UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------
WEB4BOATS.COM, INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 84-1080043
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
P.O. BOX 1028
LA JOLLA, CALIFORNIA 92038
(Address of principal executive offices) (Zip Code)
(858) 459-2628
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
None None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Web4Boats.com, Inc. is dedicated to becoming one of the leading
Internet websites for boating and water sports enthusiasts and the boating
industry. (An Internet "website" is a specific electronic address on the
Internet at which a person can maintain information accessible to other
persons connected to the Internet.) The Company commenced its current
operations in April, 1999, and launched its website on the Internet in
September, 1999. The Company's website currently delivers an easy to use
classified advertisement database advertising boats for sale, and provides
links to boating and water sports industry related websites and services.
Web4Boats.com plans to continuously make enhancements and additions to its
website. Currently, visitors to the website are able to search through
classified advertisements for over 30,000 boats for sale using a variety of
search criteria. In addition, the Company's first five advertisers on its
website are Amazon.com for books, iGoFish for fishing tackle,
Cyber-marine.com for nautical gear and equipment, Key Marine Finance (a
division of Key Bank USA, N.A.) for boat financing, and Marine Decor, a
boating gift store.
Page -2-
HISTORY
Web4boats.com, Inc. was incorporated in Delaware in 1988 under the
name Windom, Inc. as a wholly owned subsidiary of a publicly traded business
development company, Vintage Group, Inc. As the consequence of the
settlement of a class action law suit in August 1991, a substantial portion
of the shares (120,000) of Windom were distributed to the class members
(consisting of Vintage Group, Inc. shareholders) and their lawyer. From its
incorporation until 1997, Windom had no assets or business operations.
In 1997 Windom was the surviving entity in a merger with New York
Bagel Exchange, Inc., a Delaware corporation, and changed its name to New
York Bagel Exchange, Inc. For accounting purposes, however, the merger
resulted in a continuation of the bagel company's operations, which involved
a single bagel delicatessen restaurant.
The bagel business continued for 2 years. In March, 1999, due to
continuing losses in the bagel business, all the bagel business assets and
operations were sold for $120,000 to Yum Hong Park, a person unaffiliated
with the Company. Also at about that time, all the bagel business management
and directors were replaced with Dennis Schlagel, the Company's current
President and director. In April, 1999, the Company changed its name from
New York Bagel Exchange, Inc. to Webboat.com, Inc. Later in April 1999, it
was changed to Windom.com, Inc. and then to its current name, Web4Boats.com,
Inc. The name changes were part of the negotiated items in the termination
of the bagel business management.
BUSINESS
Web4Boats.com, Inc. is dedicated to becoming one of the leading
Internet websites for boating enthusiasts and the boating industry.
Management believes that Internet companies are evolving into at least two
rough categories, (1) companies that offer information and services
(generally for free) to persons perusing ("surfing") the Internet, and (2)
companies that offer (and generally sell) products that are delivered by
other means of transportation. The lines between the two categories are not
altogether clear and many companies are both. Web4Boats.com, however, is
clearly a business of the first category.
A business model in the first category that is being developed by
many Internet companies, and the primary one that is being followed by
Web4Boats.com, is a model based upon the establishment of a website that has
a wealth of information or compelling entertainment features that attract the
Internet surfer. Under this model, the ability to attract Internet surfers
then becomes what in fact the Internet company has to sell to others in the
form of advertisement space. This is the business model followed by YAHOO!
Inc., a provider of an enormous amount of information and services, and
maybe the only company that has thus far had much success with the model.
While the business model appears to work for a company with a solid brand name
that offers myriad services in thousands of categories, there has thus far
been limited experience with this model business by industry or niche focused
companies. A great number of companies, however, including Web4Boats.com,
have embarked upon the development of the industry or niche focused version
of this business model. Based upon informal observations by Web4Boats.com of
other industry or niche focused websites and public discussions at Internet
industry meetings by Internet industry spokespersons, the acceptance of the
industry or niche focused websites by advertisers as a good opportunity for
the placement of advertisements is gaining momentum. Advertisers of products
directed to particular industries or niches should be naturally attracted to
a corresponding industry or niche website. See "Market," below. Web4Boats.com
believes, however, that much of its success will depend upon the Company's
ability to establish awareness of its website among the boating public, the
achievement of which cannot be assured, but to which Web4Boats.com will devote
much of its efforts.
Web4Boats.com has commenced to organize its website into four areas:
(1) classified advertisements; (2) information services: (3) user services;
and (4) maintaining space in its pages for fee based advertisement placement
by outside vendors. (A website page is just one view of several or even
thousands of available programmed views of the information at the website
that is being viewed by the customer on his or her computer monitor.) The
Page -3-
first three items are those that are designed primarily to attract the
customer, while the fourth item is the one from which the Company plans to
derive most its revenue. The Company opened its website in September, 1999,
and has received or accrued less than $100 of revenue as of December 31, 1999.
CLASSIFIED ADVERTISEMENTS
Typical local newspaper publications feature less than 200
boats-for-sale advertisements in their classified ads. Web4Boats.com
currently has over 30,000 boats-for-sale classified ads in its database.
Web4Boats.com currently collects it own advertisements for boats-for-sale
through the use of independent service companies that, for a fee, review
publications throughout the country and load the boat-for-sale classified
advertisements into Web4Boats.com's database. The large number of boat
advertisements provides boating enthusiasts with a variety of boats to shop.
Management believes that the size of its classified database will attract
customers which, as the number of customers increases, will attract
additional sellers of boats to place their ads with Web4Boats.com. The
theory is that the mere massiveness of the database of boats for sale will
attract buyers. This theory may or may not work.
As of January 17, 2000, Web4Boats.com will stop adding advertisements
by copying them from other publications and displaying them for free. All
new ads thereafter for thirty days of display on the website will be charged a
fee to a credit card of $19.95 or $14.95 if no photograph of the boat is
included. Web4Boats.com classified advertisement software is designed to
allow anyone visiting the website to place an ad without any outside help.
The user simply fills out a form on-line. Over the next 90 days,
Web4Boats.com expects to provide the sellers with the ability to present
images of their boats, accompanied by speech and/or music if desired.
Further enhancements might include the ability to manipulate the images to
allow the potential buyer to see the side view or the back view of a boat and
the ability for contact to be made by the seller or buyer directly via the ad
for the purpose of asking questions about the product or other conversation.
The customer who places an ad receives a pin (personal identification number)
for continued access to his or her advertisement to make changes and to
secure the ad from outside interference. Because the Web4Boats.com ads are
classified ads, the Company has no plans to charge commissions to the parties
as a consequence of any sale of products made as a result of the ads.
With respect to the ads that Web4Boats.com has been displaying without
charge, beginning February 15, 2000, the Company plans to begin a
telemarketing campaign (operated by an independent telemarketing firm) to
solicit continued display of the ad based on the above fees. The costs for
such telemarketing are planned to be covered by commissions to the
telemarketing firm based on ads retained. Advertisers who decline to pay
the fee will be deleted from the displayed advertisement database. All
currently displayed advertisers will be contacted over the months after
implementation of the program in February. Another facet of the telemarketing
campaign will be to turn into new leads for adding paid advertising the
information that has, up to this point, been used to load the Company's
database with fee ads.
The Web4boats.com classified ad system has the following principal
features:
Search Ads - By a variety of criteria such as boat type, size, year,
geographic location, price, etc.
Place Ads - Automatically, from any Internet browser in the world
Edit Ads - Advertiser receives a PIN when an ad is placed, providing
security against outside interference as well as continued access for editing
purposes
Notify - Communicate with Web4Boats.com staff to facilitate answers
to special questions, etc.
Help - Online help system provides technical support
Page -4-
OTHER CLASSIFIEDS
While the Web4Boats.com classified ad system is presently designed
for pre-owned boats only, management does have plans over the next six
months to expand the system to accommodate other classified ad items.
Employment opportunities, used nautical equipment and other privately offered
items will eventually be listed. Thus the Web4Boats.com website is planned
to be even more useful to the boating public, from those wishing to hire a
captain for just an afternoon, to the marina looking to sell its used
equipment or hire new staff. Visitors to the Web4Boats.com website will be
able to research employment opportunities in addition to listing themselves
as being available for employment within specific geographic areas if they
wish.
Future Additions to the Web4Boats.com Classified Ads:
Boat Charter
Accessories Sales
Boat Deliveries
Captain Services
Marinas
Employment
Marketplace
Transportation of boats (from one location to another)
ADVERTISEMENT SEARCH CAPABILITIES
The Web4Boats.com classified advertisement database may be searched
by the customer. The Company's searching software makes it very convenient
for people to search for a boat that most closely matches their needs.
People are able to search by keyword so that any word put into the system can
become the basis for the search. Visitors to the website can also search
boats by the following pre-defined categories:
Boat Type: Powerboat, Sailboat, JetSki, Houseboat, Pontoon,
Inflatable, Canoe, Fishing Boat, or Other.
Year of boat
Length of boat
Price of boat
City
State
Telephone area code
Postal zip code
Plans for the next six months include the addition of capabilities to
the Web4Boats.com website that enables the buyer to organize a search based
upon how far he is willing to travel from his home to purchase his boat.
Page -5-
INFORMATION SERVICES
The Web4Boats.com website is linked to other websites [such as stock
quotes, accuweather, houseboating.com] on the Internet to allow the boating
enthusiast to conveniently move from Web4Boats.com to other websites. As of
January, 2000, Web4Boats.com maintained a minimum of 8 website listings. In
addition, Management also plans over the next 90 days to maintain a directory
of direct dial information resources not currently available on the Internet.
One example could be providing access to a database that stores ocean maps or
other specialized information. This will allow the search for boating
information to be expanded into a much wider spectrum and allow the
Web4Boats.com website to become especially useful for locating information
that is otherwise difficult to obtain.
USER SERVICES
As of January 17, 2000, Web4Boats.com plans to offer a complimentary
email service to any person who wants to subscribe to it. (Email is a
communication system allowing messages to be sent over the Internet to other
Internet users.) Once a visitor arrives at our website, he or she will see
the invitation to subscribe to the free email service. While on line, the
customer will fill out an application and questionnaire (which will be
similar in scope to a warranty/information card accompanying the purchase a
new television or VCR). The Company will retain this information in order to
enhance a data base of the users of Web4Boats.com site. The Company will use
this data base to create affinity groups and for strengthening the
Web4Boats.com brand recognition and create further loyalty to Web4Boats.com.
Another important feature of this free email service is that the
subscriber will have access to his or her password-protected email from
anywhere on the Internet by simply logging onto Web4Boats.com rather than
dialing long distance or using complicated setup procedures as
with most email services that are connected to Internet service providers
("ISP"). Marinas, boat captains, boat brokers, boating travelers and other
professionals will be able to more effectively connect to their email
accounts and communicate with each other. Data transfers will also be
able to occur.
ADVERTISEMENT PLACEMENT
There are a substantial number of products currently available
through vendors affiliated with the Web4Boats.com website. These affiliates
generally pay a commission of from 8-15% on products purchased by persons
that arrive at their website directly from Web4Boats.com's link to that
website. (A link is a website marker that allows a user at one website to point
to other markers and immediately bring up a view of the likes website.) The
Company plans to seek a broader and more expansive range of product
availability to add to its website, and as these relationships develop, they
will become a primary revenue source for the Company. Less than $100 of
commissions had accrued as of December 31, 1999.
BANNER ADVERTISING
Management was unable to obtain numbers relevant to online
advertising dollars spent by the boating industry, but management believes
that the potential for corporately sponsored advertising on the Web4Boats.com
website is quite substantial. Therefore, online advertising revenues are
expected to contribute substantially to the overall revenue base, assuming
that website ad space remains a viable method for generating revenue on the
Internet. There appears to be precedence established on the Internet with
regards to valuing the ad space based upon the volume of customer traffic at
the website. Web4Boats.com intends to follow pricing strategies that are
utilized by the majority of Internet based companies and is considering a
price range between $100 - $250 per 1,000 impressions. (Each Internet user's
electronic request to view a website page is an impression.)
Page -6-
MARKET
Recreational boating is an enormous industry in the United States.
$19 billion dollars were spent at retail in 1998 for new and used boats,
motors and engines, accessories, and other related items. There are
presently over 12.3 million boat registrations as of December 31, 1997, for
the United States and its territories. It is estimated that there are over
16 million boats currently in use. Over 10,000 marinas, boatyards yacht
clubs, dockomimiums, parks, etc. is ample evidence of America's love for
boating. (A docominium is a boat docking slip sold like a condominium.)
Following is a chart based primarily on information available in early
January, 2000, from the National Marine Manufacturer's Association (NMMA)
website that provides a breakdown of the recreational boating industry.
(1999 information should be available at the NMMA website by late January.)
1998 1997
Participants in Boating 74,847,000 78,406,000
All Boats in Use 16,824,000 16,230,000
Total Retail Sales $19.15 billion $19.24 billion
New boat & Motor Sales $8.54 billion $8.64 billion
Pleasure boat Exports N/A $672.8 million
New Product Category Annual
Unit Sales 1998 1997
Outboard Boats 200,900 200,000
Outboard Motors 314,000 302,000
Boat Trailers 174,000 181,000
Inboard Runabouts 6,900 6,100
Inboard Cruisers 6,600 6,300
Stern-drive Boats 91,000 92,000
Canoes 107,800 103,600
Personal Watercraft 130,000 176,000
Sailboats* 19,400 14,400
______________
*Source: 1998 Annual Sailing Business Review, 1998 forecasted.
In December 1998, Ziff-Davis's Technology User Profile reported that
there are 60 million personal computers ("PC") connected to the Internet in
the United States alone. The number of PCs connected to the Internet grew 35
percent between January and August, from 45 million to just over 60 million,
according to Ziff-Davis's Technology User Profile, 1998 Mid-Year Study. That
means that more than one-half of all PCs in use in the United States are now
able to connect to the Internet. According to Commerce Net, there are 92
million users of the Internet over the age of 16 in the United States alone.
Over 100 million globally see "surfing the Internet" as an informational and/
or recreational activity. The essential factor in all this is that the
Internet has become a major advertising target.
Management believes that the most powerful and influential use of the
Internet is cost effective communication to a global audience. Management has
gathered very preliminary surveys of potential advertisers. According to an
article published by eMarketer, Internet marketers spent a total of $1.5
billion advertising online in the United States alone. It is estimated that
they will spend $2.6 billion in 1999. Total online advertising revenues are
expected to rise to $16 billion by the year 2002.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
There are currently few laws or regulations directly applicable to
access to or commerce on the Internet. Due to the increasing popularity and
use of the Internet, it is possible that laws and regulations may be adopted,
covering issues such as user privacy, defamation, pricing, taxation, content
regulation, quality of products and services, and intellectual property
ownership and infringement. Such legislation could dampen the growth in use
of the Web, decrease the acceptance of the Web as a communications and
commercial medium, or require Web4Boats.com to incur significant expense in
complying with any new regulations. Other nations, including Germany, have
taken actions to restrict the free flow of material deemed to be objectionable
on the Web. The European Union has recently adopted privacy
and copyright directives that may impose additional burdens and costs on its
international operations. In addition, several telecommunications carriers,
including America's Carriers' Telecommunications Association, are seeking to
have telecommunications over the Web regulated by the FCC in the same manner
as other telecommunications services. Because the growing popularity and use
of the Web has burdened the existing telecommunications infrastructure and
many areas with high Web use have begun to experience interruptions in phone
service, local telephone carriers, such as Pacific Bell, have petitioned the
FCC to regulate ISPs and OSPs and to impose access fees. Increased
regulation or the imposition of access fees could substantially increase the
Company's costs of communicating on the Web to both users and service
providers, potentially decreasing the demand for products and media
properties. A number of proposals have been made at the federal, state
and local level that would impose additional taxes on the sale of goods
and services through the Internet. Such proposals, if adopted, could
substantially impair the growth of electronic commerce, and could
adversely affect the Company's opportunity to derive financial benefit from
such activities. Web4Boats.com cannot currently predict the
effect, if any, that such legislation will have on its business. There can
be no assurance that such legislation will not impose significant additional
costs on its business or subject Web4Boats.com to additional liabilities.
IF CONSUMERS DO NOT ADOPT INTERNET COMMERCE AS A MAINSTREAM
MEDIUM OF COMMERCE, OUR REVENUES MAY NOT GROW AND OUR EARNINGS
MAY SUFFER.
The success of our services will depend upon the adoption of the
Internet by consumers and dealers as a mainstream medium for commerce.
While we believe that our services offer significant advantages to consumers
and dealers, there can be no assurance that widespread acceptance of Internet
commerce in general, or of our services in particular, will occur. Our
success assumes that consumers and dealers who have historically relied upon
traditional means of commerce to purchase boat and recreational equipment,
and to procure boat financing and insurance, will accept new methods of
conducting business and exchanging information. In addition, dealers must be
persuaded to adopt new selling models and be trained to use and invest
in developing technologies. Moreover, critical issues concerning the
commercial use of the Internet, such as, ease of access, security,
reliability, cost, and quality of service, remain unresolved and may impact
the growth of Internet use. If the market for Internet-based boat and
recreational equipment marketing services fails to develop, develops slower
than expected or becomes saturated with competitors, or if our services do
not achieve market acceptance, our business, results of operations and
financial condition will be materially and adversely affected.
Page -7-
PROMOTION
The Company's mission is to become the website that professionals
and enthusiasts in the boating industry will go to most often to start their
Internet surfing for boating industry information. The Company plans to
increase consumer awareness and in the national branding of its website
through some or all of the following methods:
Internet
Radio
Print ad
Public Relations
Television
Trade Shows
Other Advertising
PROPRIETARY RIGHTS
The distinctive elements of Web4Boats.com may not be protectible
under copyright law. Web4Boats.com is aware that a number of patents
have been issued in the areas of electronic commerce, online auctions,
Web-based information indexing and retrieval, online direct marketing,
fantasy sports, common Web graphics formats and mapping technologies.
