors or a compensation committee consisting
of two or more non-employee directors, if appointed. At its discretion, the
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<PAGE>
committee may determine the persons to whom options may be granted and the
terms thereof. In addition, the committee may interpret the plan and may
adopt, amend and rescind rules and regulations for the administration of the
plan. As of September 30, 2000, 5,000,000 options to purchase shares of common
stock had been granted under the plan.
Directors' Compensation
Our Board of Directors presently consists of three members. The Board of
Directors may be expanded in the future.
Indemnification of Officers and Directors
Under Nevada Corporation Law and the Company's Articles of Incorporation, our
directors will have no personal liability to us or our stockholders for
monetary damages incurred as the result of the breach or alleged breach by a
director of his "duty of care". This provision does not apply to the
directors' (i) acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law, (ii) acts or omissions that a director
believes to be contrary to the best interests of the corporation or its
shareholders or that involve the absence of good faith on the part of the
director, (iii) approval of any transaction from which a director derives an
improper personal benefit, (iv) acts or omissions that show a reckless
disregard for the director's duty to the corporation or its shareholders in
circumstances in which the director was aware, or should have been aware, in
the ordinary course of performing a director's duties, of a risk of serious
injury to the corporation or its shareholders, (v) acts or omissions
that constituted an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders, or
(vi) approval of an unlawful dividend, distribution, stock repurchase, or
redemption. This provision would generally absolve directors of personal
liability for negligence in the performance of duties, including gross
negligence.
The effect of this provision in our Articles of Incorporation is to eliminate
our rights and our stockholders' rights (through stockholder's derivative
suits on our behalf) to recover monetary damages against a director for breach
of his fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described in
clauses (1) through (vi) above. This provision does not limit nor eliminate
our rights or any stockholder's rights to seek non-monetary relief such as an
injunction or rescission in the event of a breach of a director's duty of
care. In addition, our Articles of Incorporation provide that if Nevada law is
amended to authorize the future elimination or limitation of the liability of
a director, then the liability of the directors will be eliminated or limited
to the fullest extent permitted by the law, as amended. The Nevada
Corporations Code grants corporations the right to indemnify their directors,
officers, employees, and agents in accordance with applicable law. Our bylaws
provide for indemnification of such persons to the full extent allowable under
applicable law. These provisions will not alter the liability of the directors
under federal securities laws.
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<PAGE>
We intend to enter into agreements to indemnify our directors and officers, in
addition to the indemnification provided for in our bylaws. These agreements,
among other things, indemnify our directors and officers for certain expenses
(including attorneys' fees), judgments, fines, and settlement amounts incurred
by any such person in any action or proceeding, including any action by or in
our right, arising out of such person's services as a director or officer of
the Company, any subsidiary of the Company or any other company or enterprise
to which the person provides services at our request. We believe that these
provisions and agreements are necessary to attract and retain qualified
directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and we
will be governed by the final adjudication of such case.
As is permitted by, and subject to certain limitations stated in, the Nevada
Corporations Code, our bylaws give our Board of Directors the power to adopt,
amend, or repeal our bylaws. Our shareholders entitled to vote have concurrent
power to adopt, amend, or repeal our bylaws.
Directors and Officers Insurance
All officers and directors have directors and officers("D & 0") liability
insurance.
Certain Transactions
Big Y Alarm and Security, Inc., d/b/a USS Distributors, 100% owned by a family
member of Mr. Neissani intends to include its products on the Company's web
site. Mr. Yousef Neissani is an officer and shareholder of iShopNoMarkup.com,
Inc. The Big Y Alarm products will be offered on our web site on the same
terms as described on our letter of intent which is also signed by other
product manufacturers.
We have a business relationship with Web Pro Presentations, which performs
multi media and web design production on our behalf. Coleen Brockup, is the
spouse to Scott Brockup, who served the Company as VP/Sales and Marketing.
Coleen owns web Pro Presentations. Scott Brockup's employment was terminated
on June 16, 2000. Therefore any subsequent business relationship will be an
arm's length transaction.
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<PAGE>
On Dec. 1, 1999 we agreed to retain Knight Mitchell International, Inc.
(KMIBC) for consulting purposes for the duration of one year, Some of Ishop
directors and shareholders hold controlling interest in KMIBC, a privately
held company. At the discretion and request of the upper management KMIBC
performs business and financial consulting services for us. These services
help to develop our corporate structuring, training the staff in marketing
research and promotion and establishment of strategic alliances between us and
our suppliers. Knight Mitchell International Business Corporation owns a 50%
interest in First Western International Business Corporation. which is engaged
in international trade commerce and project finance and from time to time, may
be used to assist us. To date iShopNoMarkUp.com, inc. has not performed any
transaction with First Western International.
In Dec. 10, 1999 iShopNoMarkUp.com, Inc. acquired 49% interest in CILine.com,
Inc. by issuing 2,000,000 shares of common stock at the then market price of
$0.19 per share. in exchange for 10,290,000 shares of CiLine issued at par
value of $.001. Subsequently, in July 2000, much of the stock owned by
iShopNoMarkUp.com, Inc. was distributed to all the stockholders of
iShopNoMarkUp.com, Inc. Currently, we are holding 1,029,000 shares of
CILine.com, Inc which represents 5% of the total outstanding shares. Moussa
Yeroushalmi, Anthony Knight and Yousef Neissani, who serve as our directors
also serve ClLine.com as its President, Chief Executive Officer and Vice
President, respectively.
Descriptions of Securities
All material provisions of our capital stock are summarized in this
prospectus. However the following description is not complete and is subject
to applicable Nevada law and to the provisions of our articles of
incorporation and bylaws. We have filed copies of these documents as exhibits
to the registration statement related to this prospectus. We are authorized to
issue 200,000,000 common shares, at $.001 par value per share and 20,000,000
shares of preferred stock. As of the date of this prospectus there are
111,832,544 common shares and zero preferred shares issued and outstanding.
After giving efFect to the maximum offering, there will be 116,832,544 common
shares and zero preferred shares issued and outstanding.
We have a stock option plan in which an aggregate of 5,000,000 common shares
have been reserved for issuance. Options to purchase 5,000,000 shares have
been granted under the plan as of September 30, 2000. We do not have any
written plan for stock purchase warrants, or stock bonuses plan. At the
discretion of the Board of Directors we may compensate our employees, and! or
consultants in the form of stock certificates. To date, we have issued
1,085,748 shares to our employees and consultants for services performed
excluding 50,500,000 which were issued to Mr. Anthony Knight at the time of
incorporation..
Common Stock
We are authorized to issue 200,000,000 shares of common stock, $.001 par value
per share, of which 118,832,543 shares are issued and outstanding. Holders of
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<PAGE>
common stock are entitled to dividends when, as, and if declared by the Board
of Directors out of funds available for that purpose, subject to any priority
as to dividends for preferred stock that may be outstanding.
You have the voting rights for your shares. You and all other holders of
common stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. You have cumulative voting rights with
respect to the election of directors, with the result that your vote will
allow you a proportionate representation on the Board of Directors.
You have dividend rights for your shares. You and all other holders of common
stock are entitled to receive dividends and other distributions when, as and
if declared by the Board of Directors out of funds legally available, based
upon the percentage of our common stock you own. We will not pay dividends.
You should not expect to receive any dividends on shares in the near future.
This investment may be inappropriate for you if you need dividend income from
an investment in shares.
You have rights if we are liquidated. Upon our liquidation, dissolution or
winding up of affairs, you and all other holders of our common stock will be
entitled to share in the distribution of all assets remaining after payment of
all debts, liabilities and expenses, and after provision has been made for
each class of stock, if any, having preference over our common stock. Holders
of common stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the common stock.
All of the outstanding common stock are, and the common stock offered hereby,
when issued in exchange for the consideration paid as set forth in this
Prospectus, will be, fully paid and nonassessable. Our directors, at their
discretion, may borrow funds without your prior approval, which potentially
further reduces the liquidation value of your shares.
You have no right to acquire shares of stock based upon the percentage of our
common stock you own when we sell more shares of our stock to other people.
This is because we do not provide our stockholders with preemptive rights to
subscribe for or to purchase any additional shares offered by us in the
future. The absence of these rights could, upon our sale of additional shares,
result in a dilution of our percentage ownership that you hold.
Preferred Stock
We are authorized to issue 20,000,000 shares of preferred stock. No shares of
preferred stock are presently issued and outstanding.
Our Articles of Incorporation provide that the designations, preferences,
limitations, restrictions, and relative rights of the preferred stock, and
variations in the relative rights and preferences as between different series,
shall be established in accordance with the General Corporation Law of Nevada
by the Board of Directors.
Except for such voting powers with respect to the election of directors or
other matters as may be stated in the resolutions of the Board of Directors
creating any series of Preferred Stock, the holders of any such series shall
have no voting power. Dividends are payable solely at the option of the Board
Page 28
<PAGE>
of Directors, and there is no requirement that any dividend be declared or
paid with respect to any class of stock.
Shares Eligible for Future Sale
Upon completion of this offering, we will have 116,832,544 shares issued and
outstanding, assuming all the shares offered herein are sold. The common stock
sold in this offering will be freely transferable without restrictions or
further registration under the Securities Act, except for any of our shares
purchased by an "affiliate" who will be subject to the resale limitations of
Rule 144 promulgated under the Act.
There will be approximately 111,832,544 shares outstanding that are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Securities Act.
The common stock owned by insiders, officers and directors are deemed
"restricted securities" as that term is defined under the Securities Act and
in the future may be sold under Rule 144, which provides, in essence, that a
person holding restricted securities for a period of one (1) year may sell
every three (3) months, in brokerage transactions and/or market maker
transactions, an amount equal to the greater of (a) one percent (1%) of our
issued and outstanding common stock or (b) the average weekly trading volume
of the common stock during the four (4) calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of common stock
without any quantity limitation by a person who is not an affiliate of the
Company and who has satisfied a two (2) year holding period. Additionally,
common stock underlying employee stock options granted, to the extent vested
and exercised, may be resold beginning on the ninety-first day after the
Effective Date of a Prospectus, or Offering Memorandum pursuant to Rule 701
promulgated under the Securities Act.
As of the date hereof and upon completion of the offering, approximately
101,958,070 of our common stock (other than those which are qualified by the
SEC in connection with this offering) are available for sale under Rule 144.
Future sales under Rule 144 may have an adverse effect on the market price of
the Common stock.
Under Rule 701 ~f the Securities Act, persons who purchase shares upon
exercise of options granted prior to the date of this prospectus are entitled
to sell such common stock after the 90th day following the date of this
Prospectus in reliance on Rule 144, without having to comply with the holding
period requirements of Rule 144 and, in the case of non-affiliates, without
having to comply with the public information, volume limitation or notice
provisions of Rule 144. Affiliates are subject to all Rule 144 restrictions
after this 90-day period, but without a holding period.
There has been no public market for our common stock. With a relatively
minimal public float and without a professional underwriter, there is no
guarantee that an active and liquid public trading market, as that term is
commonly understood, will develop, or if developed that it will be sustained,
and accordingly, an investment in our common stock should be considered highly
Page 29
<PAGE>
illiquid. Although we believe a public market will be established in the
future, there can be no assurance that a public market for the common stock
will develop. If a public market for the common stock does develop at a future
time, sales by shareholders of substantial amounts of our common stock in the
public market could adversely affect the prevailing market price and could
impair our future ability to raise capital through the sale of our equity
securities.
Available Information
We have filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form SB-2 relating to the common stock offered
hereby. This Prospectus, which is part of the Registration Statement, does not
contain all of the information included in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to us,
the common stock offered hereby, reference is made to the Registration
Statement, including the exhibits and schedules thereto. Statements contained
in this prospectus concerning the provisions or contents of any contract,
agreement or any other document referred to herein are not necessarily
complete. With respect to each such contract, agreement or document filed as
an exhibit to the Registration Statement, reference is made to such exhibit
for a more complete description of the matters involved.
The Registration Statement, including the exhibits and schedules thereto, may
be inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, DC 20549
and at the Commission's regional offices at 7 World Trade Center, 13th Floor,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission also maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission, including the
Company. The address of such site is http://www.sec.gov.
We intend to furnish to our shareowners annual reports containing audited
consolidated financial statements certified by independent public accountants
for each fiscal year and quarterly reports containing unaudited consolidated
financial statements for the first three quarters of each fiscal year.