Web4Boats.com may incur substantial expenses in defending against
third-party patent claims regardless of the merit of such claims. In the
event that there is a determination that Web4Boats.com has infringed
such third-party patent rights, Web4Boats.com could incur substantial
monetary liability and be prevented from using the rights in the future.
In the event that Web4Boats.com determines that licensing of any such
proprietary rights is appropriate, Web4Boats.com cannot guarantee that
Web4Boats.com would be able to license such proprietary rights on
reasonable terms or at all.
SALES
The Company currently has no advertising sales staff. The Company
intends to build an in-house sales force to solicit viable industry and
related product manufacturers, suppliers, etc. to purchase banner space on
the Web4Boats.com site. Company expects to charge between $100 - $250 per
1,000 impressions. The Company's revenue will increase from advertising as
the traffic coming to the website increases.
TECHNOLOGY
Management believes that its focus should be on delivering ease of use
and convenience combined with capabilities designed to personalize business or
pleasure transacted over the Internet. To accomplish this goal, the Company
has engaged the services of a professional website management firm, Web
Lights Consulting and Design, Inc. The Company owns the hardware and
software that Web Light consulting & Design manages and maintains on a
continual basis. They have designed a site that will easily handle the
Company's traffic in the first phase of its growth. The equipment currently
in use has the ability to handle the capacity of 10,000 hits per day. (A hit
is each time a user makes an electronic request to view something within the
website.) As of January 12, 2000, the Company had approximately 750 to 1,000
hits per day for the past week) In the future, the consulting company will be
able to expand the capabilities of the website to handle increased traffic.
Page -8-
OUR SUCCESS IS DEPENDENT ON OUR KEEPING PACE WITH ADVANCES IN
TECHNOLOGY. IF WE ARE UNABLE TO KEEP PACE WITH ADVANCES IN
TECHNOLOGY, CONSUMERS MAY STOP USING OUR SERVICES AND OUR
REVENUES WILL DECREASE.
The Internet and electronic commerce markets are characterized by rapid
technological change, changes in user and customer requirements, frequent new
service and product introductions embodying new technologies and the emergence
of new industry standards and practices that could render our existing website
and technology obsolete. If we are unable to adapt to changing technologies,
our business, results of operations and financial condition could be
materially and adversely affected. Our performance will depend, in part, on
our ability to continue to enhance our existing services, develop new
technology that addresses the increasingly sophisticated and varied needs of
our prospective customers, license leading technologies and respond to
technological advances and emerging industry standards and practices on a
timely and cost-effective basis. The development of our website and other
proprietary technology entails significant technical and business risks. We
may not be successful in using new technologies effectively or adapting our
website or other proprietary technology to customer requirements or to
emerging industry standards.
WE ARE VULNERABLE TO COMMUNICATIONS SYSTEM INTERRUPTIONS
BECAUSE ALL OF OUR PRIMARY SERVERS ARE LOCATED IN A SINGLE LOCATION.
IF COMMUNICATIONS TO THAT LOCATION WERE INTERRUPTED, OUR
OPERATIONS COULD BE ADVERSELY AFFECTED.
Our Web Server is at the server side of Web-Light Consulting and
Design, Inc., in Ventura, California with redundant T1 connections. All of
our primary servers are located at the Ventura location and are vulnerable to
interruption by damage from fire, earthquake, flood, power loss,
telecommunications failure, break-ins and other events beyond our control.
In the event that we experience significant system disruptions, our business,
results of operations and financial condition would be materially and
adversely affected. We have, from time to time, experienced periodic
systems interruptions and anticipate that such interruptions will occur in
the future. The Company does not maintain business interruption insurance.
In the event of a prolonged interruption, the Company will suffer losses
which cannot be determined at this time. The Company may, in the future,
obtain such insurance coverage.
COMPETITION
Classified ads for boats as well as other items already have use on the
Internet, with the majority of websites offering a free listing to sellers.
While the opportunity presented is tremendous, the competitive environment is
substantial.
WEB4BOATS.COM'S MARKETS ARE HIGHLY COMPETITIVE
The market for Internet products and services is highly competitive.
There are no substantial barriers to entry in these markets, and
Web4Boats.com expects that competition will continue to intensify. Negative
competitive developments could have a material adverse effect on
Web4Boats.com manifested through lower than expected revenue and
higher costs for establishing brand awareness of Web4Boats.com.
Our boat and recreational equipment purchasing services compete against
a variety of Internet and traditional boat and recreational equipment purchasing
services as well as boat and yacht brokers. Therefore, we are affected by the
competitive factors faced by both Internet commerce companies as well as
traditional, offline companies within the boating and recreational equipment
and boating-related industries. To compete successfully as an Internet-based
commercial entity, we must significantly increase awareness of our services
and brand name.
We compete with other entities which maintain similar commercial
websites including buymarine.com; yachtworld.com; boating.com;
boattraderonline; boatowners.com; and boat-yachts.com. In addition, all major
boat and recreational equipment manufacturers have their own websites and
many have recently launched or announced plans to launch online buying
services. We also compete with boat insurers, lenders and lessors as well as
other dealers that are not part of our network. Such companies may already
maintain or may introduce websites which compete with ours.
We cannot assure that we can compete successfully against current or
future competitors, many of which have substantially more capital, existing
brand recognition, resources and access to additional financing.
In addition, Web4Boats.com competes with metasearch services (e.g.,
Yahoo!, AltaVista, Lycos and Excite) and software applications that allow
a user to search the databases of several directories and catalogs
simultaneously.Web4Boats.com also competes indirectly with database vendors
that offer information search and retrieval capabilities with their core
database products.The effect of competitors' strategic plans on Web4Boats.com
cannot be predicted with certainty, but all of these competitors are aligned
with companies
Page -9-
that are significantly larger or more well established than Web4Boats.com.
In addition, providers of software and other Internet products and services
are incorporating search and retrieval features into their offerings. For
example, Internet browsers offered by Netscape and Microsoft increasingly
incorporate pre-loaded shortcuts or displays that appear on the opening
screen of the Internet browser and direct search traffic to competing
services. These shortcut features are relatively expensive to purchase
from Internet browser vendors and not expected to be a reasonable expenditure
by Web4Boats.com for the foreseeable future. The use of such features by
competitors, however, could make it more difficult for Internet users to find
Web4Boats.com's products and services. In addition, entities that sponsor
or maintain high-traffic websites or that provide an initial point of entry for
Internet users, such as the Regional Bell Operating Companies, long-distance
providers and cable companies such as AT&T/TCI through @Home Networks
and Excite, Inc., or Internet Service Providers ("ISPs") such as Microsoft and
AOL, currently offer and could further develop, acquire or license Internet
search and navigation functions and community and communications services that
compete with those Web4Boats.com offers.
COMPETITION FOR ADVERTISING EXPENDITURES
Web4Boats.com competes with online services, other website operators
and advertising networks, as well as traditional offline media such as
television, radio and print for a share of advertisers' total advertising
budgets. Web4Boats.com believes that the number of companies selling
Web-based advertising and the available inventory of advertising space has
recently increased substantially. Accordingly, Web4Boats.com may face
increased pricing pressure for the sale of advertisements, which could
reduce its advertising revenues. In addition, its sales may be adversely
affected to the extent that its competitors offer superior advertising
services that better target users or provide better reporting of advertising
results.
PRINCIPAL COMPETITIVE FACTORS. Web4Boats.com believes that the principal
competitive factors in its markets are:
(1) brand recognition
(2) ease of use
(3) comprehensiveness
(4) personalization
(5) independence
(6) quality and responsiveness of search results and other services
(7) the availability of high-quality, targeted content and focused
value-added products and services
(8) access to end users
(9) with respect to advertisers and sponsors, the number of users,
duration and frequency of visits, and user demographics
The Company believes that the importance of brand recognition will
increase as more companies engage in commerce over the Internet. Development
and awareness of the Web4Boats.com website will depend largely on our ability
to obtain a leadership position in Internet commerce. If Internet users do
not perceive us as an effective channel for increasing boat and recreational
equipment sales and purchases and do not perceive us as offering reliable
information concerning new and pre-owned boats and recreational equipment,
as well as referrals to high quality dealers, in a user-friendly manner that
reduces the time spent for purchases, we will be unsuccessful in promoting
and maintaining our brand recognition. Our brand recognition may not be able
to gain widespread acceptance among consumers or dealers. Furthermore,
in the event of any breach or alleged breach of security or privacy involving
its services, or if any third party undertakes illegal or harmful actions
utilizing its community, communications or commerce services, Web4Boats.com
could suffer substantial adverse publicity and impairment of its brand and
reputation.
STAFF
As of November 1, 1999, the Company had no full-time employees and 1
part-time person (its President). Hiring of other management and staff will
occur incrementally as funds become available and the need arises.
Page -10-
The Company's day-to-day operations are conducted by consultants,
including Web-Light Consulting and Design, Inc. and Internet Advisors, Inc.
See Item 5, below.
KEY PERSONNEL
Web4Boats.com expects that it will need to hire personnel
in all areas. The competition for such personnel in its industry is intense,
particularly where its corporate headquarters are located. Web4Boats.com
expects to experience difficulties in hiring personnel with the right
training or experience, particularly in technical areas. Web4Boats.com does
not maintain key person life insurance for any of its personnel.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion of our results of operations
and financial condition in conjunction with our consolidated financial
statements and related notes included elsewhere in this Form 10-SB.
Unless specified otherwise as used herein, the terms "we," "us" or
"our" refers to Web4Boats.com, Inc.
OVERVIEW
Prior to entering into the Internet market and boating industry, the
Company, as a non-operating entity, merged with a business known as New York
Bagel Exchange, Inc. in September 1997. (For accounting purposes, the
merger resulted in a continuation of the bagel company's operations.)
The Company engaged in the business of wholesale and retail sales of
bagels, sandwiches, baked goods, specialty coffee and related items at a
single store. The Company's Board of Directors approved the sale
of the Company's inventory and fixed assets and ceased the bagel related
operations on March 25, 1999. The actual sale of assets was on April 19,
1999. All management of New York Bagel Exchange, Inc. resigned and new
management was subsequently appointed. On April 20, 1999, the Company changed
its name (and direction of its business) to Web4Boats.com, Inc. and commenced
developing a commercial Internet site in which boat dealers, marinas,
individual buyers and sellers would come to advertise sales and services
related to the professional and recreational boating industry.
We are a national Internet site for new and pre-owned boating and water
sports related information and purchasing services connecting consumers to our
network of affiliated and participating suppliers of boating and water sports
related websites. We launched our new website (www.Web4Boats.com) for
boating and water sports marketing service in September 1999. Through our
website, Web4Boats.com, consumers can research pricing, specifications,
availability, financing and other information regarding new and pre-owned
boats, and recreational equipment. When consumers make their selection and
they are ready to buy either a boat or any other water sport related products,
they can make their purchases in a variety of ways by utilizing the links
on our website or directly contacting the seller of the classified listed
items or products. In addition, we are continuing to develop value added
programs and product suppliers for consumers such as insurance, warranty
services, and boat transportation services.
To date, the Company has had almost no revenue from any of its
website or related operations. We are currently set up to derive revenue
from fees and commissions from affiliate programs, such as Amazon.com,
Cyber-Marine.com, iGoFish.com, and luvia.com. We expect to add to
these revenue generating opportunities with future revenues from fees paid
by banner advertisement placements and links to other websites. It is
anticipated that the enhancement of the website would include Boat
Dealers/Brokers, Boat Builders/ Manufacturers, Marinas, and other
recreational suppliers having access to our program and services by
paying initial placement fees, as well as ongoing monthly fees based
upon, among other things, the size of territory, demographics and the
transmittal of purchase requests to them.
Page -11-
We anticipate that we will derive direct revenue from the volume of
purchases made as a result of visiting our website. We also believe our
ability to attract subscribing dealers/brokers and other affiliates for our
website, is directly related to the volume of visits and subsequent
purchases we expect to occur as a result of a visit to our website. For
the week ended January 12, 2000, we have had approximately 750
to 1,000 hits per day at the Web4Boats.com website.
It is anticipated that sales and marketing costs will consist primarily
of promotion and advertising to build brand awareness and encourage potential
customers to visit our website. We will use Internet advertising, as well as
traditional media, such as television, radio and print. The majority of our
Internet advertising is expected to be comprised of sponsorship and banner
advertising agreements with Internet portals such as Alta Vista, Excite, and
Lycos as well as advertising and marketing affiliations with online boating
and recreational information providers. The Internet portals and online
boating and recreational information providers charge a combination of
set-up, initial, annual, monthly and variable fees. Set-up fees are incurred
for the development of the link between our website and their website. No
such banner advertising is currently in place.
From April 1999 to September 1999, the Company's operating activities
related primarily to engaging consulting personnel, raising capital, purchasing
operating assets, performing product development and investing in sales and
marketing programs. The Company began accruing commissions from products
being purchased by Web4Boats.com viewers being linked to the company's
affiliation program in September, 1999. Revenues from that buying through
December 31, 1999, however, are less than $100.
The Company expects to derive substantially all of its revenues from
the sale of advertisements. Advertising revenues are recognized in the period
in which the advertisement is displayed, provided that no significant Company
obligations remain and collection of the resulting receivable is probable.
Company obligations typically include guarantees of a minimum number
of "impressions," or times that any advertisement appears on pages where
the user views the advertising banner on the Web4Boats.com website. To
the extent minimum guaranteed impressions are not met, the Company
defers recognition of the corresponding revenues until guaranteed impression
levels are achieved. Deferred revenue is comprised of billings in excess of
recognized revenue relating to advertising contracts. The Company's revenues
are derived principally from the sale of advertisements on short-term
contracts.The Company's standard rates for advertising currently range from
$100-250 per 1,000 impressions. The Company currently has no banner
advertisers and its impressions are currently running about 750 to 1,000
per day.
Page -12-
The Company has an extremely limited operating history as an Internet
company, and its prospects are subject to the risks, expenses and difficulties
frequently encountered by companies in the new and rapidly evolving markets
for Internet products and services. To address these risks, the Company must,
among other things, continue to respond to competitive developments, attract,
retain and motivate qualified personnel, implement and successfully execute its
advertising sales strategy, develop and market additional media properties,
upgrade its technologies and commercialize products and services
incorporating such technologies. There can be no assurance that the Company
will be successful in addressing such risks. The extremely limited operating
history of the Company makes the prediction of future results of operations
difficult or impossible. The Company currently expects to significantly
increase its operating expenses to expand its sales and marketing operations,
to fund greater levels of product development and to develop and
commercialize additional media properties.
As a result of the Company's extremely limited operating history, the
Company does not have historical financial data for any significant period of
time. Quarterly revenues and operating results will depend
substantially upon the advertising revenues received within the quarter,
and will be difficult to forecast accurately. Accordingly, the cancellation or
deferral of a small number of advertising contracts could have a material
adverse effect on the Company's financial condition. In addition, the
Company plans to significantly increase its operating expenses to
expand its sales and marketing operations and to fund greater levels of
product development. To the extent that such expenses precede or are
not subsequently followed by increased revenues, the Company's results
of operations will be materially and adversely affected.
The Company's operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside the
Company's control. These factors include the level of usage of the Internet,
demand for Internet advertising, seasonal trends in both Internet usage and
boat advertising placements, the advertising budgeting cycles of individual
advertisers, the amount and timing of capital expenditures and other costs
relating to the expansion of the Company's operations, the introduction of
new products or services by the Company or its competitors, pricing changes
in the industry, technical difficulties with respect to the use of
Web4Boats.com, general economic conditions and economic conditions specific
to the Internet and online media. As a strategic response to changes in the
competitive environment, the Company may from time to time make material
pricing, service or marketing decisions that effect the Company's business.
Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations of securities analysts and
investors. In such event, the trading price of the Company's Common Stock
would likely be materially and adversely affected.
Page -13-
RESULTS OF OPERATIONS
The use of any comparison data derived from the Company's
accompanying financial statements is misleading because the Company
disposed of its assets in New York Bagel Exchange, Inc. in April 1999,
(within days after the change of the Company's fiscal year) and
subsequently began to pursue a completely different business than that
of the predecessor company. Therefore, the financial statements have
no comparative information that would be helpful in this regard. Instead
the Company will focus on the forward looking aspects of our financial
condition and any risks involved in entering these unchartered waters.
REVENUES
For the fiscal year ended March 1999 and the period from April 1, 1999
to September 30, 1999, our revenues were $554,451 and $3,770, respectively.
Both amounts, however, are related to the Bagel store operation that has been
discontinued. Revenues from the website operations for the period ended
September 30, 1999, are $ -0- and from September 30, 1999, to December
31, 1999, are less than $100. There can be no assurance that revenues will
increase in the near future.
SALES AND MARKETING
Sales and marketing expenses in the future will primarily include
Internet marketing and advertising expenses, fees paid to our purchase request
providers, expenses to develop our brand equity and encourage potential
customers to visit our website, personnel and other costs associated with
sales. The Company's customers are expected to purchase advertisements
on a short-term basis. There can be no assurance that customers will
continue to purchase advertising on the Company's website pages. The
Company anticipates that sales and marketing expenses will increase in
future periods as it continues to pursue an aggressive brand building
strategy.
PRODUCT AND TECHNOLOGY DEVELOPMENT
Product and technology development expenses in the future will
primarily include personnel costs relating to the introduction of new
products and services and enhancing the features, content and functionality
of our website, as well as expenses associated with our telecommunications
and computer infrastructure. The Company believes that continued expansion
of its operations is essential to enhance and extend the Web4Boats.com main
website, establish branded properties in targeted markets and expand the
Company's user and advertising base. As a consequence, the Company intends
to continue to increase expenditures in all operating areas.