We will provide without charge to each person who receives a prospectus, upon
written or oral request of such person, a copy of any of the information that
was incorporated by reference in the prospectus (not including exhibits to the
information that is incorporated by reference unless the exhibits are
themselves specifically incorporated by reference). Any such request shall be
directed to Moussa Yeroushalmi, President of iShopNoMarkup.com, Inc., 683
Middle Neck Road, Great Neck, NY 11021, Tel. (516) 487-5444.
Within five days of our receipt of a subscription agreement accompanied by a
check for the purchase price, we will send by first class mail a written
confirmation to notify the subscriber of the extent, if any, to which such
subscription has been accepted. We reserve the right to reject orders for the
purchase of shares in whole or in part. Upon acceptance of each subscriber, we
will promptly provide our stock transfer agent the information to issue
shares.
Page 30
<PAGE>
You can also call or write us at any time with any questions you may have. We
would be pleased to speak with you about any aspect of this offering.
Special Note Regarding Forward-Looking Statements
This prospectus contains forward-looking statements that reflect our views
about future events and financial performance. Our actual results, performance
or achievements could differ materially from those expressed or implied in
these forward-looking statements for various reasons, including those in the
"Risk Factors" section beginning on page 8. Therefore, you should not place
undue reliance upon these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.
Dividend Policy
We have never declared or paid cash dividends on our common stock and
anticipate that all future earnings will be retained for development of our
business. The payment of any future dividends will be at the discretion of our
Board of Directors and will depend upon, among other things, future earnings,
capital requirements, the financial condition of the Company and general
business conditions.
Stock Transfer Agent
Our transfer agent and registrar of the common stock is HSBC Bank USA, Issuer
Service, 140 Broadway, Level A, New York, New York 10005.
Experts
Our consolidated financial statements as of date of inception, August 20, 1999
and for the year ending March 31, 2000 have been audited by Merdinger,
Fruchter, Rosen, & Corso, P.C., 888 Seventh Avenue, New York, N.Y.10106,
independent auditors, as set forth in their report included herein also
containing the unaudited statements for the quarter ending September 30,
2000 and incorporated herein by reference. Such financial statements have been
included in reliance upon such report given upon their authority as experts in
accounting and auditing.
Legal Matters
On July 6, 2000, James Smith, an employee sued us in Nassau County alleging
wrongful termination. We have entered a counterclaim against this employee,
seeking damages in excess of $1,000,000, for breaching the terms of his
employment agreement. The case is currently in the prediscovery stage, and the
ultimate resolution of the matter is not ascertainable at this time.
Page 31
<PAGE>
We have retained counsel to prosecute a claim against a former
business to business client based on its breach of contract and related
claims. These claims arise out of the termination by the former client of a
purchase order contract after having entered into this agreement with us.
Because the contract contains an arbitration clause, it is our intention to
file a demand for arbitration with the American Arbitration Association. We
anticipate that the demand for arbitration will seek damages for a sum in
excess of $1,000,000.
There is no past, pending or, to our knowledge, threatened litigation or
administrative action which has or is expected by our management to have a
material effect upon our business, financial condition or operations,
including any litigation or action involving our officers, directors, or other
key personnel.
The Law Offices of Miles Garnett, Esq., 66 Wayne Avenue, Atlantic Beach,
N.Y.11509, Tel. #(516) 371-4598, will pass upon certain legal matters relating
to the offering.
Page 32
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
<PAGE
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F1
BALANCE SHEET F2
STATEMENT OF OPERATIONS F3
STATEMENT OF STOCKHOLDERS' EQUITY F4-F7
STATEMENT OF CASH FLOWS F8
NOTES TO FINANCIAL STATEMENTS F9-F16
Page 33
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF ISHOPNOMARKUP.COM, INC.:
We have audited the accompanying balance sheet of Ishopnomarkup.com, Inc. (A
Development Stage Company) as of March 31, 2000 and the related statements of
operations, stockholders' equity and cash flows for the period from August 20,
1999 (inception) to March 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ishopnomarkup.com, Inc. as of
March 31, 2000 and the results of its operations and its cash flows for the
period from August 20, 1999 (inception) to March 31, 2000 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
accompanying financial statements, the Company has no established source of
revenue, which raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to this matter are also discussed
in Note 1. These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
MERDINGER, FRUCHTER ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
June 21, 2000
-F1-
Page 34
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
------------- ---------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 27,254 $ 855,077
Receivables from affiliates 281,553 100,000
Other receivables 4,362 -
Prepaid and other current assets 15,473 36,746
----------- -----------
Total current assets 328,642 991,823
Property and equipment, net 71,000 52,502
Security deposits 49,322 -
Investments in affiliates 43,229 380,000
Deferred compensation expense 101,989 -
----------- ------------
Total assets $ 594,182 $ 1,424,325
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 15,453 $ 32,534
----------- ------------
Total liabilities 15,453 32,534
=========== ============
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value;
20,000,000 shares authorized, 0 shares issued - -
Common stock, $0.001 par value;
200,000,000 shares authorized,
111,832,544 shares issued and outstanding 111,833 111,283
Additional paid-in-capital 5,153,733 2,316,073
Deficit accumulated during
The development stage (4,681,837) (1,035,565)
Treasury stock ( 5,000) -
Total stockholders' equity 578,729 1,391,791
----------- ------------
Total liabilities and stockholders' equity $ 594,182 $ 1,424,325
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-F2-
Page 35
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
August 20, August 20,
Six 1999 1999
Months Ended (Inception) to (Inception) to
September 30, March 31, September 30,
2000 2000 2000
------------ ------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue $ 5,000 $ - $ 5,000
Web development and design
Expense 138,946 - 138,946
Selling, general and
administrative expenses
(including stock-based
compensation of $2,212,360,
$251,740 and $2,464,100,
respectively) 3,328,105 1,050,935 4,240,094
------------ ----------- -----------
3,328,105 1,050,935 4,379,040
------------ ----------- -----------
Loss from operations before
interest income and provision
for income taxes (3,323,105) (1,050,935) (4,374,040)
Interest income 18,833 15,370 34,203
Provision for income taxes - - -
------------ ----------- -----------
Net loss $ (3,304,272) $(1,035,565) $(4,339,837)
============ =========== ===========
Loss per common share -
basic and diluted ( 0.03) $ ( 0.01) $( 0.04)
</TABLE
The accompanying notes are an integral part of these financial statements.