GENERAL AND ADMINISTRATIVE
General and administrative expense primarily consists of executive,
consulting, financial and legal expenses and related costs. General and
administrative expense was $517,598 and $71,089 in the fiscal year ended
March 1999, and the six months ended September 30, 1999, respectively.
The first amount is related entirely to the bagel store operations. Virtually
all of the second amount is related to development of the website
business. Salaries for all periods set forth in the financial statements
are related solely to the bagel store operation. Executive compensation
in the form of Common Stock and Common Stock options has been granted
to Mr. Dennis Schlagel, the Company's President since the end of the
bagel store operation, and Mr. Blair J. Merriam, with whom the Company
contracts through Internet Advisors, Inc. See Item 6, below.
Page -14-
COST OF REVENUES
Cost of revenues consists of the expenses associated with the
production and usage of the Company's website. As measured in page views
(defined as electronic page displays), the Company delivered an average of
approximately 350 page views per day in September, compared with an average
of approximately 650 page views per day in October and 750 to 1,000
page views per day in the first part of January. The Company anticipates
that its content and Internet connection expenses as a percentage of revenue
will continue to increase for the foreseeable future.
PRODUCT DEVELOPMENT
Product development expenses will consist primarily of consultant
compensation to support new product development. Product development
expenses are expected to increase as the Company embarks on its course to
aggressively enhance the features and functionality of Web4Boats.com website.
To date, all product development costs have been expensed as incurred. The
Company believes that significant investments in product development are
required to remain competitive.
INCOME TAXES
The Company has net operating loss carryforwards from years 1997 and
earlier of approximately $188,000 and $94,000 for federal and California state
tax purposes, respectively. With additional losses for fiscal years 1998 and
1999, the Company has total net operating loss carryforwards at March 31,
1999 of approximately $1,650,000 and $825,000 for federal and California
state tax purposes, respectively. A deferred asset for these amounts has not
been accrued due to the uncertain nature of its being realized. Net
operating loss carryforwards begin to expire in fiscal year 2011.
EXECUTIVE COMPENSATION
The Company does not have any non-officer employees, and no
cash salaries or wages are currently being paid. However, the President
of the Company, Dennis Schlagel, received 500,000 shares of restricted
Rule 144 stock in lieu of compensation and a Stock Option in April
1999, for 500,000 shares of common stock exercisable at the price of
$0.50 per share. The stock and stock options were granted to Mr. Schlagel
because the Company did not have sufficient cash available to induce Mr.
Schlagel to join the Company in an officer and director capacity.
See "Security Ownership Of Certain Beneficial Owners and Management"
Item 4 below, "Executive Compensation" Item 6 below, and "Certain
Relationships and Related Transactions" Item 7 below.
The Company issued 10,000 shares of restricted Rule 144 common stock
to Daniel Thornton in April 1999, in exchange for consulting services. The
stock was granted to Mr. Thornton because the Company did not have sufficient
cash available to induce Mr. Thornton to join the Company in the capacity of
director. See "Security Ownership Of Certain Beneficial Owners and
Management" Item 4 below, and "Certain Relationships and Related Transactions"
Item 7 below.
Page -15-
The Company's day to day operations are provided by Mr. Blair J.
Merriam under a contract with Internet Advisors, Inc. Computer hardware
maintenance and website design are performed on a contract basis with
Web-Light Consulting and Design, Inc. See "Certain Relationships and
Related Transactions, Item 7, below. The Company expects to continue
these arrangements at least until summer of 2000. Depending on the
success of the operation and the availability of funds the Company
hopes at that time to begin to establish an internal management team
and staff. Poor business results could delay this plan indefinitely. Under
the terms of the agreement with Internet Advisors, Inc. the Company is
obligated to pay Ten Thousand Dollars ($10,000) per month that "may
be made in either cash, stock, or any combination thereof." Because
the fees may be paid in stock, the Company does not believe it will
have any problems meeting its payment obligations under this agreement
over the next twelve months.
The Web-Light Consulting and Design agreement is for Web-Light
to design and build Web4Boats.com's website according to the criteria
established by Web4Boats.com for a fee of $32,760.00. Under the
agreement total costs including hardware and setup fees were
$63,920. These fees have been paid. Ongoing monthly fees are $3,750.
These fees are paid as incurred. The Company believes it will have no
problems meeting its obligations under the agreement.
STOCK OPTIONS GRANTED IN 1999
In April 1999, we granted stock options (not under any plan) to
purchase 1,000,000 shares of common stock. These stock options were
granted to employees, directors and consultants at exercise prices of fifty
cents ($0.50) per share which were below the fair market value at the date of
grant. See "Security Ownership of Certain Beneficial Owners and Management"
Item 4 below, "Executive Compensation", Item 6 below, and "Certain
Relationships and Related Transactions", Item 7 below.
LIQUIDITY AND CAPITAL RESOURCES
Although the Company's auditor has issued an opinion questioning
the Company's ability to continue as a going concern, we believe our
current cash and cash equivalents are sufficient to meet our anticipated
cash needs for working capital and capital expenditures for at least the
next 12 months.
In August, 1999, the Company received $100,000 from a shareholder in
exchange for 10,000 shares of Series A Preferred Stock. A portion of the
cash has been used primarily to pay for hardware, software, programming
and other operating expenses to launch its website and other daily operating
costs. The Company anticipates that capital expenditures in the fiscal year
ending March 30, 2000 will be approximately $50,000, primarily for
additions to the Company's networking and computer infrastructure,
leasehold improvements and furniture.
In June 1999, we authorized the creation of a class of Preferred
shares. The Twenty Million (20,000,000) shares of Preferred Stock have a
par value of one-tenth cent ($.001) per share, bringing the total number of
common and preferred shares authorized by the Company to One Hundred Twenty
Million (120,000,000) shares. The Company's Board of Directors may
divide and issue the Preferred Shares in series.
In August 1999, the Company designated a portion of the Preferred Stock
as Series A Preferred Stock. Such Series A Preferred Stock consists of 10,000
shares of the authorized Preferred Shares. At the option of the holder, the
purchaser may convert said Series A Preferred Stock into Common Stock of the
Company no sooner than one (1) year after the purchase date. All 10,000
shares were sold for $100,000 on August 13, 1999. The conversion rate for
said stock shall be at the rate of One Hundred (100) shares of Common Stock
for every one (1) share of Series A Preferred Stock. One Million (1,000,000)
shares of Common Stock have been reserved and such shares shall be issued only
in conversion of the Series A Preferred Stock as provided by the terms of the
designation.
With respect to fiscal years beyond March 31, 2000, we may be required
to raise additional capital to meet our long term operating requirements.
Although our revenues have decreased since implementation of the
Web4Boats.com business, our expenses have continued to, and in the
foreseeable future are expected to, exceed our revenues. Accordingly,
we do not expect to be able to fund our operations from internally
generated funds for the foreseeable future.
Our cash requirements depend on several factors, including:
(1) the level of expenditures on marketing and advertising
(2) the rate of market acceptance
(3) the ability to expand our customer base
(4) the ability to increase the volume of sales with our
affiliates
(5) the cost of contractual arrangements with online
information providers, search engines, and other referral
sources.
Page -16-
The Company currently has no material commitments. The Company
anticipates a substantial increase in its capital expenditures and operating
lease arrangements in 2000 consistent with its anticipated growth. We cannot
accurately predict the timing and amount of our cash requirements. If
capital requirements vary materially from those currently planned, we may
require additional financing sooner than anticipated. We have no commitments
for any additional financing, and there can be no assurance that any such
commitments can be obtained on favorable terms, if at all.
Any additional equity financing may be dilutive to our stockholders,
and debt financing, if available, may involve restrictive covenants with
respect to dividends, raising capital and other financial and operational
matters which could restrict our operations or finances. If we are unable to
obtain additional financing as needed, we may be required to reduce the scope
of our operations or our anticipated expansion, which could have a material
adverse effect on our business, results of operations and financial condition.
PLAN OF OPERATION
Over the next twelve months the Company plans to devote most
of its efforts and financial resources toward increasing awareness of its
website among the boating public and professionals. Initial focus,
however, must be on installation of the core features of the website.
The volume of classified advertisements has reached the point that
management believes it is sufficient, because of its size, to attract boat
buyers and others to the website. In addition, management also believes
that the website traffic will now justify fees for all new ads placed on the
website. Finally, with respect to the classified ads, in February the Company
will commence a telemarketing campaign with an independent telemarketing
firm (the firm has not yet been selected) to contact all current classified
advertisers collected by the Company and displayed on the website with
the proposal of a fee for continued display of the ad. In this way all
non-paying advertisers are expected to be dropped from the displayed
data base over the new 60 days.
The credit card charge portion of the classified advertisement
service and the centralized email service are expected to be operational by
the third week of January, 2000. The next phase with the classified
advertisement sector is to add new categories (next 90 days) and enhance the
display features (music, voice, etc.) available to the advertiser. The
addition of the display features, however, is a lower priority than the other
aspects of the website development.
Concurrent with the telemarketing campaign directed at classified
advertisers will be the initial concerted efforts at increasing awareness of the
website among the boating public and professionals. The Company plans to
initially arrange most of its links from other websites and magazines through
a barter arrangement under which the other website or magazine will receive
a reciprocal link to its website or services thereby reducing cash outlays.
The Company expects that its significant cash outlays over the next
90 days will be for completion of development of the core elements of its
website. This amount is expected to be $50,000 to $100,000. Sources of
theses funds have not been located as of the date hereof, but the Company
is pursuing leads for possible lenders and investors. There can be no
assurance at this time that these funds or any funds will be available to the
Company on terms that it can afford. Failure to acquire these funds at this
point in the Company's development would make it difficult for the Company
to achieve its business goals over the next six months. See Financial
Statements.
Assuming that the Company acquires the $50,000 to $100,000 it is
seeking and completes development of the core elements of its website over
the next 90 days, management believes that the Company should have begun
to bring in significant revenue from its monthly fees in its classified
advertisement sector. At this point the Company will begin to seek a
significant infusion of capital, $1 - 5 million, to increase awareness of the
website among the boating public and professionals and to continue
development of the website. There can be no assurance that such funding
will be available to the Company. In the event that such funding is not
available to the Company, then Web4Boats.com would be forced to use
whatever cash is generated, mostly by its classified advertisement sector,
for enhancement of the website and its promotion. Such a process of
development would likely be much slower than what could be achieved
with the infusion of substantial new investments. Management believes,
however, that the Company's business is relatively easily scalable. In
other words, once the core elements of the website are in place in the next
90 days, the website will be able to achieve its purpose. Thereafter,
additional funds are devoted mostly to promotion of the website and
enhancement of the core elements. The availability of funds determines
the speed with which promotion and enhancements are pursued.
Depending upon the ability of the Company to arrange additional
financing, the Company expects to add full time management and staff
by the end of 2000. Development of the Company's business could
significantly alter the timing of the need for staff and current plans are
tentative. In addition, competition for qualified internet technology and
sales personnel is intense, which is expected to make it difficult to add
personnel on short notice and at the optimal time for the Company.
STRATEGIC ALLIANCES
In order to serve users more effectively and to extend the
Web4Boats.com brand to new media properties, the Company has entered into
strategic relationships with business partners who offer content, technology,
and distribution capabilities. Strategic alliances are affiliations and
linkages to other web companies that provide related products and services
and in most cases are willing to compensate Web4boats.com for directing
traffic and/or purchasers to their sites. To date, the Company has had
less than $100 of revenue derived from affiliate programs.
Page -17-
WE HAVE A HISTORY OF NET LOSSES AND EXPECT NET LOSSES FOR THE
FORESEEABLE FUTURE. IF WE CONTINUE TO LOSE MONEY, OUR OPERATIONS
WILL NOT BE FINANCIALLY VIABLE.
Web4Boats.com has not begun receiving commission or advertising
revenues, however, commissions are currently accruing (less than $100 had
accrued as of December 31, 1999.) and the sales of the advertising banners
expected to begin in the first quarter 2000 when the Company has increased
traffic coming to the site. Therefore, Web4Boats.com has a limited operating
history, and its prospects are subject to the risks, expenses and uncertainties
frequently encountered by young companies that operate exclusively in the
new and rapidly evolving markets for Internet products and services.
Because of the recent emergence of the Internet-based boating and
recreational information and purchasing industry, none of our executives
has significant experience in the industry. This limited operating history
and management experience means it is difficult for us to predict future
operating results. We had an accumulated deficit of $1,819,977
September 30, 1999 Our potential for future profitability must be
considered in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in the early stages of development,
particularly companies in new and rapidly evolving markets, such as the
market for Internet commerce.
Page -18-
SEASONALITY
We expect our business to experience seasonality as it matures.
Seasonality in the boating and recreational equipment industry, Internet
and commercial online service usage and advertising expenditures is likely to
cause fluctuations in our operating results which will be difficult to predict
until the Company has more experience with its operations. Internet
and commercial online service usage and the growth rate of such usage may be
expected typically to decline during the summer. Depending on the extent
to which the Internet and commercial online services are accepted as an
advertising medium, seasonality in the level of advertising expenditures
could become more pronounced for Internet-based advertising.
Page -19-
Page -20-
Page -21-
LIABILITY FOR THE COMPANY'S SERVICES
Web4Boats.com hosts a wide variety of information, community,
communications and commerce services that enable individuals to exchange
information, generate content, conduct business and engage in various online
activities. The laws relating to the liability of providers of
these online services for activities of their users is currently unsettled.
Claims could be made against Web4Boats.com for defamation, negligence,
copyright or trademark infringement, personal injury or other theories based
on the nature and content of information that may be posted online by its
users. Such claims have been brought, and sometimes successfully pressed,
against online service providers in the past. In addition, Web4Boats.com
could be exposed to liability with respect to the selection of listings that
may be accessible through its Web4Boats.com-branded products and media
properties, or through content and materials that may be posted by users in
classifieds, message boards, clubs, chat rooms, or other interactive
community-building services. Any such finding of liability against
Web4Boats.com could have a material adverse effect on the Company's
business.
Page -22-
Page -23-
Page -24-
Page -25-
Page -26-
WE ARE UNCERTAIN OF OUR ABILITY TO OBTAIN ADDITIONAL FINANCING FOR
OUR FUTURE CAPITAL NEEDS. IF WE ARE UNABLE TO OBTAIN ADDITIONAL
FINANCING WE MAY NOT BE ABLE TO CONTINUE TO OPERATE OUR BUSINESS.
We currently anticipate that our cash, cash equivalents and short-term
investments will be sufficient to meet our anticipated needs for working
capital and other cash requirements at least for the next 12 months. We may
need to raise additional funds sooner, however, in order to fund more rapid
expansion, to develop new or enhance existing services or products, to
respond to competitive pressures or to acquire complementary products,
businesses or technologies. There can be no assurance that additional
financing will be available on terms favorable to us, or at all.
If adequate funds are not available or are not available on acceptable terms,
our ability to fund our expansion, take advantage of potential acquisition
opportunities, develop or enhance services or products or respond to
competitive pressures would be significantly limited.
Page -27-
RELIANCE ON ADVERTISING REVENUES AND UNCERTAIN ADOPTION OF THE
WEB AS AN ADVERTISING MEDIUM
Web4Boats.com expects to derive a majority of its revenues from
the sale of advertisements on its Web pages under short-term contracts.
Most of its advertising customers have limited experience with the Web
as an advertising medium. Web4Boats.com's continuing ability to
generate significant advertising revenues will depend upon, among other
things: - - advertisers' acceptance of the Web as an effective and sustainable
advertising medium; - - the development of a large base of users of its
services possessing demographic characteristics attractive to advertisers;
and - - its ability to continue to develop and update effective advertising
delivery and measurement systems. No standards have yet been widely
accepted for the measurement of the effectiveness of Web-based advertising.
Web4Boats.com cannot be certain that such standards will develop
sufficiently to support Web-based advertising as a significant advertising
medium. In addition, adverse economic conditions can significantly
impact advertisers ability and willingness to spend additional amounts
on advertising generally, and on Web-based advertising specifically.
Page -28-
YEAR 2000 ISSUE
Because many computer applications have been written using two digits
rather than four to define the applicable year, some date-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000.
This "Year 2000 issue" could result in system failures or miscalculations
causing disruptions of operations, including disruptions of our website or
normal business activities.
Non-information technology systems include accounts receivable/
payable, payroll, banking, postal bar code, and other software that support
our daily business activities. Although we have not conducted a survey, we
believe there is no material exposure to our non-information technology
systems. We believe that we do not have any other non-information, embedded
technology systems, with potential Year 2000 issues.
We do not believe that we have material exposure to the Year 2000
issue with respect to our own information systems since our existing systems
correctly define the Year 2000 with four digits. As of January 12, 2000 we
had no problems with the change to the Year 2000. Thus far, we do
not believe that there is any need for alternative plans to deal with the
Year 2000 issues. The worst case scenario pertaining to the Year 2000 issue
would be an overall failure of the national Internet and telecommunications
infrastructure. This may require alternative means for users to gain
connection to our servers.
Page -29-
ITEM 3. DESCRIPTION OF PROPERTY
The Company is located at the home of a major shareholder of the
Company, Dori Merriam, at 6150 La Jolla Mesa Drive, La Jolla, California
92037. Its telephone number is (858) 459-6268. The Company occupies this
space on a rent-free basis. The Company believes its facilities are adequate
to meet current and short-term future business needs. The Company is
looking for suitable office space, 2,000 to 3,000 sq. ft., in a commercial
facility. If the Company develops according to its plan, then it is
anticipated that additional office space will be needed within the next
twelve months. Leasing costs have yet to be determined.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tables sets forth the number and percentage of
outstanding shares of Company Common Stock and Series A Preferred Stock
owned by (i) each person known to the Company to beneficially own more than
5% of each class of stock, (ii) each director, (iii) each named executive
officer, and (iv) all executive officers and directors as a group. The
following calculations are made according to the rules of the Securities and
Exchange Commission. Share ownership is deemed to include all shares that
may be acquired through the exercise or conversion of any other security
immediately or within the next sixty days. Such shares that may be so
acquired are also deemed outstanding for purposes of calculating the
percentage of ownership for that individual or any group of which that
individual is a member. Shares outstanding were determined as of December
31, 1999.