- F3 -
Page 36
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
</TABLE>
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-in Development Treasury Stock
------------------ Capital Stage -----------------
Share Amount Shares Amount Total
-------- ------- ------------ -------------- ------ ------ -----------
Balance, August 20, 1999 (inception) - $ - $ - $ - $ $ -
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock for services
- on October 8, 1999 at $0.001 per share 50,500,000 50,500 - - - - 50,500
- on January 15, 2000 at $0.19 per share 171,895 172 32,488 - - - 32,660
- on February 15, 2000 at $0.19 per
share 387,263 387 73,193 - - - 73,580
- on March 13, 2000 at $0.19 per share 500,000 500 94,500 - - - 95,000
Issuance of common stock for cash
- on August 27, 1999 1,000,000 1,000 1,500 - - - 2,500
- on October 8, 1999 50,343,425 50,343 - - - - 50,343
- on October 11, 1999 458,070 458 86,542 - - - 87,000
- on December 10, 1999 1,159,681 1,160 219,182 - - - 220,342
- on December 12, 1999 38,157 39 7,211 - - - 7,250
- on December 22, 1999 1,438,458 1,439 271,872 - - - 273,311
- on December 23, 1999 26,315 26 4,973 - - - 4,999
- on December 26, 1999 33,333 33 24,966 - - - 24,999
- on December 30, 1999 40,000 40 7,560 - - - 7,600
- on January 13, 2000 7,333 7 5,493 - - - 5,500
- on January 15, 2000 131,578 132 24,868 - - - 25,000
- on January 18, 2000 1,820,717 1,821 344,123 - - - 345,944
- on February 2, 2000 105,260 105 19,895 - - - 20,000
- on February 10, 2000 115,260 115 - - - - 115
</TABLE>
The accompanying notes are integral part of these financial statements.
- F4 -
Page 37
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-in Development Treasury Stock
------------------ Capital Stage -----------------
Share Amount Shares Amount Total
-------- ------- ------------ -------------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
- on February 15, 2000 78,947 79 14,921 - - - 15,000
- on February 18, 2000 107,981 109 49,934 - - - 50,043
- on March 13, 2000 592,120 592 428,778 - - - 429,370
- on March 31, 2000 226,300 226 226,074 - - - 226,300
Issuance of common stock for 49%
interest in C1 on December 10, 1999 2,000,000 2,000 378,000 - - - 380,000
Net loss - - - (1,035,565) - - (1,035,565)
-------- ------- ------------ -------------- ------ ------ -----------
Balance, March 31, 2000 111,282,093 111,283 2,316,073 (1,035,565) - - 1,391,791
Issuance of common stock for services
- on April 4, 2000 at $1 per share 10,000 10 1,890 - - - 1,900
- on May 22, 2000 at $1 per share 550 1 549 - - - 550
- on May 18, 2000at $1 per share 7,500 7 7,493 - - - 7,500
- on June 14, 2000 at $1 per share 2,500 2 2,498 - - - 2,500
- on July 20, 2000 at $1 per share 1,040 1 1,039 - - - 1,040
- on July 20, 2000 at $1 per share 5,001 6 4,996 - - - 5,002
Issuance of common stock for cash
- on April 5, 2000 30,000 30 29,970 - - - 30,000
- on April 12, 2000 10,000 10 9,990 - - - 10,000
- on April 18, 2000 20,000 20 19,980 - - - 20,000
- on April 22, 2000 10,000 10 9,990 - - - 10,000
</TABLE>
The accompanying notes are integral part of these financial statements.
- F5 -
Page 38
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-in Development Treasury Stock
------------------ Capital Stage -----------------
Share Amount Shares Amount Total
-------- ------- ------------ -------------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
- on April 24, 2000 5,000 5 4,995 - - - 5,000
- on April 28, 2000 10,000 10 9,990 - - - 10,000
- on May 3, 2000 5,000 5 4,995 - - - 5,000
- on May 5, 2000 5,000 5 4,995 - - - 5,000
- on May 8, 2000 15,000 15 14,985 - - - 15,000
- on May 9, 2000 5,000 5 4,995 - - - 5,000
- on May 10, 2000 20,000 20 19,980 - - - 20,000
- on May 11, 2000 20,000 20 19,980 - - - 20,000
- on May 15, 2000 5,000 5 4,995 - - - 5,000
- on May 18, 2000 5,000 5 4,995 - - - 5,000
- on May 24, 2000 20,100 20 20,080 - - - 20,100
- on May 26, 2000 38,500 38 38,462 - - - 38,500
- on May 31, 2000 5,000 5 4,995 - - - 5,000
- on June 6, 2000 10,000 10 9,990 - - - 10,000
- on June 8, 2000 5,000 5 4,995 - - - 5,000
- on June 9, 2000 10,000 10 9,990 - - - 10,000
- on June 22, 2000 5,000 5 4,995 - - - 5,000
- on June 23, 2000 35,000 35 34,965 - - - 35,000
- on June 23, 2000 5,000 5 4,995 - - - 5,000
- on June 27, 2000 5,000 5 4,995 - - - 5,000
- on June 30, 2000 60,000 60 59,940 - - - 60,000
- on July 12, 2000 10,000 10 9,990 - - - 10,000
</TABLE>
The accompanying notes are integral part of these financial statements.
- F6 -
Page 39
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-in Development Treasury Stock
------------------ Capital Stage -----------------
Share Amount Shares Amount Total
-------- ------- ------------ -------------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
- on July 13, 2000 65,000 65 64,935 - - - 65,000
- on July 14, 2000 27,760 28 27,732 - - - 27,760
- on July 20, 2000 37,500 37 37,463 - - - 37,500
- on July 25, 2000 15,000 15 14,985 - - - 15,000
- on July 26, 2000 5,000 5 4,995 - - - 5,000
Options issued as compensation - - 2,295,858 - - - 2,295,858
Net loss (unaudited) - - - (3,304,272) - - (3,304,272)
Purchase back of common stock on
June 6, 2000 at $.01 per share - - - 500,000 (5,000) ( 5,000)
Distribution of investment in affiliate
to stockholders - - - (342,000) - - (342,000)
----------- ------- ------------ -------------- --------- ------ ----------
Balance, September 30, 2000 111,832,544 $111,833$ 5,153,733 $ (4,681,837) 500,000 $(5,000) $ 578,729
=========== ======== =========== ============= ========= ======== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
- F7 -
Page 40
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
August 20, August 20,
Six 1999 1999
Months Ended (Inception) to (Inception) to
September 30, March 31, September 30,
2000 2000 2000
------------ ------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (3,304,272) $( 1,035,565) $(4,339,837)
Adjustments to reconcile net loss to
Net cash provided (used) by operating activities:
Depreciation and amortization 8,006 4,798 12,804
Stock-based compensation 2,212,360 251,740 2,464,100
Loss on abandonment of fixed assets 7,244 - 7,244
(Increase) Decrease in:
Other receivables ( 185,915) ( 100,000) ( 285,915)
Security deposits ( 49,322) - ( 49,322)
Prepaid expenses and other current assets 21,273 36,746) ( 15,473)
(Decrease) Increase in:
Accounts payable ( 17,082) 32,534 15,452
---------- ---------- ------------
NET CASH USED IN OPERATING ACTIVITIES (1,307,708) ( 883,239) (2,190,947)
---------- ---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ( 36,475) ( 57,300) ( 93,775)
Investment ( 2,500) - ( 2,500)
---------- ---------- ------------
NET CASH (USED BY) PROVIDED BY INVESTING ACTIVITIES ( 38,975) ( 57,300) ( 96,275)
---------- ---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 523,860 1,795,616 2,319,476
Purchase of treasury stock ( 5,000) - ( 5,000)
---------- ---------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 518,860 1,795,616 2,314,476
---------- ---------- ------------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS ( 827,823) 855,077 27,254
CASH AND CASH EQUIVALENTS - Beginning of Period 855,077 - -
---------- ---------- ------------
CASH AND CASH EQUIVALENTS - End of Period $ 27,254 $ 855,077 $ 27,254
============ ========== ============
CASH PAID DURING THE PERIOD FOR:
Interest Expense $ - $ - $ -
============ ========== ============
Income Taxes $ - $ - $ -
============ ========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- F8 -
Page 41
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation and Nature of Operations
----------------------------------------------
Ishopnomarkup.com, Inc. ("Ishop" or the "Company"), is a Nevada corporation
formed on August 20, 1999. The Company is currently a development-stage
company under the provisions of the Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("SFAS") NO. 7. The
Company conducts its operations from offices located in Garden City, Long
Island, New York.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has no established
source of revenue. This factor raises substantial doubt about the Company's
ability to continue as a going concern. Without realization of additional
capital, it would be unlikely for the Company to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to
continue in existence.
Management plans to take the following steps that it believes will be
sufficient to provide the Company with the ability to continue in existence:
a) Raise additional working capital through a private placement. The private
placement will be in the form of debt, equity or a convertible debenture.
b) Seek acquisitions for the company. Acquisitions will be operating
companies in the e-commerce, internet or electronic industries.
Unaudited Financial Information
-------------------------------
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly its financial position as of September 30, 2000
and the results of its operations and cash flows for the six months ended
September 30, 2000. These statements are condensed and therefore do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The results of
operations for the six months ended September 30, 2000 are not necessarily
indicative of the results to be expected for the full year.
- F9 -
Page 42
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Nature of Operations
--------------------
Ishop was formed for the purpose of developing a shopping mall on the
Internet. Ishop will offer products through its website on the Internet and
provide goods directly from the supplier, at no markup to the purchaser.
Ishop will generate revenues by charging a transaction fee and through
advertising, and it will not carry an inventory. Ishop's initial phase of its
business plan will focus on marketing of books, software, music, games and
videos due to the proven popularity of these items on the Internet. It is
anticipated that operating revenue will commence on or about the second
quarter of the year 2000/2001.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
Concentration of Credit Risk
----------------------------
The Company places its cash in what it believes to be credit-worthy financial
institutions. However, cash balances may exceed FDIC insured levels at
various times during the year.
Fair Value of Financial Instruments
-----------------------------------
The carrying value of cash and cash equivalents and accounts payable
approximates fair value due to the relatively short maturity of these
instruments.
Property and Equipment
----------------------
Property and equipment are recorded at cost. Repairs and maintenance costs
are charged to operations as incurred. Depreciation is computed using
straight-line methods calculated to amortize the cost of assets over their
estimated useful lives, generally five to seven years. Upon retirement or
other disposition of property and equipment, the cost and related depreciation
will be removed from the accounts and the resulting gains or losses recorded.
- F10 -
Page 43
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Stock-Based Compensation
-------------------------
The Company has adopted the intrinsic value method of accounting for stock-
based compensation in accordance with Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees" and related
interpretations.
Organization Costs
------------------
In accordance with American Institutes of Certified Public Accountants'
Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities",
the Company expenses, as incurred, costs related to organizational and start-
up activities.
Income Taxes
------------
Income taxes are provided for based on the liability method of accounting
pursuant to SFAS No. 109, "Accounting for Income Taxes". Deferred income
taxes, if any, are recorded to reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end.
Investments
-----------
Investments in affiliates which are less than 20% are being carried on the
cost basis.
Loss per share
--------------
The computation of basic earnings per share ("EPS") is computed by dividing
income available to common stockholders by the weighted average number of
outstanding common shares during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period. The
computation of diluted EPS does not assume conversion, exercise or contingent
exercise of securities that would have an anti-dilutive effect. Nominal
issuance of stock is deemed to be outstanding for the entire period presented.
The shares used in the computation were as follows:
March 31, 2000 September 30, 2000
Basic and Diluted 111,832,544 111,832,544
- F11 -
Page 44
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Comprehensive Income
--------------------
SFAS No. 130, "Reporting Comprehensive Income", establishes standards for the
reporting and display of comprehensive income and its components in the
financial statements. The items of other comprehensive income that are
typically required to be displayed are foreign currency items, minimum pension
liability adjustments, and unrealized gains and losses on certain investments
in debt and equity securities. At March 31, 2000 and for the period then
ended, the Company had no such transactions.
NOTE 2 - CORPORATE ACQUISITIONS AND DISPOSITION
On December 10, 1999, Ishop acquired a 49% equity interest in C1 by issuing
2,000,000 shares of common stock at the then market price of $.19 per share,
in exchange for 10,290,000 shares of C1, issued at par value of $.001. On
July 28, 2000, the Company distributed 90% of its investment in C1 to the
Company's stockholders. The carrying value in the financial statements has
been reduced to $38,000. Since the ownership of the substantial portion of
the investment was temporary, the investment has been accounted for pursuant
to the cost method.