COMMON STOCK
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF
BENEFICIAL OWNER(1) OWNERSHIP COMMON STOCK
BENEFICIALLY OWNED
Dennis Schlagel 19% 1,000,000(2)
P.O. Box 3171
Cheyenne, WY 82003
Daniel Thornton * 10,000
2658 Bridgeway Road
Sausalito, CA 94965
Blair J. Merriam 36% 1,970,000(3)
P.O. Box 5235
Cheyenne, WY 82003
Latin Foods Corporation 6% 280,000(4)
6469 Mones Cazon
Buenos Aires, Argentina
All executive officers and 50% 2,980,000(2)(3)
directors as a group
(3 persons)
- ----------------
Page -30-
* Indicates ownership of less than one percent.
(1) If Dori Merriam's shares of Series A Preferred Stock were currently
convertible, then she would appear in the above table as owning
1,000,000 shares and her Percentage of Ownership would be
18%. Blair Merriam is Dori Merriam's nephew through her
husband's family. See following table.
(2) Includes 500,000 shares that may be acquired pursuant to the exercise
of options.
(3) Includes 200,000 shares that may be acquired pursuant to the exercise
of options and beneficial ownership of shares by the following
entities that are 100% owned by Mr. Merriam: Spika Corporation -
465,000 shares direct and 640,000 shares that may be acquired
pursuant to the exercise of options; Internet Advisors, Inc. -
500,000 shares direct; BJM, Inc. - 165,000 direct.
(4) All 280,000 shares may be acquired pursuant to the exercise of
options. Latin Foods Corporation is 100% owned and operated by
Carlos Jorge DeBaisieux.
- ----------------
SERIES A PREFERRED STOCK
NAME AND ADDRESS OF PERCENTAGE OF NUMBER OF SHARES OF SERIES
BENEFICIAL OWNER OWNERSHIP A PREFERRED BENEFICIALLY
OWNED (1)
Dori Merriam 100% 10,000
6150 La Jolla Mesa Drive
California
All executive officers and 0% 0
directors as a group
(0 persons)
- ----------------
(1) Each share of Series A Preferred Stock is convertible into 100 shares
of Common Stock after August 13, 2000. Ms. Merriam disclaims beneficial
ownership of any shares of Common Stock beneficially owned by her husband,
James Merriam.
- ----------------
SUBSTANTIAL SALES OR THE PERCEPTION OF FUTURE SALES OF OUR
COMMON
STOCK MAY DEPRESS OUR STOCK PRICE.
Sale of substantial numbers of shares of Common Stock in the public
market could adversely affect the market price of our Common Stock and make
it more difficult for us to raise funds through equity offerings in the
future. A substantial number of outstanding shares of Common Stock and
shares of Common Stock issuable upon exercise of outstanding stock options
will become available for resale in the public market at prescribed times.
Of the 4,683,460 shares that were outstanding as of September 30, 1999,
approximately 3,068,460 shares are eligible for sale in the public market
without restriction. Of the restricted shares of Common Stock most shares
have been held more than one year and shall be eligible for sale in the
public market in accordance with the provisions of Rules 144 of the
Securities Act and any contractual or legal restrictions on their transfer,
as applicable.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Pursuant to the Company's Certificate of Incorporation and its By-Laws,
the members of the Board of Directors serve for one-year terms. The following
persons assumed their positions subsequent to the end of the most recent fiscal
year. None of the persons listed below had any employment relationship with
the Company prior to the dates indicated below. All officers and directors
of the Company at the end of the most recent fiscal year were terminated as
of April 1, 1999. See "Certain Relationships and Related Transactions" in
Item 7, below, for a description of the Stock Redemption and Employment
Termination Agreement. See also "Executive Compensation" in Item 6, below.
The Company's current directors and executive officers are:
Name Age Position
Blair J. Merriam(1) 41 General Manager
Dennis Schlagel(1) 60 President, Director
Daniel Thornton 39 Director
- ----------------
Page -31-
(1) Mr. Schlagel and Mr. Merriam are first cousins.
- ----------------
Mr. Blair J. Merriam has been General Manager of the Company since
April, 1999. Mr. Merriam presently devotes full time to the affairs of the
Company. For 6 years prior to joining the Company, Mr. Merriam worked for
himself in consulting and managing the sales and marketing of food products
companies producing products mainly in the United States and Mexico. Mr.
Merriam also recently formed Internet Advisors Group, Inc. through which he
has been consulting to the Company and operating as its General Manager.
Mr. Dennis Schlagel has been President and a director of the Company
since the sale of the Company's bagel business in April, 1999. Mr. Schlagel
is semi-retired and lives from fall through spring near Hermosillo, Mexico.
He devotes only part of his time to the affairs of the Company. Prior to
joining the Company, Mr. Schlagel was from February, 1994, general manager
of Beltropic, Inc., a Wyoming corporation engaged in farming and the produce
export, sales and distribution business in northern Mexico. Prior to and
after serving in the Army in 1961, Mr. Schlagel attended Chico State College,
California, and California Polytecnic, respectively.
Mr. Daniel Thornton has been a director of the Company since October
1, 1999. From September 1996 to the present Mr. Thornton has been Chief
Executive Officer of BioSynergy Natriceuticals, Inc., a supplier of raw
materials and secondary ingredients to the dietary supplement industry.
For 2 years prior to September 1996, he was Chief Executive Officer of
Stevion Co.
Directors occasionally consult on an informal basis and, under the
Company's bylaws, are to meet formally for the annual meeting of directors.
Consultants
The following persons are employees of Web-Light Consulting and Design, Inc.,
the company upon which Web4boats.com is currently dependent for management of
its website.
Andre Delgado is the owner and founder of Web-Light Consulting &
Design, Inc. Web-Light Consulting & Design is an Internet Service Provider
specializing in web-site design, development, electronic commerce, database,
website hosting, and RealAudio/Video solutions. In 1995 Andre Delgado
founded Web-Light Consulting and Design to help companies and organizations
take full advantage of the unparalleled opportunities provided by the World
Wide Web. Web-Light is located in Ventura, California along Southern
California's coastline. Web-Light maintains the latest in technology,
presently utilizing Intel Pentium III servers running Windows NT and
RealAudio/Video G2 connected to 2 redundant T1 Internet connections.
Currently Web-Light is responsible for 8 daily Internet RealAudio Broadcasts
with 53 others pending. Web-Light's client's range from small companies and
non-profit organizations to publicly-traded companies, international radio
networks, and presently includes a year 2000 Presidential Candidate.
Web-Light provides each client with the personal attention that they need and
deserve and Web-Light's success can be attributed to its outstanding customer
service.
Nicolaus Sommer is a Software Architect for Web-Light Consulting &
Design. In 1999 Mr. Nicolaus Sommer joined the Web-Light Team to provide
customers with the 3rd generation of Internet Software. Nicolaus Sommer is
responsible for database design, development of robust server software for
dynamic website content, website security, and system administration. In
1998 Mr. Sommer developed and implemented the NT Web Server System and
E-commerce solutions into a UNIX server array at JetLink Systems, Ventura,
California. Followed by custom website development for the JetLinkclient,
"Golden West Dental". JetLink Systems is the biggest ISP in Ventura County.
Mr. Sommer is the author of numerous technical feature films for the German
Broadcast System (ARD and ZDF); former Partner/CTO of "Computer World"
and owner of the ISP and software development company "Sycom Systems" in
Germany. Mr. Sommer has 15+ years experience in software and project
development using C, C++, Object Pascal, Java, Java Script, and Microsoft
NT/Novell/UNIX System integration.
IF WE ARE UNABLE TO ATTRACT, TRAIN AND RETAIN ADDITIONAL
HIGHLY QUALIFIED SALES AND MARKETING, MANAGERIAL AND
TECHNICAL PERSONNEL, OUR BUSINESS MAY SUFFER.
The Company's future success depends on our ability to identify, hire,
train and retain highly qualified sales and marketing, managerial and technical
personnel. In addition, as we introduce new services we will need to hire
additional personnel. Competition for such personnel is intense, and we may
not be able to attract, assimilate or retain such personnel in the future.
The inability to attract and retain the necessary managerial, technical and
sales and marketing personnel could have a material adverse effect on our
business, results of operations and financial condition.
Our business and operations are substantially dependent on the
performance of our executive officers, and consultants, some of whom are
contracted on an at-will basis and all of whom have worked together for only
a short period of time. The Company utilizes the services of outside
consultants and technical advisors.
Page -32-
ITEM 6. EXECUTIVE COMPENSATION
None of the persons listed below was in an employment relationship
with the Company in the fiscal year ended March 31, 1999. Mr. Blair J.
Merriam, however, began a Common Stock and Common Stock option position in
the Company in August, 1997. See "Certain Relationships and Related
Transactions" in Item 7, below. The following tables contain compensation
data for the Chief Executive Officer and other named executive officers of
the Company for the CURRENT fiscal year as of September 30, 1999, because
none of the executive officers of the Company at March 31, 1999, is still
with the Company and the compensation paid to the March 31, 1999, executive
officers is the subject of the April 1, 1999, Stock Redemption and
Employment Termination Agreement discussed in Item 7, below.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards
--------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Name Other Securities
And Annual Restricted Under- All Other
Principal Compen- Stock lying Compen-
Position Salary Bonus sation Awards Options sation
Blair J. Merriam $120,000(1) -0- -0- $193,750(2) $ -0- -0-
General Manager
Dennis Schlagel -0- -0- -0- $250,000 $-0- -0-
President, Chief
Executive Officer,
Secretary, Treasurer,
Director
- ----------------
</TABLE>
(1) Cash compensation is pursuant to an Agreement with Internet Advisors,
Inc., which is 100% owned and operated by Mr. Merriam. This amount may be
paid in "cash, stock or any combination thereof."
(2) Issued to Mr. Blair J. Merriam or companies over which he has 100%
control and ownership. See "Security Ownership of Certain Beneficial Owners
and Management" in Item 4, above and "Certain Relationships and Related
Transactions" in Item 7, below.
(3) Mr. Schlagel received options for 500,000 shares on April 20, 1999.
The exercise price of the options is $.50 per share and the market price of
the Company's Common Stock on the date of grant was $.50 per share. See
"Security Ownership of Certain Beneficial Owners and Management" in Item 4,
above and "Certain Relationships and Related Transactions" in Item 7,
below.
- ----------------
Page -33-
No other executive officer of the Company receives an annual salary
and bonus in excess of $100,000.
EMPLOYMENT ARRANGEMENTS
The Company has no employment agreements with any of its employees.
The Company does, however, have two agreements with its consultants upon
which it depends heavily for its day to day operations.
Internet Advisors Group, Inc.
The Company engaged Internet Advisors Group, Inc. to set up its
business operations and establish its website design parameters. See "Certain
Relationships and Related Transactions" in Item 7, below.
Web-Light Consulting and Design, Inc.
In July, 1999, the Company entered into an agreement with Web Light
Consulting and Design, Inc. under which Web Light is to act as the designer
and operator of Web4Boats.com's website. Web-Light contracted to design
and build the Web4Boats.com website according to the Company's
parameters for a flat fee, including computer hardware, of $63,920. Monthly
fees, including Internet connection costs and technical maintenance, are
$3,750 on a month to month basis. Full performance by Web-Light
under the agreement should be completed by the end of February or
March, 2000. Additional development of the site will be contracted as
needed and affordable by Web4Boats.com. Web4Boats.com owns the
website and related computer hardware. It could terminate its relationship
with Web-Light at any time and move the related hardware to any
other service provider.
STOCK OPTIONS AND WARRANTS
None of the persons listed below was in an employment relationship
with the Company in the fiscal year ended March 31, 1999. None of the
current executive officers of the Company received options in the fiscal
year completed March 31, 1999. Mr. Blair J. Merriam, however, first
obtained Common Stock in the Company in August, 1997 and has since
acquired a substantial holding of Common Stock and Common Stock
options. The following table sets forth options awarded for the fiscal
year as of September 30, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
<S> <C> <C> <C> <C>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise or Base Expiration
Name Granted (#) Current Year Price ($/sh) Date
Dennis Schlagel 500,000 100% $.50(1) 4/2/04
</TABLE>
- ----------------
(1) The market price on the date of grant was $.50.
- ----------------
Page -34-
None of the persons listed below was in an employment relationship
with the Company in the fiscal year ended March 31, 1999. Mr. Blair J.
Merriam first obtained Common Stock in the Company in August, 1997,
and has since acquired a substantial holding of Common Stock and
Common Stock options See "Certain Relationships and Related
Transactions" in Item 7, below. The following tables contain option data
for the Chief Executive Officer and other named executive officers of the
Company for the current fiscal year as of September 30, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN CURRENT FISCAL YEAR
AS OF 9/30/99 AND OPTION VALUES AS OF 9/30/99
<S> <C> <C> <C>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
9/30/99 9/30/99(1)
Shares Acquired Exercisable/ Exercisable/
Name on Exercised Unexercisable Unexercisable
Blair J. Merriam(2) -0- 840,000/840,000 $-0-/$-0-
Dennis Schlagel -0- 500,000/500,000 $-0-/$-0-
</TABLE>
- ----------------
(1) Computed based on the differences between the fair market value on
September 30, 1999, ($.4375 per share) and aggregate exercise prices.
(2) Mr. Blair J. Merriam first obtained Common Stock in the Company
in August, 1997, and has since acquired a substantial holding of Common
Stock and Common Stock options. See "Certain Relationships and
Related Transactions" in Item 7, below. Mr. Merriam exercised -0- options
in the fiscal year ended March 31, 1999.
- ----------------
DIRECTORS COMPENSATION
The Company's directors are reimbursed for expenses incurred on
behalf of the Company. The company presently has no compensation plan for
directors. In April, 1999, Mr. Daniel Thornton received 10,000 shares of
Common Stock in consideration for consulting services prior to becoming a
director of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK REDEMPTION AND EMPLOYMENT TERMINATION AGREEMENT
For approximately 1 year and 7 months prior to April 1, 1999, the
Company was in the bagel business operating a bagel bakery and delicatessen.
The Company's board of Directors approved the sale of the Company's inventory
and fixed assets for $120,000 on March 22, 1999. The Company ceased its
business operations on March 25, 1999, and disposed of the assets subject to
the sale on April 19, 1999.
Page -35-
On April 1, 1999, all prior management involved in the bagel business
of the Company was terminated pursuant to the Stock Redemption and Employment
Termination Agreement. This Agreement is summarized as follows:
The Agreement was between Mark J. Horne and the Company. Mr. Horne
was at the time the Chief Executive Officer, President and sole Director of
the Company. Under the Agreement, all Mr. Horne's ownership in the Company
(1,215,000 shares of Common Stock) was redeemed for $121.50. Mr. Horne also
relinquished all his options for Company stock. Mr. Horne resigned all his
positions with the Company after appointing Dennis Schlagel as his
replacement in all Mr. Horne's officer positions and as a Director. Mr.
Horne also received a cash payment of $10,000. As part of the transaction,
the Company changed its name to Windom, Inc. and conveyed to Mr. Horne the
Internet domain name "Webboat.com . . . and all variations thereof which Mr.
Horne has reserved . . . ." The Company received the rights to the domain
names "Webbought.com and Webought.com and all legal rights to the name
'ebot'."
Mr. Horne and his father, George F. Horne, canceled, relinquished and
forgave all claims to accrued and unpaid compensation and indebtedness
represented by their loans to the Company in the aggregate amount of
$256,438.62. The Agreement also called for the Company to cancel its
sponsorship agreement with race car driver, Arie Luyendyk, a friend of Mr.
Horne. The Agreement contains mutual releases by each party of the other,
and the Company indemnifies Mr. Horne for any losses related to the Company's
breach of the Agreement or by reason of his relationship with the Company as
an officer, director or shareholder.
As a consequence of this Agreement, all of the executive compensation
for the fiscal year ended March 31, 1999, was reversed.
INTERNET ADVISORS GROUP, INC. CONSULTING AGREEMENT
On April 15, 1999, the Company entered into a 1 year consulting
agreement with Internet Advisors Group, Inc. Internet Advisors is wholly
owned and operated by Blair J. Merriam who at the time the Company entered
into the Agreement was and who continues to be a major shareholder of the
Company. See "Security Ownership of Certain Beneficial Owners and
Management" in Item 4, above. The Agreement calls for Internet Advisors to
provide the following services.
Day to day management of the corporate affairs and business
Liaison with website management firm
Public relations advisor
Planning, design, development, organization, writing and distributing
the materials and content required to develop and maintain the
website
Liaison with attorneys and accountants regarding Filing of this Form
10-SB
Hiring and retaining outside consultants, outsource services and other
service providers
Internet Advisors is to be paid $10,000 per month in "cash, stock, or any
combination thereof" for these services. The agreement is month-to-
month without mention of termination provision.
On April 2, 1999, the Company issued 500,000 shares of Common Stock to
Internet Advisors Group, Inc. for consulting services. The value of these
shares at the date of issuance was $100,000.
Page -36-
ADDITIONAL TRANSACTIONS
On September 24, 1997, the Company issued options for 140,000 shares
of Common Stock to Spika Corporation for assistance in Company development.
The options have an exercise price of $1.00 per share and expire September 4,
2002. These options were valued at $140,000 based on the market price of
the Company's Common Stock at the date of grant. Spika is 100% owned and
operated by Blair J. Merriam, the Company's General Manager.