The Company also has investments in three other entities. All of these
investments are less than 20% of the outstanding stock of the investee and are
carried on the cost basis. The aggregate investment in these three affiliates
at September 30, 2000 is $5,229.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
March 31, 2000 September 30, 2000
Equipment and Furniture $ 60,320 $ 79,681
Leasehold Improvements 10,646 -
--------- -----------
70,966 79,681
Less: Accumulated Depreciation (5,178) 8,681
--------- -----------
$ 65,788 $ 71,000
========= ===========
Depreciation expense for the year ended March 31, 2000 is $4,798, and for the
six months ended September 30, 2000 is $8,006.
-F12-
Page 45
<PAGE>
NOTE 4 -INCOME TAXES
The components of the provision for income taxes for the period from August
20, 1999 (inception) to March 31, 2000, are as follows:
Current Tax Expense
U.S. Federal $ -
State -
-------------
Total Current -
Deferred Tax Expense
U.S. Federal -
State -
-------------
Total Deferred -
Total Tax Provision (Benefit) from
Continuing Operations $ -
-------------
The reconciliation of the effective income tax rate to the Federal statutory
rate is as follows:
Federal Income Tax Rate 34.0%
Effect of Valuation Allowance ( 34.0)%
Effective Income Tax Rate 0.0%
At March 31, 2000, the Company had net carryforward losses of approximately
$1,035,505. Because of the current uncertainty of realizing the benefits of
the tax carryforward, a valuation allowance equal to the tax benefits for
deferred taxes has been established. The full realization of the tax benefit
associated with the carryforward depends predominantly upon the Company's
ability to generate taxable income during the carryforward period.
Deferred tax assets and liabilities reflect the net tax effect of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities
as of March 31, 2000 are as follows:
Deferred Tax Assets
Loss Carryforwards $ 352,000
Less: Valuation Allowance ( 352,000)
-------------
Net Deferred Tax Assets -
==============
Net operating loss carryforwards expire in 2020.
- F13 -
Page 46
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 5 - RELATED PARTY TRANSACTIONS
An officer, director and shareholder of the Company individually owns another
company that includes its products on the Company's website. Such products
will be marketed to the public at terms and conditions no different than other
product vendors.
The Company has a contract with a consulting firm whereby another officer,
director and shareholder of the Company is an owner of the consulting firm.
This firm has primarily been retained to actively solicit additional vendors
to bring products to the Company's website.
Certain web design production and multi-media production is performed by an
entity owned by the spouse of the Company's VP/Sales and Marketing.
The Company has advanced funds to its affiliates, aggregating $281,553,
including interest at 10%.
The Company leases office space to these entities at fair market rates.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company, effective April 2000, committed to a lease for all of its office
space, through October 2002.
The following is a schedule by years of future minimum annual rental payments
required under the lease.
March 31, 2001 $ 339,456
March 31, 2002 $ 350,064
March 31, 2003 $ 175,032
Rental expense was $22,800 for the year ended March 31, 2000, and $80,992 for
the six months ended September 30, 2000 (see Note 5).
NOTE 7 - OPTIONS
The Company adopted an option plan "1999 Stock Option Plan" which provides for
the issuance of options to purchase up to 5,000,000 shares of Common Stock.
The plan was established to provide employee incentives.
- F14 -
Page 47
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 7 - OPTIONS (Continued)
The Company uses the intrinsic value method (APB Opinion 25) to account for
its stock options granted to officers, directors, and employees. Under this
method, compensation expense is recorded over the vesting period based on the
difference between the exercise price and quoted market price on the date the
options are granted.
The Company has adopted only the disclosure provisions of SFAS 123 "Accounting
for Stock-Based Compensation". At March 31, 2000, 1,558,283 options were
granted (with an exercise price of $.50), none have been exercised. Stock
options expire primarily in ten years from the date granted and vest over
service periods that range from 11/2 to 10 years. The weighted average fair
value of options granted during the period ended March 31, 2000 estimated on
the date of grant using the Black-Sholes option-pricing model was $-0-. The
fair value of these options granted is estimated on the date of grant using
the following assumptions: expected volatility of 1%, risk-free interest rate
of 6.0%, and an expected life of ten years.
During the six month period ended September 30, 2000, the Company granted
options to purchase 4,591,717 shares of common stock, with an exercise price
of $.50. The options vest over a period of 0 to 2 years. As the exercise
price was less than the fair value of the common stock at the date of grant,
compensation expense of $2,193,869 has been recorded in the financial
statements. The estimated fair value of the options granted during the six
month period ended September 30, 2000 was $.55 per option valued using the
Black-Sholes option pricing model with the following assumption: Volatility
of 0%, risk-free interest rate of 5.25%, and an expected life of two years.
Proforma loss and loss per share information, for the six month period ended
September 30, 2000, if the provisions of SFAS 123 had been adopted, as
follows:
Loss as reported $ (3,304,272)
-------------
Proforma loss $ (3,522,558)
-------------
Proforma loss per share $ ( 0.03)
Stock option activity is summarized as follows:
Weighted
Number of Average
Shares Exercise price
----------- --------------
Stock option activity is summarized as follows:
Outstanding, at inception, August 20, 1999 - $ -
Granted 1,558,283 $ 0.50
---------
Outstanding at March 31, 2000 1,558,283 $ 0.50
=========
Exercisable at March 31, 2000 -
=========
- F15 -
Page 48
<PAGE>
ISHOPNOMARKUP.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000 AND SEPTEMBER 30, 2000
NOTE 7 - OPTIONS (Continued)
Weighted average remaining life at March 31, 2000 is 9.5 years.
Weighted
Number of Average
Shares Exercise price
----------- --------------
Outstanding, April 1, 2000 1,558,283 $ 0.50
Granted 4,591,717 $ 0.50
Cancelled (1,150,000) $ 0.50
----------- --------------
Outstanding, September 30, 2000 5,000,000 $ 0.50
----------- --------------
Exercisable, September 30, 2000 4,358,717 $ 0.50
Weighted average remaining life at September 30, 2000 is 4.75 years.