On October 6, 1997, the Company issued 165,000 restricted shares of
Common Stock to Spika Corporation for assistance in Company development.
The market value of these shares at the date of issuance was $165. Spika is
100% owned and operated by Blair J. Merriam, the Company's General Manager.
On October 6, 1997, the Company issued 165,000 restricted shares of
Common Stock to BJM, Inc. for assistance in Company development. The market
value of these shares at the date of issuance was $165. BJM, Inc. is 100%
owned and operated by Blair J. Merriam, the Company's General Manager.
On December 30, 1997, the Company issued options for 500,000 shares
of Common Stock to Spika Corporation for assistance in Company development.
The options have an exercise price of $.50 per share and expire December 30,
2002. These options were valued at $31,250 based on the market price of the
Company's Common Stock at the date of grant. Spika is 100% owned and
operated by Blair J. Merriam, the Company's General Manager.
On March 10, 1998, the Company issued options for 200,000 shares of
Common Stock to Blair J. Merriam for marketing services. The options have an
exercise price of $.50 per share and expire March 10, 2003. These options
were valued at $62,500 based on the market price of the Company's Common
Stock at the date of grant.
On April 6, 1999, the Company issued 10,000 shares of Common Stock to Daniel
Thornton for consulting services prior to his becoming a director of the
Company. These shares were valued at $3,128.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue up to 100,000,000 shares of Common
Stock, of which 4,683,460 shares were issued and outstanding as of September
30,1999 and 3,000,000 shares are reserved for issuance pursuant to the
exercise of outstanding options, warrants or convertible preferred stock.
Holders of Common Stock have no cumulative voting rights, and, accordingly,
the holders of a majority of the outstanding shares have the ability to elect
all of the directors. Holders of Common Stock have no preemptive or other
rights to subscribe for shares.
PREFERRED STOCK
The Company has 20,000,000 authorized preferred shares issuable in one
or more series with rights and preferences as determined by the Board of
Directors. As of November 23, 1999, the Board of Directors had authorized
10,000 as Series A Preferred Stock with the following rights and preferences:
Series A Preferred Stock which, at the option of the holder thereof
may, no sooner than one year after the purchase date, be converted into
Common Stock at the conversion rate of one (1) share of Series A Preferred
Stock into one-hundred (100) shares of Common Stock. One-million shares of
the Corporation's Common Stock are reserved and issuable only in conversion
Page -37-
of the Series A Preferred Stock. Shares of Series A Preferred Stock that have
been converted revert to the status of unissued and unclassified preferred
shares and may be reissued as part of any future class of shares designated
by the Board of Directors. The Series A Preferred Stock has antidilution
provisions as to any stock split, stock dividend or similar action with
respect to the Company's Common Stock. The shares have a liquidation
preference of $100.00 per share without further participation in additional
distributions. All other rights not specifically addressed in the
designation are identical to those rights granted to common shareholders.
All 10,000 shares of Series A Preferred Stock are held by one
shareholder.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company's Common Stock trades under the symbol "EBOT" on the OTC
Electronic Bulletin Board. Trading commenced in the second quarter of 1998.
The following table sets forth the high and low bid prices per share of the
Common Stock for the last two fiscal years as reported by the OTC Electronic
Bulletin Board. These prices reflect inter-dealer prices, without
retail mark-ups, mark-downs or commissions, and may not necessarily represent
actual transactions.
HIGH LOW
FISCAL 1997
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter $2.50 $0.5625
Fourth Quarter $2.00 $0.1875
FISCAL 1998
First Quarter $1.0625 $0.5625
Second Quarter $1.0625 $0.1875
Third Quarter $0.3125 $0.04
Fourth Quarter $0.875 $0.20
FISCAL 1999
First Quarter $0.5625 $0.1875
Second Quarter $1.00 $0.50
Third Quarter $0.5625 $0.3125
The Company has been informed by its transfer agent that as of
January 12, 2000, there were approximately 163 record owners of its
Common Stock.
The Company has not paid any dividends on its common Stock since
inception. It is the present policy of the Company not to pay cash dividends
and to retain future earnings to support the Company's growth. Any payment
of cash dividends in the future will be dependent upon the amount of funds
legally available therefor, the Company's earnings, financial condition,
capital requirements and other factors that the Board of Directors may deem
relevant. The Company does not anticipate paying any cash dividends in the
foreseeable future.
OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT
FLUCTUATIONS WHICH MAY MAKE IT DIFFICULT FOR INVESTORS TO PREDICT
OUR FUTURE PERFORMANCE.
Our quarterly operating results may fluctuate due to many factors.
Our expense levels are based in part on our expectations of future revenues
which may vary significantly. We plan our business operations based on
increased revenues and if our revenues do not increase faster than our
expenses, our business, results of operations and financial condition will be
materially and adversely affected. Other factors that may adversely affect
our quarterly operating results include:
(1) the announcement or introduction of new or enhanced
sites, services and products by us or our competitors
(2) general economic conditions and economic conditions
specific to the Internet, online commerce or the boating
and recreational equipment industry
(3) a decline in the usage levels of online services and
consumer acceptance of the Internet and commercial online
services for the purchase of consumer products and
services such as those offered by us
(4) our ability to upgrade and develop our systems and
infrastructure and to attract new personnel in a timely
and effective manner
(5) the level of traffic on our website and other sites that
refer traffic to our website
(6) technical difficulties, system downtime or Internet
brownouts
(7) the amount and timing of operating costs and capital
expenditures relating to expansion of our business,
operations and infrastructure
(8) governmental regulation
(9) unforeseen events affecting the industry
Page -38-
ITEM 2. LEGAL PROCEEDINGS
None.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
(1) On August 22, 1997, the Company issued 450,000 shares of Common
Stock in the merger with New York Bagel Exchange, Inc. ("NYBE") at the rate
of one share of Company Common Stock for each share of NYBE. These shares
were valued at $102,500.
(2) On September 24, 1997, the Company issued options for 140,000
shares of Common Stock to Spika Corporation for Internet marketing consulting.
The options have an exercise price of $1.00 per share and expire September 4,
2002. These options were valued at $140,000 based on the market price of the
Company's Common Stock at the date of grant.
(3) On October 6, 1997, the Company issued 165,000 shares of
restricted Common Stock to Spika Corporation for assistance in development
services. The market value of these shares at the date of issuance was $165.
(4) On October 6, 1997, the Company issued 165,000 shares of
restricted Common Stock to BJM, Inc. for assistance in development services.
The market value of these shares at the date of issuance was $165.
(5) On October 6, 1997 the Company issued 170,000 shares of restricted
Common Stock to John Lusk in exchange for development services. These shares
were valued at $170.
(6) On October 10, 1997 the Company issued 250,000 shares of
restricted Common Stock to Mark Horne as compensation. These shares were
valued at $25,000. These shares were redeemed on April 1, 1999.
(7) On October 10, 1997, the Company issued 250,000 shares of
restricted Common Stock to George Horne reportedly as payment of a loan to
the Company. These shares were valued at $25,000. These shares were
canceled on April 1, 1999.
(8) On October 10, 1997, the Company issued 10,000 shares of
restricted Common Stock to Bob Clark in exchange for $7,500 cash.
(9) On December 12, 1997 the Company issued 200,000 shares of
restricted Common Stock to Bake It Again Sam as part of a merger transaction
that was rescinded April 1, 1998. These shares were valued at $175,000.
(10) On December 19, 1997, the Company issued 70,000 shares of
restricted Common Stock to Ben Harris in exchange for management services.
These shares were valued at $39,375.
(11) On December 30, 1997, the Company issued options for 500,000
hares of Common Stock to Spika Corporation for Internet marketing consulting.
The options have an exercise price of $.50 per share and expire December 30,
2002. These options were valued at $31,250 based on the market price of the
Company's Common Stock at the date of grant.
Page -39-
(12) On January 1, 1998 the Company issued 5,000 shares of restricted
Common Stock to Dawn Estep in exchange for legal services. These shares were
valued at $1,563.
(13) On February 27, 1998, the Company issued 30,000 shares of
restricted Common Stock to Ben Harris in exchange for management services.
These shares were valued at $41,250.
(14) On February 27, 1998, the Company issued 10,000 shares of
restricted Common Stock to James Flaherty in exchange for management
services. These shares were valued at $13,750.
(15) On March 3, 1998, the Company issued 7,500 shares of restricted
Common Stock to David Young in exchange for professional services. These
shares were valued at $6,094.
(16) On March 6, 1998, the Company issued 100,000 shares of restricted
Common Stock to Rod Fong in exchange for legal services. These shares were
valued at $81,125.
(17) On March 6, 1998, the Company issued 45,000 shares of restricted
Common Stock to Dawn Estep in exchange for professional services. These shares
were valued at $36,563.
(18) On March 10, 1998, the Company issued options for 200,000 shares
of Common Stock to Blair J. Merriam for marketing services. The options have
an exercise price of $.50 per share and expire on March 10, 2003. These
options were valued at $62,500 based on the market price of the Company's
Common Stock at the date of grant.
(19) On June 10, 1998 the Company issued 150,000 shares of restricted
Common Stock to E & E Consulting in exchange for consulting services. These
shares were valued at $140,625.
(20) On June 10, 1998 the Company issued 10,000 shares of restricted
Common Stock to Diane Lalosh in exchange for legal services. These shares were
valued at $9,375.
(21) On September 30, 1998, the Company issued 500,000 shares of
restricted Common Stock to Mark Horne as compensation. These shares were
valued at $75,000. Thee shares were redeemed on April 1, 1999.
(22) On September 30, 1998, the Company issued 500,000 shares of
restricted Common Stock to Ted Kohn as compensation. These shares were
valued at $43,125. These shares were redeemed in exchange for 10,000 shares
described in item (33) below.
(23) On September 30, 1998 the Company issued 20,000 shares of
restricted Common Stock to Diane Lalosh in exchange for legal services.
These shares were valued at $3,750.
(24) On February 18, 1999, the Company issued 100,000 shares of
restricted Common Stock to Arie Luyendyk in exchange for marketing services.
These shares were valued at $62,500.
(25) On February 27, 1999, the Company issued 20,000 shares of
restricted Common Stock to Andrew Frisque in exchange for consulting
services. These shares were valued at $20,000.
(26) On April 2, 1999, the Company issued 500,000 shares of Common
Stock to Internet Advisors Group, Inc. in exchange for Internet marketing
consulting. These shares were valued at $100,000.
(27) On April 6, 1999, the Company issued 300,000 shares of Common
Stock to Spika Corporation in exchange for Internet marketing consulting.
These shares were valued at $93,750.
(28) On April 6, 1999, the Company issued 10,000 shares of Common
Stock to Daniel Thornton in exchange for consulting services. These shares
were valued at $3,125.
(29) On April 6, 1999, the Company issued 190,000 shares of Common
Stock to eight individuals in exchange for various legal and consulting
services. These shares were valued at $59,375.
(30) On April 20, 1999, the Company issued 500,000 shares of
restricted Common Stock and options to acquire 500,000 shares of Common Stock
at $.50 per share to Dennis Schlagel as compensation. The shares were valued
at $250,000. The options expire April 2, 2004, and were valued at $-0- based
on the market price at the date of award ($.50).
(31) On April 22, 1999, the Company issued 100,000 shares of Common
Stock to Equus Ranch, Inc. in exchange for cancellation of a promissory note.
These shares were valued at $20,000.
(32) On April 22, 1999, the Company issued 50,000 shares of Common
Stock to Bill Robotham in exchange for cancellation of a promissory note.
These shares were valued at $30,000.
(33) On May 28, 1999, the Company issued 10,000 shares of restricted
Common Stock to Ted Kohn as compensation and in exchange for the shares listed
in item 22 above. These shares were valued at $3,125.
(34) On August 13, 1999, the Company sold 10,000 shares of Series A
Preferred Stock to one shareholder for $100,000 cash.
The Company believes transactions (1) through (25), (30), (33) and (34)
were exempt from registration pursuant to Section 4(2) of the Securities Act of
1933, as amended, as privately negotiated, isolated, non-recurring transactions
not involving any public solicitation. The purchasers in each case represented
their intentions to acquire the securities for investment only and not with a
view to the distribution thereof. Appropriate restrictive legends are
affixed to the stock certificates issued in such transactions. In addition,
the purchases described in items (6), (20) and (30) were "accredited
investors" (as that term is defined in Rule 501(a)(3) of Regulation D.
The shares issued in items (26) through (29), (31) and (32) were
issued pursuant to an offering under Rule 504 of Regulation D.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law allows the Company to indemnify any
person who was or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he or she
is or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee
or agent of any corporation, partnership, joint venture, trust or other
enterprise. The Company may advance expenses in connection with defending
any such proceeding, provided the indemnitee undertakes to pay any such
amounts if it is later determined that such person was not entitled to be
indemnified by the Company. The Company's Bylaws provide for indemnification
of all directors, officers, and control persons.
Insofar as indemnification by the Company for liabilities arising under
the Act may be permitted to directors, officers and controlling persons of the
Company pursuant to provisions of the Certificate of Incorporation and Bylaws,
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable. In the event that a claim for
indemnification by such director, officer or controlling person of the
Company 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 offered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
========================
PART F/S
WEB4BOATS.COM, INC.
FINANCIAL STATEMENTS
Years Ended March 31, 1998 and 1999
==================
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Auditor 2
Financial Statements
Balance Sheets (Assets) 3
Balance Sheets (Liabilities and Shareholders' Equity 4
Statements of Income 5
Statements of Cash Flows 6
Statements of Shareholders' Equity 7
Notes to Financial Statements 8-12
======================
Report of Independent Auditor
October 29, 1999
To the Board of Directors and Shareholders
of Web4Boats.com., Inc.:
I have audited the accompanying balance sheets of Web4Boats.com, Inc. as of
March 31, 1998 and 1999, and the related statements of operations, cash flows,
and shareholders' equity for each of the two years ended March 31, 1998 and
1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audits provide a
reasonable basis for my opinion.
In my opinion, such financial statements present fairly, in all material
respects, the financial position of Web4Boats.com, Inc. as of March 31, 1998
and 1999, and the results of operations and their cash flows for each of the
two years ended March 31, 1998 and 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
Web4Boats.com, Inc. will continue as a going concern. As discussed in Note
7 to the financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 7. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ Carl S. Sanko
Carl S. Sanko
Chatsworth, California
Page FS-2-
Web4Boats.com, Inc.
Balance Sheets
March 31, 1998 and 1999
<TABLE>
March 31, March 31,
1998 1999
<CAPTION>
<S> <C> <C>
Assets
Current assets
Cash $ 0 $ 983
Accounts receivable 10,622 3,028
Inventory 8,629 5,340
Total current assets 19,251 9,351
Property and equipment
Furniture and fixtures 2,808 2,808
Equipment 134,172 134,172
Vehicles 2,371 0
Leasehold improvements 120,650 120,650
260,001 257,630
Accumulated depreciation (180,677) (229,900)
Property and equipment, net 79,324 27,730
Other assets
Deposits 17,826 6,316
Total other assets 17,826 6,316
Total assets $116,401 $ 43,397
</TABLE>
See accompanying notes to financial statements
Page FS-3-
Web4Boats.com, Inc.
Balance Sheets
March 31, 1998 and 1999
<TABLE>
<CAPTION>
March 31, March 31,
1998 1999
Liabilities and Shareholders' Equity
<S> <C> <C>
Current liabilities
Cash deficit $ 4,959 $ 0
Accounts payable 24,028 65,070
Accrued expenses 19,023 307,888
Accrued litigation settlement 42,500 42,500
Short-term borrowings 50,000 50,000
Total current liabilities 140,510 465,458
Commitments and contingencies
Shareholders' equity (deficit)
Common stock, par value $.001,
100,000,000 shares authorized,
4,062,060 and 5,018,870 issued
and outstanding at March 31, 1998
and 1999, respectively 4,062 5,019
Outstanding stock options 516,890 516,890
Paid in capital 660,675 833,468
Accumulated deficit (1,205,736) (1,777,438)
Total shareholders' equity (24,109) ( 422,061)
Total liabilities and shareholders' equity $116,401 $ 43,397
</TABLE>
See accompanying notes to financial statements
Page FS-4-
Web4Boats.com, Inc.
Statements of Operations
For the Years Ended March 31, 1998 and 1999
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, March 31,
1998 1999
<S> <C> <C>
Revenues $ 640,747 $ 554,451
Cost of sales 267,061 203,152
Gross profit 373,686 351,299
Operating expenses:
Salaries 232,197 221,663
Marketing 516,250 193,750
General and administrative 497,040 507,588
Total operating expenses 1,245,487 923,001
Net loss $ (871,801) $ (571,702)
Earnings per share, antidilutive $ (.29) $ (.13)
</TABLE>
See accompanying notes to financial statements
Page FS-5-
Web4Boats.com, Inc.
Statements of Cash Flows
For the Years Ended March 31, 1998 and 1999
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, March 31,
1998 1999
<S> <C> <C>
Cash flows from operating activities
Net loss $ (871,801) $ (571,702)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 73,964 50,606
Common stock issued for services 219,845 173,750
Stock options issued for services 516,250 0
Loss on disposal of vehicle 0 988
Changes in operating assets and
liabilities
Accounts receivable (9,767) 7,594
Inventory (8,629) 3,289
Prepaids 647 0
Accounts payable 24,028 41,042
Accrued expenses 11,506 288,865
Accrued litigation settlement (17,000) 0
Net cash provided by (used in) operating
activities (60,957) (5,568)
Cash flows from investing activities
Purchases of property and equipment (668) 0
Deposits 4,000 11,510
Net cash provided by (used in) investing
activities 3,332 11,510
Cash flows from financing activities
Proceeds from issuance of common stock 7,500 0
Proceeds from issuance of debt 42,463 0
Net cash provided by (used in) financing
activities 49,963 0
Net increase (decrease) in cash (7,662) 5,942
Cash, beginning of year 2,703 (4,959)
Cash, end of year $ (4,959) $ 983
</TABLE>
See accompanying notes to financial statements
Page FS-6-
Web4Boats.com, Inc.
Statements of Shareholders' Equity
For the Years Ended March 31, 1998 and 1999
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, March 31,
1998 1999
<S> <C> <C>
Preferred stock:
Balance, beginning of year $ 285,000 $ 0
Converted to common stock (285,000) 0
Balance, end of year 0 0
Common stock and paid in capital:
Balance, beginning of year 28,155 664,737
Converted from preferred stock 285,000 0
Common stock issued 351,582 173,750
Balance, end of year 664,737 838,487
Outstanding stock options:
Balance, beginning of year 0 516,890
Stock options issued 516,890 0
Balance, end of year 516,890 516,890
Accumulated deficit:
Balance, beginning of year (333,935) (1,205,736)
Net loss (871,801) (571,702)
Balance, end of year (1,205,736) (1,777,438)
Total shareholders' equity $ (24,109) $ (422,061)
</TABLE>
See accompanying notes to financial statements
Page FS-7-
NOTES TO FINANCIAL STATEMENTS
NOTE 1 Summary of significant accounting policies
Organization and business
Web4boats.com, Inc. ("the Company"), a Delaware Corporation, was incorporated
on February 4, 1994 as New York Bagel Exchange, Inc. Commencing September
26, 1995, the Company has operated in the business of wholesale and
retail sales of bagels, sandwiches, baked goods, specialty coffees and related
items. On August 22, 1997, the Company acquired the net monetary assets of
Windom, Inc., a non-operating public shell, resulting in the retirement of all
the common and preferred shares of both companies, and the reissuance, by
the Company, of 2,594,560 shares of common stock. The merger was
accounted for, in substance, as a capital transaction rather than as a business
combination. Subsequent to the merger, the Company continued its
wholesale and retail operations. On January 26, 1999, New York Bagel
Exchange, Inc. changed its name to Webboat.com, Inc. Subsequent to
fiscal 1999, on April 2, 1999, Webboat.com, Inc. changed its name to
Windom.com, Inc. and on April 20, 1999, Windom.com, Inc. changed its
name to Web4Boats.com, Inc.
Inventory
The Company does not maintain material quantities of inventory because of its
general perishable nature and the liquidity of its products. Inventory at
year end is stated at cost, which approximates market, on a first-in, first-
out basis.
Property and equipment
Equipment is recorded at cost and is depreciated over estimated useful lives of
three years using the straight-line method. Leasehold improvements are recorded
at cost and are amortized over the lesser of the estimated useful lives of the
property or the lease term using the straight-line method.
Income taxes
The Company has net operating loss carryforwards from years 1997 and earlier of
approximately $188,000 and $94,000 for federal and California state tax
purposes, respectively. With additional losses for fiscal years 1998 and
1999, the Company has total net operating loss carryforwards at March 31,
1999 of approximately $1,650,000 and $825,000 for federal and California
state tax purposes, respectively. A deferred asset for these amounts has not
been accrued due to the uncertain nature of its being realized. Net
operating loss carryforwards begin to expire in fiscal year 2011.
Page FS-8-
Earnings per share
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding during each fiscal year.
NOTE 2 Shareholders' equity
Compensatory stock issuance
During fiscal year 1998, the Company received professional and legal services
valued at $219,845 in exchange for common stock. During fiscal 1999, the
Company received salary compensation of $43,125, and professional services
valued at $173,750 in exchange for common stock. Additionally and prior to
a public market for the stock, the Company issued 500,000 shares in fiscal
year 1998 (including 165,000 shares to a related party), with a charge to
paid in capital for par value of the shares, for services related to getting
the Company on the Electronic Bulletin Board operated by the National
Association of Securities Dealers, Inc.
Stock options
During fiscal year 1998, the Company recorded a charge to operations of $516,250
for marketing and other services in exchange for issuance of stock options.
The value for such services was computed as the difference between the quoted
market price at the option's measurement date and the option price. All
options were exercisable at time of grant and no options have been exercised
as of March 31, 1999. The number of shares represented by stock options
outstanding at both March 31, 1998 and 1999 are 1,500,000 shares with an
option price of $.50 to $1.00 per share, and $1,000,000 in total, and with a
market price at date of grant of $.56 to $2.00 per share, and $1,687,500 in
total. Outstanding options expire on various dates from September 24, 2002
to March 10, 2003. Amounts recorded as stock options will be, upon exercise,
reclassified to common stock and paid in capital.
Comprehensive income
The Company has adopted early application of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income", effective for
fiscal years beginning after December 15, 1997. The term "comprehensive
income", as used in SFAS 130, includes net income plus all other components
of comprehensive income such as revenues, expenses, gains, and losses that
are included in comprehensive income, but not in net income in accordance
with generally accepted accounting principles. Since the Company has no
components of comprehensive income for fiscal years 1998 and 1999 other than
net income, it has no comprehensive income to report for those years.
Page FS-9-
NOTE 3 Related parties
Short term borrowings
At March 31, 1998 and March 31, 1999, the Company had unsecured promissory
notes, inclusive of accrued interest, of $52,638 and $57,713, respectively,
payable to two shareholders. The notes bear annual interest at rates of 10%
to prime plus two percent. The notes were exchanged for 150,000 shares of
stock in April, 1999.
Stock options
Represented in outstanding stock options at March 31, 1998 and 1999 are 680,000
shares to related parties.
NOTE 4 Statements of Cash Flows
Financial instruments
The Company considers all liquid interest-earning investments with a maturity of
three months or less at the date of purchase to be cash equivalents.
Noncash transactions
In fiscal year 1998, the Company issued 200,000 shares of its common stock to an
officer as compensation for services accrued as of March 31, 1997, and 95,000
shares to a private lender in cancellation of $75,000 in debt.
Interest paid
In fiscal years 1998 and 1999, the Company charged to operations interest
expense of $2,638 and $5,075, respectively. No interest was paid for either
fiscal year.
NOTE 5 Commitments and Contingencies
Lease commitments
The Company leases its facility under a long-term operating lease. Rent expense
for fiscal years 1998 and 1999 was approximately $38,000 and $40,000,
respectively. Future minimum lease payments total $45,000 for fiscal 2000,
with the lease expiring on March 31, 2000. Subsequent to March 31, 1999, the
Company assigned its lease to a buyer of its business assets. The
assignment was with recourse in that the Company is responsible if the new
lessee fails to make lease payments.
Litigation
During fiscal 1999, a lawsuit was filed against the Company in which the
plaintiff, a former officer, claimed breach of employment contract related to
fiscal year 1998. Subsequent to March 31, 1999, the dispute was settled for
$42,500. The unpaid settlement amount is accrued as of March 31, 1998 and
1999.
Page FS-10-
NOTE 6 Subsequent Events
Disposal of operating assets
On March 22, 1999, the Board of Directors approved sale of the Company's
inventory and fixed assets for $120,000. The Company ceased its business
operations on March 25, 1999. The actual disposal date of assets subject to
the sale was on April 19, 1999. A gain of approximately $72,000 resulted
upon the disposition. Per Accounting Principles Board opinion No. 30, since
the disposal date occurred subsequent to fiscal year 1999, the gain is to be
recognized when realized, which will be in fiscal year 2000.
Nature of subsequent operations
During fiscal year 1999, the Company began making plans to develop a commercial
internet site in which boat dealers, marinas, individual buyers and sellers
would come to advertise sales and services related to the boating industry.
Included in accrued payables at March 31, 1999, is $256,250 of marketing,
consulting and other services provided to the Company in fiscal 1999 and
related to development of the Company's new business operations.
In April, 1999, the Company issued 1,000,000 shares of its common stock as full
payment for these services. Subsequently, the Company has continued to invest
substantially in website development and related costs. The Company expects,
as a going concern, to realize future benefits from these costs. However, all
such development costs are expensed as incurred.
Stock redeemed and issued Subsequent to March 31, 1999, the Company
contractually redeemed, at par value, 1,215,000 shares of common stock,
representing all the outstanding stock held by a former officer of the
Company. The Company then issued 500,000 shares of restricted common
stock and stock options representing 500,000 shares of common stock to a new
officer as consideration for future services to be rendered.
Issuance of preferred stock
In June, 1999, the Company authorized the issuance of 20,000,000 shares of
$.001 par value, preferred stock. In August, 1999, 10,000 shares of
preferred stock was designated as Series A preferred stock with conversion
rights of one share of Series A preferred to 100 shares of common stock.
Subsequently, the 10,000 shares of Series A preferred was sold for $100,000
to a related party.
NOTE 7 Going concern
The Company has suffered recurring losses from operations and has a net capital
deficiency that raise substantial doubt about its ability to continue as a going
concern. As a result of not being able to meet its obligations as they became
due, the Company saw no alternative but to sell its operating assets, as
Page FS-11-
described in Note 6 above. Note 6 also describes management's plans in
regard to perpetuating its existence through new operations related to
internet marketing and the boating industry. The Company has the ability to
raise funds through the public equity market and, as stated in Note 6, has
raised substantial funds from a related party in the private sector as
well. While such plans and fundraising ability seem to mitigate the effect
of prior years losses and deficits, the Company is essentially only beginning
to market in a new industry. The inability to assess the likelihood of the
effective implementation of management's plans in this new environment also
raises substantial doubt about its ability to continue as a going concern.
Page FS-12-
=====================
Web4Boats.com, Inc.
Balance Sheets
September 30, 1998 and 1999
<TABLE>
<CAPTION>
September 30, September 30,
1998 1999
<S> <C> <C>
Assets
Current assets
Cash $ 9,037 $ 41,349
Accounts receivable 25,824 3,028
Inventory 8,629 0
Total current assets 43,490 44,377
Property and equipment
Furniture and fixtures 2,808 0
Equipment 134,172 31,160
Leasehold improvements 120,650 0
257,630 31,160
Accumulated depreciation (204,597) ( 1,243)
Property and equipment, net 53,033 29,917
Other assets
Deposits 17,826 0
Trademarks, net 0 12,144
Total other assets 17,826 12,144
Total assets $ 114,349 $ 86,438
</TABLE>
See Accountant's compilation report
Page FS-13-
Web4Boats.com, Inc.
Balance Sheets
September 30, 1998 and 1999
<TABLE>
<CAPTION>
September 30, September 30,
1998 1999
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 50,425 $ 1,088
Accrued expenses 57,521 2,378
Accrued litigation settlement 42,500 42,500
Short-term borrowings 50,000 36,000
Total current liabilities 200,446 81,966
Shareholders' equity (deficit)
Preferred stock, par value $.001,
20,000,000 shares authorized,
0 and 10,000 issued and
outstanding at September 30, 1998
and 1999, respectively 0 10
Common stock, par value $.001,
100,000,000 shares authorized,
4,742,060 and 4,683,460 issued
and outstanding at September 30, 1998
and 1999, respectively 4,742 4,683
Outstanding stock options 516,890 516,890
Paid in capital 813,745 1,282,011
Accumulated deficit (1,421,474) (1,799,122)
Total shareholders' equity ( 86,097) 4,472
Total liabilities and shareholders'
equity $ 114,349 $ 86,438
</TABLE>
See Accountant's compilation report
Page FS-14-
Web4Boats.com, Inc.
Statements of Operations
For the Six Months Ended September 30, 1998 and 1999
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
September 30, September 30,
1998 1999
<S> <C> <C>
Revenues $ 333,368 $ 3,770
Cost of sales 118,738 0
Gross profit 214,630 3,770
Operating expenses:
Salaries 89,474 31,250
General and administrative 340,894 66,084
Total operating expenses 430,368 97,334
Loss from operations (215,738) ( 93,564)
Gain on disposed operations 0 71,880
Net loss $ (215,738) $ ( 21,684)
Earnings per share, antidilutive $ (.05) $ (.01)
</TABLE>
See Accountant's compilation report
Page FS-15-
Web4Boats.com, Inc.
Statements of Cash Flows
For the Years Ended September 30, 1998 and 1999
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
September 30, September 30,
1998 1999
<S> <C> <C>
Cash flows from operating activities
Net loss $ (215,738) $ (21,684)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 25,303 1,449
Common stock issued for services 153,750 31,250
Stock options issued for services 0 (71,880)
Loss on disposal of vehicle 988 0
Changes in operating assets and liabilities
Accounts receivable (15,202) 0
Inventory 0 5,340
Accounts payable 26,397 (63,982)
Accrued expenses 38,498 11,578
Short-term borrowings 0 (14,000)
Net cash provided by (used in) operating
activities 13,996 (121,929)
Cash flows from investing activities
Sale of business operations 0 99,610
Purchase of fixed assets 0 (31,160)
Purchases of trademarks 0 (12,350)
Deposits refunded 0 6,316
Net cash provided by (used in) investing
activities 0 62,416
Cash flows from financing activities
Proceeds from issuance of preferred stock 0 100,000
Payment to redeem common stock 0 (121)
------ ----------
Net cash provided by (used in) financing
activities 0 99,879
Net increase (decrease) in cash 13,996 40,366
Cash, beginning of year (4,959) 983
Cash, end of year $ 9,037 $ 41,349
</TABLE>
See Accountant's Compilation Report
Page FS-16-
=======================
PART III
ITEM 1. EXHIBITS
The following exhibits are filed as part of the Registration
Statement:
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
2(1) Articles of Incorporation and amendments thereto.
2(2) By-laws
6(1) 9/27/97 Option to Beltropic to acquire 180,000 shares of Common
Stock
6(2) 9/27/97 Option to Latin Foods, Inc. to acquire 180,000 shares of
Common Stock
6(3) 9/27/97 Option to Spika Corporation to acquire 140,000 shares of
Common Stock
6(4) 12/30/97 Option to Spika Corporation to acquire 500,000 shares of
Common Stock
6(5) 3/10/98 Option to Blair J. Merriam to acquire 200,000 shares of
Common Stock
6(6) 3/10/98 Option to James A. Merriam to acquire 200,000 shares of
Common Stock
6(7) 3/10/98 Option to Latin Foods, Inc. to acquire 100,000 shares of
Common Stock
6(8) 4/2/99 Option to Dennis Schlagel to acquire 500,000 shares of
Common Stock
6(9) 4/1/99 Stock Redemption and Employment Termination Agreement
Page -42-
6(10) Consulting Agreement Between Web4Boats.com and Internet Advisors
Group, Inc.
6(11) Web4Boats.Com - Phase 1 Agreement
6(12) Web4Boats.com/Luvia.com Proposal
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
WEB4BOATS.COM, INC.
Dated: January 18, 2000 By:/s/ Dennis Schlagel
---------------------------------------
Dennis Schlagel, President, Chairman of
the Board of Directors
Exhibit 2.1
ARTICLES OF INCORPORATION OF WINDOM, INC.
The undersigned natural person, being more than eighteen (18)
years of age, acting as incorporator in order to organize and
establish a corporation under and pursuant to the General
Corporation Law of the State of Delaware, as amended, does hereby
adopt the following Articles of Incorporation:
ARTICLE I
Name
The name of the corporation is Windom, Inc.
ARTICLE II
Period of Duration
The period of duration of the corporation shall be perpetual,
unless dissolved according to law.
ARTICLE III
Purpose
The purpose for which the corporation is organized is to transact
any lawful business or to conduct any activity in which a
corporation may lawfully engage under the General Corporation Law
of the State of Delaware, as amended.
ARTICLE IV
Rights, Powers and Privileges
In furtherance of the foregoing purpose and in furtherance of the
conduct of all of its business and affairs, the corporation shall
have and may exercise all the rights, powers and privileges now
or hereafter conferred upon corporations organized under the
General Corporation Law of the State of Delaware, as amended, and
all other rights, powers and privileges of any kind whatsoever
which are necessary, suitable or proper for the accomplishment of
its corporate purpose.
ARTICLE V
Capital
1. Authorized Shares. The aggregate number of shares which the
corporation shall have the authority to issue is one hundred
million (100,000,000) shares of common stock, each with a par
value of one-tenth cent ($.001) per share.
The shares of said stock may be issued from time to time by the
board of directors of the corporation for cash, services
rendered, property or such other consideration as the board of
directors may determine, and in all cases shall be deemed fully
paid and non-assessable. The judgment of the board of directors
as to the adequacy of any consideration received for any shares,
options or any other securities which the corporation may at any
time be authorized to issue or sell or otherwise dispose of shall
be conclusive in the absence of fraud, subject to the provisions
of these Articles of Incorporation.
Each and every share of stock shall be equal and without
preference or classification as between such shares of stock.
None of such shares of stock shall, in the hands of any person
whomsoever, render such person liable to pay any assessment or
any obligation or payment on account of the debts or obligations
of the corporation.
2. No Cumulative Voting. Each shareholder of record shall have
one vote for each share of stock standing in his name on the
books of the corporation. Cumulative voting shall not be allowed
in the election of directors or for any other purpose.
3. No Preemptive Rights. No shareholder of the corporation shall
have any preemptive or similar right to acquire or subscribe for:
any additional, unissued or treasury shares of stock; other
securities of any class; rights, warrants, or options to purchase
stock; or, securities of any kind convertible into stock or
carrying stock purchase warrants or privileges.
4. Warrants. The board of directors may create and issue at any
time, whether or not in connection with the issuance and sale of
any shares or securities, rights or options entitling the holders
thereof to purchase shares of the capital stock of the
corporation. The form of such rights or options, the terms upon
which they shall be issued, the price of the shares to be
purchased upon the exercise thereof, and the time of exercise
shall be determined by the board of directors.