- F16 -
Page 49
<PAGE>
APPENDIX
No dealer, salesperson or any other person
is authorized to give any information or
to make any representations in connection
with this Prospectus and, if given or made,
such information or representations must
not be relied upon as having been authorized
by us. This Prospectus does not constitute
an offer to sell or a solicitation of an iShopNoMark up .com, Inc.
offer to buy any security other than the
securities offered by this Prospectus, or
an offer to sell or solicitation of an
offer to buy any securities by anyone in
any jurisdiction in which such offer or
solicitation is not authorized or is
unlawful. The delivery of this Prospectus
shall not, under any circumstances, create
any implication that the information herein
is correct as of any time subsequent to the
date of the Prospectus For Office Use Only:
---------------------------------------------
Until June 30, 2001 all dealers effecting
transactions in the registered securities,
whether or not participating in this
distribution, may be required to deliver a 5 000 000
prospectus. This is in addition to the SHARES COMMON STOCK
obligation of dealers to deliver a prospectus ($.001 par value per share)
when acting as underwriters and with respect
to their unsold allotments or subscriptions.
TABLE OF CONTENTS
Summary 5
Our Company 5
Management's Discussion and
Analysis of Financial
Condition and Plan of Operations 7
Risk Factors 8
Losses since our inception 8
Seasonal economic conditions 9
Revenues and results fluctuate 9
Need for additional capital 9
Control of the corporation 10
Failure to service customers 10
Use of Proceeds 10
Capitalization 11
Dilution 12
Business 14
Principal Shareholders 15
Management 17 ISHOPNOMARKUP.COM, INC.
Certain Transactions 21 683 Middle Neck Road
Description of Securities 22 Great Neck, NY 11021
Shares Eligible for Future Sale 23
Available Information 24
Dividend Policy 25
Stock Transfer Agent 25
Experts 25 ___________,2000
Legal Matters 26
Index to Financial Statements F-1
---------------------------------------
-12-
Page 50
<PAGE>
Broker/Dealer Name & Address -------------------------------------------------
Investor: --------------------------------------------------------------------
Investor #: ------------------------------------------------------------------
SUBSCRIPTION
AGREEMENT
For
I SHOP NO MARKUP.COM,INC.
Common Stock ($10.00 per share)
Persons interested in purchasing common stock of iShopNoMarkup.com, Inc.
Must complete and return this Subscription Agreement along with their check or
Money order to:
iShopNoMarkup.com, Inc.
683 Middle Neck Road
Great Neck, NY 11021 ("the Issuer") ("the Company")
Subject only to acceptance hereof by the issuer, in is discretion, the
undersigned hereby subscribes for the number of common shares and at the
aggregate subscription price set forth below.
An accepted copy of this Agreement will be returned to the Subscriber as a
receipt, and the physical stock certificates shall be delivered to each
Investor within thirty (30) days of the Close of this offering.
SECURITIES OFFERED - The Company and selling shareholders are offering
5,000,000 shares ($.001 par value per share) at $10.00 per share.
MINIMUM SUBSCRIPTION - In connection with this subscription the
Undersigned hereby subscribes to the number of common shares shown in the
following table.
ALL SUBSCRIBERS - THE MINIMUM SUBSCRIPTION IS 250 SHARES.
Number of Common Shares =
----------------
Multiply by Price of Shares x $10.00 per Share
----------------
Aggregate Subscription Price = $
---------------
Check or money order shall be made payable to iShopNoMarkup.com, Inc. escrow
account or by wire transfer as per instructions listed below.
Wiring Instructions:
-------------------
HSBC Bank
ABA #
Account No.
In the name of :iShopNoMarkup.com. Inc. escrow account
Page 52
<PAGE>
In connection with this investment in the Company, I represent and
warrant as follows:
a) Prior to tendering payment for the shares, I received a copy of and read
your prospectus dated _________________,2000.
b) I am a bonafide resident of the state of_____________________
c) The Issuer and the other purchasers are relying on the truth and accuracy
of the declarations, representations and warranties herein made by the
undersigned. Accordingly, the foregoing representations and warranties and
undertakings are made by the undersigned with the intent that they may be
relied upon in determining his/her suitability as a purchaser. Investor agrees
that such representations and warranties shall survive the acceptance of
Investor as a purchaser, and Investor indemnifies and agrees to hold harmless,
the Issuer and each other purchaser from and against all damages, claims,
expenses, losses or actions resulting from the untruth of any of the
warranties and representations contained in this Subscription Agreement.
Please register the shares which I am purchasing as follows:
Name: Date:
------------------------------ ---------------------------
As (check one)
[ ] Individual [ ] Tenants in Common [ ] Existing Partnership
[ ] Joint Tenants [ ] Corporation [ ] Trust
[ ] Minor with adult [ ] IRA
custodian under the Uniform Gift to Minors Act
For the person(s) who will be registered shareholder(s):
------------------------------ ---------------------------------
Signature of Subscriber Residence Address
------------------------------ ---------------------------------
Name of Subscriber (Printed) City or Town
------------------------------ ---------------------------------
Signature of co-Subscriber State Zip Code
------------------------------ ---------------------------------
Name of co-Subscriber (Printed) Telephone
------------------------------ ---------------------------------
Subscriber Tax I.D. or Co-Subscriber Tax I.D. or
Social Security Number Social Security Number
------------------------------
E-mail Address (if available)
-----------------------------------------------------------------------------
ACCEPTED BY:ISHOPNOMARKUP.COM, INC.
By:-------------------- Date--------------
Officer
Page 53
<PAGE>
Part II-INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OFFICERS AND DIRECTIONS
The information required by this item is incorporated by reference to
"indemnification" in the prospectus herein.
At present we have not entered into individual indemnity agreements with our
Officers or Directors. However, our By-Laws and Certificate of Incorporation
provide a blanket indemnification that we shall indemnify, to the fullest
extent under Nevada law, our directors and officers against certain
liabilities incurred with respect to their service in such capabilities. In
addition, the Certificate of Incorporation provides that the personal
liability of our directors and officers and our stockholders for monetary
damages will be limited.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons
Pursuant to the foregoing provisions, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, as
amended, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and we
will be governed b y the final adjudication of such case.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration $ 13,200.00
Blue Sky Fees and Expenses $ 4,100.00
Legal Fees and Expenses $ 20,000.00
Printing and Engraving Expenses $ 13,700.00
Transfer Agent $ 7,000.00
Accountant's Fees and Expenses $ 15,000.00
-------------
Total $ 73,000.00
The foregoing expenses, except for the SEC fees, are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Unregistered Securities sold within the past three years.
We issued 50,500,000 shares of Common Stock to Yousef Neissani, in connection
with our initial capitalization. The total price paid for the shares was
$50,500, or $0.001 per share.
Page 54
<PAGE>
We issued 50,500,000 shares of Common Stock to Anthony Knight on August20,
1999, pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
an agreement with Mr. Knight. Pursuant to the terms of the agreement, the
Common Stock was issued as consideration for the preparation by Mr. Knight of
a business plan designed to educate prospective venture investors about our
business to business and business to consumer programs. The value of the
shares issued pursuant to this agreement was $50,500.
We issued 1,000,000 shares of Common Stock to Mike Gumport in August 1999, in
connection with our initial capitalization and pursuant to an exemption from
registration under Section 4(2) of the Securities Act. The total price paid
for the shares was $2,500, or $.0025 per share. Subsequently 500,000 shares
were repurchased and show as treasury shares on our balance sheet.
We issued 131,581 shares of Common Stock to PSY Trading, Inc. ("PSY"), a
company owned by Moussa Yeroushalmi, on December 10, 1999, in connection with
our initial capitalization and pursuant to an exemption from registration
under Section 4(2) of the Securities Act. The total price paid for the shares
was $25,000, or $.19 per share.
We issued 2,000,000 shares of Common Stock to PSY, Inc., on December 10, 1999,
in exchange for 10,290,000 shares of ClLine.com, Inc., common stock.
We issued 5,323,498 shares of Common Stock in a private placement, conducted
beginning on September 21, 1999, and concluding on January 12, 2000. The price
per unit was $.019. The total consideration received by us in connection with
this private placement was $1,011,446. The offer and sale of the shares was
conducted pursuant to Rule 506 of Regulation D of the Commission without any
general solicitation. There were no non-accredited purchasers.
We issued 1,085,748 shares of Common Stock during a period running from
February 15,2000, under the terms of an Employee Stock Compensation Plan (the
"Stock Compensation Plan"), in which the Common Stock was issued to some of
our directors, key employees and consultants. The Stock Compensation Plan,
created by a Board resolution, was established pursuant to an exemption under
rule 701 of the Securities Act. The total value of the shares issued pursuant
to this Stock Compensation Plan was $219,731.
We issued 673,137 shares of Common Stock in a second round of private
placement financing, beginning on January 7, 2000, and concluding on February
3, 2000 The price per unit was $.075. The total consideration received by us
in connection with this private placement was $504,853. The offer and sale of
the shares was conducted pursuant to Rule 506 of Regulation D, without any
general solicitation. There were no non-accredited purchasers.
We issued 750,160 shares of Common Stock in a third round of private placement
financing, conducted beginning on February 4, 2000, and concluding on July 26,
2000. The price per unit was $1.00. The total consideration received by us in
Page 55
<PAGE>
connection with this private placement was $750,160. This offer and sale of
the shares was conducted pursuant to Rule 506 of Regulation D, without any
general solicitation. There were no non-accredited purchasers.
Page 56
ITEM 27. - EXHIBITS
Index to Exhibits
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
3.1 Articles of Incorporation Previously Filed
-----------------------------------------------------------------------------
3.2 Bylaws Previously Filed
-----------------------------------------------------------------------------
5.1 Consent of Miles Garnett, Esq. To be filed with amendment
-----------------------------------------------------------------------------
10.1 Lease Agreement Previously Filed
-----------------------------------------------------------------------------
10.2 Trademark Applications Previously Filed
-----------------------------------------------------------------------------
10.3 1999 Stock Option Plan Previously Filed
-----------------------------------------------------------------------------
10.4 Stock Option Agreements Previously Filed
-----------------------------------------------------------------------------
10.5 Letters of Intent from
Suppliers This filing page
-----------------------------------------------------------------------------
10.6 Employment Agreements Previously Filed
-----------------------------------------------------------------------------
10.7 Agreement w/Ian Noakes
for Overseas Offices Previously Filed
-----------------------------------------------------------------------------
10.8 Consulting Agreement
w/ Knight Mitchell Previously Filed
-----------------------------------------------------------------------------
10.9 Purchase Agreement
w/ Big Y and other terms This filing page
-----------------------------------------------------------------------------
10.11 Stock Compensation Plan This filing page
-----------------------------------------------------------------------------
10.12 Persons receiving stock
under Stock Compensation Plan This filing page
with details
-----------------------------------------------------------------------------
10.13 Consulting Agreements This filing page
-----------------------------------------------------------------------------
11.1 Statement re: Computation
of per share earnings Previously Filed
-----------------------------------------------------------------------------
21.1 Subsidiaries of iShop This filing page
-----------------------------------------------------------------------------
23.1 Consent of Accountant, This filing page
-----------------------------------------------------------------------------
27.1 Financial Data Schedule Previously Filed
Page 57
<PAGE>
ITEM 28. Undertakings
The undersigned registrant undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement
To include any prospectus required by section I O(a)(3) of the
Securities Act of 1933;
To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment) which, individually or in the aggregate, represent a
fundamental change in the information in the registration statement;
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to the information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of securities at that time shall be deemed
to be the initial bona fide offering.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission any supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred to that section.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to our certificate of incorporation or provisions of
Nevada law, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission the indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. If a
claim for indemnification against liabilities (other than the payment by the
Registrant) of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding is asserted by a director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of our counsel the matter has been settled by controlling
Page 57
precedent, submit to a court of appropriate jurisdiction the question whether
<PAGE>
the indemnification by it is against public policy as expressed in the Act and
will be governed by the fmal adjudication of the issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, this
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on our behalf by the undersigned, in the
city of Ggreat Nneck, State of New York, on December 20, 2000.
(Registrant) I SHOP NO MARKUP.COM, INC.
--------------------------
By /s/ Moussa Yeroushalmi
------------------------------------------
Moussa Yeroushalmi, Chief Executive Officer
In accordance with the Securities Act of 1933 this registration was
signed by the following persons in the capacities and on the dates indicated.
(Signature) /s/ Anthony Knight
--------------------------------------------
Anthony Knight, Chairman of the Board
(Date)
--------------------------------------------
(Signature) /s/ Yousef Neissanir
--------------------------------------------
Yousef Neissani, Chief Financial Officer
(Date)
--------------------------------------------
(Signature) /s/ M. Nasir Sharifi
--------------------------------------------
M. Nasir Sharifi, Controller
Who must sign: the small business issuer, its principal executive officer or
officers, its principal financial officer, its controller or principal
accounting officer and at least the majority of directors or persons
performing similar functions.
Page 58