5. Transfer Restrictions. The board of directors may restrict the
transfer of the corporation's stock by giving the corporation or
any other person "first right of refusal to purchase" the stock,
by making the stock redeemable, or by restricting the transfer of
the stock under such terms and in such manner as the directors
may deem necessary and which is not inconsistent with the laws of
the State of Delaware. Any stock so restricted must carry a
conspicuous legend noting the restriction and the place where
such restriction may be found in the records of the corporation.
6. Distributions. The board of directors may from time to time
distribute to the shareholders, as a dividend or in partial
liquidation, out of either stated capital or surplus capital of
the corporation, a portion of its assets, in cash or property,
subject to the limitations contained in the laws of Delaware.
ARTICLE VI
Shareholder Voting
At all meetings of shareholders, one-third (1/3) of the shares
entitled to vote at such meeting represented in person or by
proxy shall constitute a quorum. At any meeting at which a quorum
is present, the affirmative vote of a majority of the shares
represented at such meeting and entitled to vote on the subject
matter shall be the act of the shareholders; except that the
following actions shall require the affirmative vote or
concurrence of a majority of all of the outstanding shares of the
corporation entitled to vote thereon: (1) adopting an amendment
to these Articles of Incorporation; (2) lending money to,
guaranteeing the obligations of, or otherwise assisting any of
the directors of the corporation; (3) authorizing the sale,
lease, exchange, or other disposition of all or substantially all
of the property and assets of the corporation, with or without
its goodwill, not in the usual and regular course of business;
(4) approving a plan of merger or consolidation; (5) adopting a
resolution submitted by the board of directors to dissolve the
corporation; (6) adopting a resolution submitted by the board of
directors to revoke voluntary dissolution proceedings; and (7)
any other action which the General Corporation Law of the State
of Delaware, as amended, requires to be approved by the
shareholders.
ARTICLE III
Registered Owner of Stock
The corporation shall be entitled to treat the registered holder
of any shares of the corporation as the owner thereof for all
purposes, including all rights deriving from such shares; and
shall not be bound to recognize any equitable or other claim to,
or interest in, such shares or rights deriving from such shares,
on the part of any other person, including but without limiting
the generality hereof, a purchaser, assignee or transferee of
such shares or rights deriving from such shares, unless and until
such purchaser, assignee, transferee or other person becomes the
registered holder of such shares, whether or not the corporation
shall have either actual or constructive notice of the interest
of such purchaser, assignee, transferee or other person. The
purchaser, assignee, or transferee of any of the shares of the
corporation shall not be entitled: to receive notice of the
meetings of the shareholders; to vote at such meetings; to be
paid dividends or other sums payable to shareholders; or, to own,
enjoy or exercise any other property or rights deriving from such
shares against the corporation, until such purchaser, assignee,
or transferee has become the registered holder of such shares.
ARTICLE VIII
Board of Directors
1. Number of Directors. The number of directors shall be at
least three; except that there need be only as many directors as
there are, or initially will be, shareholders (if the outstanding
shares are, or initially will be, held of record by fewer than
three shareholders). Subject to this limitation, the number of
directors shall be fixed in accordance with the bylaws.
2. Initial Board of Directors. The initial board of directors
shall consist of three (3) members.
The names and addresses of the persons who are to serve as
directors of the corporation until the first annual meeting of
shareholders, and until their successors shall be elected and
shall qualify, are as follows:
Name Address
Diane Pankovcin 818 Fifth Avenue, Suite 303
San Rafael, California 94901
John Mohalley 818 Fifth Avenue, Suite 303
San Rafael, California 94901
Lisa Row 818 Fifth Avenue, Suite 303
San Rafael, California 94901
ARTICLE IX
Provisions for Regulation of the Internal Corporate Affairs
The following provisions are inserted for the management of the
business and for the regulation of the internal affairs of the
corporation, and the same are in furtherance of and not in
limitation or exclusion of the powers conferred by law.
1. Bylaws. The board of directors shall have the power to adopt,
alter, amend or repeal, from time to time, such bylaws as it
deems proper for the management of the affairs of the
corporation. Such bylaws shall not be inconsistent with these
Articles of Incorporation and the General Corporation Law of the
State of Delaware, as amended.
2. Compensation to Directors. The board of directors is
authorized to make provisions for reasonable compensation to its
members for their services as directors. Any director of the
corporation may also serve the corporation in any other capacity
and receive compensation therefor in any form.
3. Conflicts of Interest. No contract or other transaction
between the corporation and any other person, firm, partnership,
corporation, trust, joint venture, syndicate or other entity
shall be in any way affected or invalidated solely by: (a) the
fact that any director or officer of the corporation is
pecuniarily or otherwise interested in, or is a director,
officer, shareholder, employee, fiduciary or member of such other
entity; or (b) the fact that any director or officer
individually, or jointly with others, or any entity in which any
director or officer is in any way interested, may be a party to
or may be interested in a contract or other transaction of the
corporation.
4. Corporate Opportunities. The officers, directors and other
members of management of the corporation shall be subject to the
doctrine of corporate opportunities only insofar as it applies to
business opportunities in which the corporation has expressed an
interest as determined from time to time by the board of
directors as evidenced by resolutions appearing in the
corporation's minutes. When such areas of interest are
delineated, all such business opportunities within such areas of
interest which come to the attention of the officers, directors
and other members of management shall be disclosed promptly to
the corporation and made available to it. The board of directors
may reject any business opportunity presented to it, and
thereafter each officer, director or member of management may
avail himself of such opportunity. Until such time as the
corporation, through its board of directors, has designated an
area of interest, the officers, directors and other members of
management shall be free to engage in that area of interest on
their own; and this doctrine shall not limit the rights of any
officer, director or other member of management to continue a
business existing prior to the time that such area of interest is
designated by the corporation. This provision shall not be
construed to release any employee of the corporation (other than
an officer, director or member of management) from duties which
he may have to the corporation.
5. Indemnification. The corporation shall indemnify each
incorporator, director and officer, and their heirs, executors,
personal representatives and administrators to the fullest extent
allowed by the laws of Delaware.
ARTICLE X
Registered Office and Agent
The address of the initial registered office of the corporation
is Suite 600, One Commerce Center, 12th & Orange Streets,
Wilmington, New Castle County, Delaware 19801, and the name of
the initial registered agent of the corporation at such address
is Agents and Corporations, Inc. Either the registered office or
agent may be changed in the manner permitted by law.
ARTICLE XI
Incorporator
The name and address of the incorporator of the corporation is as
follows:
Name Address
Florence L. Valastiak 1625 Broadway, Suite 770
Denver, Colorado 80202
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
designated in Article XI above, have executed these Articles of
Incorporation in duplicate on January 13, 1988.
/s/ Florence L. Valastiak
STATE OF COLORADO
ss.
CITY AND COUNTY OF DENVER
I, Catherine S. Morrison, a Notary Public, hereby certify that
Florence L. Valastiak, known to me to be the person whose name is
subscribed to the foregoing Articles of Incorporation, appeared
before me this day in person and being by me first duly sworn,
acknowledged and declared that she signed said Articles of
Incorporation as her free and voluntary act and deed for the uses
and purposes therein set forth and that the statements therein
contained are true.
Witness my hand and notarial seal this 13th day of January, 1988.
My commission expires: September 23, 1991.
/s/ Catherine S. Morrison
Notary Public
(Notary Seal)
===============
Certificate for Renewal and Revival of Charter
Windom, Inc., a corporation organized under the laws of Delaware,
the charter of which was voided for failure to file completed tax
report, now desires to procure a restoration, renewal and revival
of its charter, and hereby certifies as follows:
1. The name of this corporation is Windom, Inc.
2. Its registered office in the State of Delaware is located at
Twelfth and Orange Streets, One Commerce Center, Suite 600, City
of Wilmington, Delaware 19899-0511, County of New Castle. The
name of its registered agent is Agents and Corporations, Inc.
3. The date of filing of the original Certificate of
Incorporation in Delaware was January 19, 1988.
4. The date when restoration, renewal, and revival of the charter
of this company is to commence is on the 29th day of February
1996, same being prior to the date of the expiration of the
charter. This renewal and revival of the charter of this
corporation is to be perpetual.
5. This corporation was duly organized and carried on the
business authorized by its charter until the 1st day of March A.
D. 1996, at which time its charter became inoperative and void
for failure to file completed tax report and this certificate for
renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the
State of Delaware,
IN TESTIMONY WHEREOF, and in compliance with the provisions of
Section 312 of the General Corporation Law of the State of
Delaware, as amended, providing for the renewal, extension and
restoration of charters, Diane M. Lalosh, the last and acting
President Secretary of Windom, Inc., have hereunto set her hands
to this certificate this 15th day of August 1997.
/s/ Diane M. Lalosh
Diane M. Lalosh
Last and Acting President and Secretary
================
CERTIFICATE OF MERGER OF NEW YORK BAGEL EXCHANGE, INC.
INTO WINDOM, INC.
The undersigned corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
Windom, Inc. Delaware
New York Bagel Exchange, Inc. Delaware
SECOND: That a plan and agreement of merger between the parties
to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in
accordance with the requirements of Section 251 of the General
Corporation Law of the State of Delaware.
THIRD: That the surviving corporation of the merger is Windom,
Inc.
FOURTH: That the surviving corporation has changed its name to
New York Bagel Exchange, Inc.
FOURTH: (sic) That the certificate of incorporation of Windom,
Inc., a Delaware corporation, now New York Bagel Exchange, Inc.,
the surviving corporation, shall be the certificate of
incorporation of the surviving corporation.
FIFTH: That the executed plan and agreement of merger is on file
at the principal place of business of the surviving corporation.
The address of the principal place of business of the surviving
corporation is 21059 Victory Blvd., Canoga Park California 91303.
SIXTH: That the copy of the plan and agreement of merger will be
furnished by the surviving corporation, on request and without
cost to any stockholder of any constituent corporation.
New York Bagel Exchange, Inc.
BY: /s/ Mark J. Horne
President
ATTEST:
BY /s/ Mark J. Horne
Secretary
===============
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
Windom, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Windom,
Inc., a reso1ution was duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling
a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"I" so that, as amended said Article shall be and read as
follows:
"ARTICLE I
Name
The name of the corporation is New York Bagel Exchange, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of stockholders of said corporation
was duly called and held, upon notice in accordance with Section
222 of the General Corporation law of the State of Delaware at
which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said Windom, Inc. has caused this certificate
to be signed by Mark J. Horne, its authorized officer, this 22nd
day of August 1997,
By: /s/ Mark J. Horne
Mark J. Horne, President
=================
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
New York Bagel Exchange, Inc. a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of New York
Bagel Exchange, Inc., a reso1ution was duly adopted setting forth
a proposed amendment of the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling
a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"I" so that, as amended, said Article shall be and read as
follows:
"ARTICLE I
The name of the corporation is Webboat.com, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said
corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said New York Bagel Exchange, Inc. has caused
this certificate to be signed by Mark J. Horne, its authorized
officer, this 26th day of January 1999.
By
/s/ Mark J. Horne, CEO
Mark J. Horne, Chief Executive Officer
================
STATE OF DELAWARE CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
Webboat.Com, Inc. a corporation organized and existing under and
by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of
Webboat.Com, Inc. reso1utions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling
a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"I" so that, as amended, said Article shall be and read as
follows:
The name of the corporation is Windom.Com, Inc.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said
corporation was duly called and held upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said Webboat.Com, Inc. has caused this
certificate to be signed by Dennis Schlagel this 2nd day of April
1999.
By
/s/ Dennis Schlagel
Authorized Officer
Name: Dennis Schlagel
Print or Type
Title: Chairman, C.E.O. & Secretary
===================
STATE OF DELAWARE CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
Windom.com, Inc. a corporation organized and existing under and
by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Windom.com,
Inc. reso1utions were adopted setting forth a proposed amendment
of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling a meeting of
the stockholders of said corporation for consideration thereof.
The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"1" so that, as amended, said Article shall be and read as
follows: Web4Boats.com, Inc.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said
corporation was duly called and held upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said Windom.com, Inc. has caused this
certificate to be signed by Dennis Schlagel this 20th day of
April 1999.
By: /s/ Dennis Schlagel
(Authorized Officer)
Name: Dennis Schlagel
Print or Type
Title: Chairman, C.E.O. & Secretary
================
STATE OF DELAWARE CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
Web4Boats.com, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the board of directors of
Web4Boats.com, Inc., resolutions were adopted setting forth
proposed amendments to the Certificate of Incorporation of said
corporation declaring said amendments to be advisable and calling
for the solicitation consent to such amendments without a meeting
of the stockholders of said corporation pursuant to Section 228 of
the General Corporation Law of the State of Delaware. The
resolution setting forth the proposed amendments is as follows:
RESOLVED: that the Certificate of Incorporation of this
corporation be amended by changing the Article thereof numbered
"ARTICLE V, Section 1" so that, as amended, said Article shall be
and read as follows:
ARTICLE V
Capital
1. Authorized Shares. The aggregate number of shares which the
corporation shall have the authority to issue is one-hundred-
twenty-million (120,000,000), of which one-hundred-million
(100,000,000) shares shall be common stock, each with a par value
of one-tenth-cent ($.001) per share and twenty-million (20,000,000)
shall be Preferred Shares, each with a par value of one-tenth cent
($.001) per share.
The corporation may divide and issue the Preferred Shares in
series. Preferred Shares of each series when issued shall be
designated to distinguish it from the shares of all other series.
The board of directors is hereby expressly vested with the
authority to divide the class of Preferred Shares into series and
to fix and determine the relative rights and preferences of the
shares of any such series so established to the full extent
permitted by these Articles of Incorporation and the laws of the
State of Delaware in respect of the following:
(a) The number of shares to constitute such series, and the
distinctive designations thereof;
(b) The rate and preference of dividends, if any, the time of
payment of dividends, whether dividends are cumulative and the date
from which any dividend shall accrue;
(c) Whether shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(d) The amount payable upon shares in event of involuntary
liquidation;
(e) The amount payable upon shares in event of voluntary
liquidation;
(f) Sinking fund or other provisions, if any, for the redemption
or purchase of shares;
(g) The terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of
conversion;
(h) Voting powers, if any; and
(i) Any other relative rights and preference of shares of such
series, including, without limitation, any restriction on an
increase in the number of shares of any series theretofore
authorized and any limitation or restriction of rights or powers to
which shares of any future series shall be subject.
The shares of common and Preferred stock may be issued from time to
time by the board of directors of the corporation for cash,
services rendered, property or such other consideration as the
board of directors may determine, and in all cases shall be deemed
fully paid and non-assessable. The judgement of the board of
directors as to the adequacy of any consideration received for any
shares, options or any other securities which the corporation may
at any time be authorized to issue or sell or otherwise dispose of
shall be conclusive in the absence of fraud, subject to the
provisions of these Articles of Incorporation.
Each and every share of stock within a class without series or
within a series of a class with series shall be equal and without
preference or classification as between such shares of stock. None
of such shares of stock shall, in the hands of any person
whomsoever, render such person liable to pay any assessment or any
obligation or payment on account of the debts or obligations of the
corporation.
SECOND: That thereafter, pursuant to resolution of its board of
directors, consent of the stockholders of said corporation was duly
sought pursuant to which the necessary number of shares required by
statute were voted in favor of the amendments.
THIRD: That said amendments were duly adopted in accordance with
the provisions of Sections 242 and 228 of the General Corporation
Law of the State of Delaware.
FOURTH: That notice to all of the corporation's shareholders was
sent pursuant to Section 228 of the General Corporation Code of the
State of Delaware.
FIFTH: That the capital of said corporation shall not be reduced
under or by reason of said amendments.
IN WITNESS WHEREOF, said Web4Boats.com, Inc. has caused this
certificate to be signed by Dennis Schlagel, Authorized Officer,
this 16th day of June, 1999.
By: /s/ Dennis Schlagel
Dennis Schlagel, Chairman of the Board,
Chief Executive Officer and Secretary
================
STATE OF DELAWARE
DESIGNATION OF RIGHTS AND PREFERENCES
OF SERIES A PREFERRED STOCK OF
WEB4BOATS.COM, INC.
Pursuant to Section 151 of the Delaware Corporation Law and Article
V, Section 1 of its Articles of Incorporation, the Board of
Directors of Web4Boats.com, Inc. hereby designates a portion of its
20,000,000 authorized Preferred Shares as Series A Preferred Stock
as follows:
The class of stock shall be designated as Series A Preferred Stock.
Such Series A Preferred Stock shall consist of 10,000 shares of the
authorized Preferred Shares.
Such Series A Preferred Stock, at the option of the holder thereof
may, no sooner than one year after the purchase date, be converted
into the common stock of the Corporation upon the following terms:
(a) Any holder of such Series A Preferred Stock desiring to avail
himself or herself of the option for conversion of his or her stock
shall deliver, duly endorsed in blank, the certificates
representing the stock to be converted to the Secretary of the
Corporation at its office, and at the same time notify the
Secretary in writing over his or her signature that he or she
desires to convert his or her stock into common stock at the
conversion rate of one (1) share of Series A Preferred Stock into
one-hundred (100) shares of common stock.
(b) Upon receipt by the Secretary of a certificate or certificates
representing such Series A Preferred Stock and a notice that the
holder desires to convert the same, the Corporation shall forthwith
cause to be issued to the holder such shares of common stock at the
conversion rate set forth in section (a) above, and shall deliver
to such holder a certificate in due form for such common stock.
(c) One-million shares of the Corporation=s common stock shall be
reserved and such shares shall be issued only in conversion of the
Series A Preferred Stock as herein provided.
(d) Shares of Series A Preferred Stock that have been converted
shall revert to the status of unissued and unclassified preferred
shares and may be reissued as part of any future class of shares
designated by the Board of Directors.
(e) If, at any time the convertible Series A Preferred Stock of
this Corporation is outstanding, the Corporation increases the
number of common shares outstanding through a stock split, stock
dividend or similar action, the conversion rate for the Series A
Preferred Stock shall be adjusted accordingly, so as to make each
share of Series A Preferred Stock convertible into the same
proportionate amount of common stock as it would have been
convertible into without such adjustment of the common stock. Each
Series A shareholder shall be notified in writing of the adjusted
conversion rate within thirty (30) days of such action by the
Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, or in the event of
any reduction of capital of the Corporation resulting in a
distribution of assets to its stockholders, the holders of Series
A Preferred Stock shall be entitled to receive out of the assets of
the Corporation, without regard to capital or the existence of a
surplus of any nature, and after payment of all senior liquidation
preferences, an amount equal to one-hundred dollars ($100.00) per
share of Series A Preferred Stock which have not been converted,
before any payment shall be made or any assets distributed to the
holders of common stock. The liquidation preference of Series A
Preferred Stock is junior only to that of all previously issued
Preferred Stock. After the making of such payments to the holders
of the Series A Preferred Stock, the remaining assets of the
corporation shall be distributed among the holders of the common
stock, and/or other securities junior to this Series A Preferred
Stock without further participation by the holders of the Series A
Preferred Stock. If the assets of the Corporation distributable as
aforesaid among the holders of the Series A Preferred Stock shall
be insufficient to permit the payment to them of said amounts, the
balance of all assets distributable after paying all senior
liquidation preferences shall be distributed ratably among the
holders of the Series A Preferred Stock.
Any other rights not specifically addressed in this resolution are
identical to those rights granted to common shareholders.
IN WITNESS WHEREOF, said Web4Boats.com, Inc. has caused this
certificate to be signed by Dennis Schlagel, Authorized Officer,
this 13th day of August 1999.
By: /s/ Dennis Schlagel
Dennis Schlagel, Chairman of the Board,
Chief Executive Officer and Secretary
=================
Exhibit 2.2
BYLAWS OF WINDOM, INC.
ARTICLE I
Offices
The principal office of the corporation shall initially be
located at 1625 Broadway, Suite 770, Denver, Colorado 80202. The
corporation may have such other offices, either within or outside
the State of Delaware, as the board of directors may designate or
as the business of the corporation may require from time to time.
The registered office of the corporation required by the Delaware
General Corporation Law to be maintained in the State of Delaware
may be, but need not be, identical with the principal office, if
in the State of Delaware, and the address of the registered
office may be changed from time to time in accordance with the
Delaware General Corporation Law.
ARTICLE II
Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders
for the purpose of electing directors and for the transaction of
such other business as may come before the meeting shall be held
at such time and date as the board of directors shall designate
from time to time by resolution duly adopted. If the day fixed
for the annual meeting shall be a legal holiday in the State of
Delaware, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held on
the day designated herein for any annual meeting of the
stockholders, or at any adjournment thereof, the board of
directors shall cause the election to be held at a special
meeting of the stockholders as soon thereafter as is convenient.
Section 2. Special Meetings. Special meetings of the
stockholders, for any purpose, unless otherwise prescribed by
statute, may be called by the president or by a majority of the
board of directors, and shall be called by the secretary at the
request of the holders of not less than one-tenth of all the
outstanding shares of the corporation entitled to vote at the
meeting.
Section 3. Place of Meeting. The board of directors may designate
any place, either within or outside of Delaware, as the place for
any annual meeting or for any special meeting called by
the board of directors. A waiver of notice signed by all
stockholders entitled to vote at a meeting may designate any place,
either within or outside of Delaware, as the place for such
meeting. If no designation is made, or if a special meeting shall
be called otherwise than by the board, the place of meeting shall
be the registered office of the corporation in Delaware.
Section 4. Notice of Meeting. Written or printed notice stating
the place, day and hour of the meeting, and, in case of a special
meeting, the purposes for which the meeting is called, shall be
delivered not less than ten nor more than sixty days before the
date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or
persons calling the meeting, to each stockholder of record
entitled to vote at such meeting, except that if the authorized
capital stock is to be increased at least thirty days notice
shall be given. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to
the stockholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
If requested by the person or persons lawfully calling such
meeting, the secretary shall give notice thereof, at corporate
expense.
Section 5. Closing of Transfer Books or Fixing of Record Date.
For the purpose of determining stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for
any other proper purpose, the board of directors may provide that
the stock transfer books shall be closed for any stated period
not exceeding sixty days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to
notice of or to vote at a meeting of stockholders, such books
shall be closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the board
of directors may fix in advance a date as the record date for any
such determination of stockholders, such date in any case to be
not more than sixty days and, in case of a meeting of
stockholders, not less than ten days prior to the date on which
the particular action, requiring such determination of
stockholders, is to be taken. If the stock transfer books are not
closed and no record date is fixed for the determination of
stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or
the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of
stockholders shall be deemed to have been made as provided in
this section, such determination has been made through the
closing of the stock transfer books and the stated period of
closing expired.
Section 6. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at
least ten days before each meeting of stockholders, a complete list
of the stockholders entitled to vote at such meeting, or any
adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for
a period of ten days prior to such meeting, shall be kept on file
at the principal office of the corporation, whether within or
outside Delaware, and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original stock transfer
books shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at any
meeting of stockholders.
Section 7. Quorum. At least one-third of the outstanding shares
of the corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders. If
less than one-third of the outstanding shares are represented at
a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The
stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless the
vote of a greater number, or voting by classes, is required by
law, or the articles of incorporation.
Section 8. Proxies. At all meetings of the stockholders, a
stockholder may vote by proxy executed in writing by the stock-
holder or by his duly authorized attorney in fact. Such proxy
shall be filed with the secretary of the corporation before or at
the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided
in the proxy.
Section 9. Voting of Shares. Each outstanding share, regardless
of class, shall be entitled to one vote, and each fractional
share shall be entitled to a corresponding fractional vote on
each matter submitted to a vote at a meeting of stockholders,
except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the articles of
incorporation as permitted by the Delaware General Corporation
Law. In the election of directors, each record holder of stock
entitled to vote at such election shall have the right to vote
the number of shares owned by him for as many persons as there
are directors to be elected, and for whose election he has the
right to vote. Cumulative voting shall not be allowed.
Section 10. Voting of Shares by Certain Holders. Treasury shares
shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares at any given
time.
Shares standing in the name of another corporation may be voted
by such officer, agent or proxy as the bylaws of such corporation
may prescribe, or, in the absence of such provision, as the board
of directors of such corporation may determine.
Shares held by an administrator, executor, personal
representative, guardian or conservator may be voted by him,
either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be
voted by him, either in person or by proxy, but no trustee shall
be entitled to vote shares held by him without a transfer of such
shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into
his name if authority so to do is contained in an appropriate
order of the court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name
of the pledges, and thereafter the pledges shall be entitled to
vote the shares so transferred.
Section 11. Informal Action by Stockholders. Any action required
to be taken at a meeting of the stockholders, or any other action
which may be taken at a meeting of the stockholders, may be taken
without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, is signed
by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. The consent shall have the
same force and effect as a vote of the stockholders, and may be
stated as such in any articles or document filed with the
Secretary of State of Delaware under the Delaware General
Corporation Law.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its board of directors, except as
otherwise provided in the Delaware General Corporation Law or the
articles of incorporation.
Section 2. Number, Tenure and Qualifications. The board of
directors shall consist of at least three members as shall be
designated by the board of directors from time to time and, in
the absence of such designation, the board of directors shall
consist of three members; provided, however, that in the event
the outstanding shares of the corporation are held of record by
fewer than three stockholders, there shall be only as many
directors as there are stockholders absent a designation by the
board of directors to the contrary. Directors shall be elected at
each annual meeting of stockholders. Each director shall hold
office until the next annual meeting of stockholders and
thereafter until his successor shall have been elected and
qualified. Directors need not be residents of Delaware or
stockholders of the corporation. Directors may be removed in the
manner provided by the Delaware General Corporation Law.
Directors shall be natural persons of the age of 21 years or
older.
Section 3. Removals and Resignations. Except as may otherwise be
provided by statute, the stockholders may, at any special meeting
called for the purpose, by a vote of the holders of the majority
of the shares then entitled to vote at an election of directors,
remove any or all directors from office, with or without cause.
A director may resign at any time by giving written notice to the
board of directors, the president or secretary of the
corporation. The resignation shall take effect immediately upon
the receipt of the notice, or at any later period of time
specified therein. The acceptance of such resignation shall not
be necessary to make it effective, unless the resignation
requires acceptance for it to be effective.
Section 4. Vacancies. Any vacancy occurring in the office of a
director whether by reason of an increase in the number of
directorships or otherwise, may be filled by a majority of the
directors then in office, though less than a quorum. A director
elected to fill a vacancy shall be elected for the unexpired term
of his predecessor in office, unless sooner displaced.
When one or more directors resign from the board, effective at a
future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective.
Each director so chosen shall hold office as herein provided in
the filling of other vacancies.
Section 5. Annual Meetings. The board of directors shall meet
each year immediately after the annual meeting of the
stockholders for the purpose of organization, election of
officers, and consideration of any other business that may be
properly brought before the meeting. No notice of any kind to
either old or new members of the board of directors for such
meeting shall be necessary.
Section 6. Regular Meetings. The board of directors from time to
time may provide by resolution for the holding of regular
meetings and fix the time and place of such meetings. Regular
meetings may be held within or without the State of Delaware. The
board need not give notice of regular meetings provided that the
board promptly gives notice of any change in the time or place of
such meetings to each director not present at the meeting at
which such change was made.
Section 7. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president or
any two directors. The person or persons authorized to call
special meetings of the board of directors may fix any place,
either within or outside Delaware, as the place for holding any
special meeting of the board of directors called by them.
Section 8. Notice. Notice of any special meeting shall be given
at least five days prior thereto by written notice delivered
personally or mailed to each director at his business address, or
by notice given at least two days prior thereto by telegraph. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to
the telegraph company. Any director may waive notice of any
meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting
of the board of directors need be specified in the notice or
waiver of notice of such meeting.
Section 9. Quorum. A majority of the number of directors fixed by
Section 2 shall constitute a quorum for the transaction of
business at any meeting of the board of directors, but if less
than such majority is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice.
Section 10. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the board of directors.
Section 11. Compensation. By resolution of the board of
directors, any director may be paid any one or more of the
following: his expenses, if any, of attendance at meetings; a
fixed sum for attendance at each meeting; or a stated salary as
director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor.
Section 12. Presumption of Assent. A director of the corporation
who is present at a meeting of the board of directors at which
action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered
in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such
action.
Section 13. Executive Committee. By resolution adopted by a
majority of the board of directors, the board may designate one
or more committees, including an executive committee, each
consisting of one or more directors. The board of directors may
designate one or more directors as alternate members of such
committee, who may replace any absent or disqualified member at
any meeting of such committee. Any such committee, to the extent
provided in the resolution and except as may otherwise be
provided by statute, shall have and may exercise the powers of
the board of directors in the management of the business and
affairs of the corporation and may authorize the seal of the
corporation to be affixed to all papers which may require the
same. The designation of such committee and the delegation
thereto of authority shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed
upon it or him by law. If there be more than two members on such
committee, a majority of any such committee may determine its
action and may fix the time and place of its meetings, unless
provided otherwise by the board. If there be only two members,
unanimity of action shall be required. Committee action may be by
way of a written consent signed by all committee members. The
board shall have the power at any time to fill vacancies on
committees, to discharge or abolish any such committee, and to
change the size of any such committee.
Except as otherwise prescribed by the board of directors, each
committee may adopt such rules and regulations governing its
proceedings, quorum, and manner of acting as it shall deem proper
and desirable.
Each such committee shall keep a written record of its acts and
proceedings and shall submit such record to the board of
directors. Failure to submit such record, or failure of the board
to approve any action indicated therein will not, however,
invalidate such action to the extent it has been carried out by
the corporation prior to the time the record of such action was,
or should have been, submitted to the board of directors as
herein provided.
Section 14. Informal Action by Directors. Any action required or
permitted to be taken at a meeting of the directors may be taken
without a meeting if a consent in writing, setting forth the
action so taken, is signed by all of the directors entitled to
vote with respect to the subject matter thereof. The consent
shall have the same force and effect as a unanimous vote of the
directors, and may be stated as such in any articles or document
filed with the Secretary of State of Delaware under the Delaware
General Corporation Law.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation shall be a
president, one or more vice presidents, if deemed appropriate and
necessary by the board of directors, a secretary and treasurer.
The board of directors may appoint such other officers, assistant
officers, committees and agents, including a chairman of the
board, assistant secretaries and assistant treasurers, as they
may consider necessary, who shall be chosen in such manner and
hold their offices for such terms and have such authority and
duties as from time to time may be determined by the board of
directors. The salaries of all the officers of the corporation
shall be fixed by the board of directors. One person may hold
more than one office, except no person may simultaneously hold
the offices of president and secretary. In all cases where the
duties of any officer, agent or employee are not prescribed by
the bylaws or by the board of directors, such officer, agent or
employee shall follow the orders and instructions of the
president.
Section 2. Election and Term of Office. The board of directors
which serves as such prior to the first annual meeting of the
stockholders shall elect the officers of the corporation. The
officers of the corporation shall thereafter be elected by the
board of directors annually at each annual meeting of the board
of directors. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until the
first of the following to occur: until his successor shall have
been duly elected and shall have qualified; or until his death;
or until he shall resign; or until he shall have been removed in
the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the
board of directors or by the executive committee whenever in its
judgment the best interests of the corporation will be served
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not in itself create
contract rights.
Section 4. Vacancies. A vacancy in any office, however occurring,
may be filled by the board of directors for the unexpired portion
of the term.
Section 5. President. The president shall, subject to the
direction and supervision of the board of directors, be the chief
executive officer of the corporation and shall have general
supervision of its officers, agents and employees; he shall
perform all the duties commonly incident to his office and shall
perform such other duties as the board of directors shall
designate. He shall, unless otherwise directed by the board of
directors, attend in person or by substitute appointed by him, or
shall execute on behalf of the corporation written instruments
appointing a proxy or proxies to represent the corporation, at
all meetings of the stockholders of any other corporation in
which the corporation shall hold any stock. He may, on behalf of
the corporation, in person or by substitute or by proxy, execute
written waivers of notice and consents with respect to any such
meetings. At all such meetings and otherwise, the president, in
person or by substitute or proxy as aforesaid, may vote the stock
so held by the corporation and may execute written consents and
other instruments with respect to such stock and may exercise any
and all rights and powers incident to the ownership of the stock,
subject however to the instructions, if any, of the board of
directors. The president shall have custody of the treasurer's
bond, if any.
Section 6. Vice Presidents. The vice presidents shall assist the
president and shall perform such duties as may be assigned to
them by the president or by the board of directors. In the
absence of the president, the vice president designated by the
board of directors or, (if there be no such designation)
designated in writing by the president shall have the powers and
perform the duties of the president. If no such designation shall
be made all vice presidents may exercise such powers and perform
such duties.
Section 7. The Secretary. The secretary shall: (a) keep the
minutes of the proceedings of the stockholders, executive
committee and the board of directors; (b) see that all notices
are duly given in accordance with the provisions of these bylaws
or as required by law; (c) be custodian of the corporate records
and of the seal of the corporation and affix the seal to all
documents when authorized by the board of directors; (d) keep at
its registered office or principal place of business within or
outside Delaware a record containing the names and addresses of
all stockholders and the number and class of shares held by each,
unless such a record shall be kept at the office of the
corporation's transfer agent or registrar; (e) sign with the
president, or a vice president, certificates for shares of the
corporation, the issuance of which shall have been authorized by
resolution of the board of directors; (f) have general charge of
the stock transfer books of the corporation, unless the
corporation has a transfer agent; and (g) in general perform all
duties incident to the office of secretary and such other duties
as from time to time may be assigned to him by the president or
by the board of directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the
secretary.
Section 8. Treasurer. The treasurer shall be the principal
financial officer of the corporation and shall have the care and
custody of all funds, securities, evidences of indebtedness and
other personal property of the corporation and shall deposit the
same in accordance with the instructions of the board of
directors. He shall receive and give receipts and acquittances
for moneys paid in on account of the corporation, and shall pay
out of the funds on hand all bills, payrolls and other just debts
of the corporation of whatever nature upon maturity. He shall
perform all other duties incident to the office of the treasurer
and, upon request of the board, shall make such reports to it as
may be required at any time. He shall, if required by the board,
give the corporation a bond in such sums and with such sureties
as shall be satisfactory to the board, conditioned upon the
faithful performance of his duties and for the restoration to the
corporation of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation. He shall have such other powers and
perform such other duties as may be from time to time prescribed
by the board of directors or the president. Assistant treasurers,
if any, shall have the same powers and duties, subject to the
supervision of the treasurer.
ARTICLE V
Stock
Section 1. Certificates. The shares of stock shall be represented
by consecutively numbered certificates signed in the name of the
corporation by its president or a vice president and the
secretary or an assistant secretary, and shall be sealed with the
seal of the corporation, or with a facsimile thereof. The
signatures of the company's officers on such certificate may also
be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation
itself or an employee of the corporation. In case any officer who
has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer at the date of its
issue. Certificates of stock shall be in such form consistent
with law as shall be prescribed by the board of directors. No
certificate shall be issued until the shares represented thereby
are fully paid.
Section 2. Consideration for Shares. Shares shall be issued for
such consideration, expressed in dollars (but not less than the
par value thereof) as shall be fixed from time to time by the
board of directors. Treasury shares shall be disposed of for such
consideration expressed in dollars as may be fixed from time to
time by the board. The consideration may consist, in whole or in
part, of money, other property, tangible or intangible, or in
labor or services actually performed for the corporation, but
neither promissory notes nor future services shall constitute
payment or part payment for shares.
Section 3. Lost Certificate. In case of the alleged loss,
destruction or mutilation of a certificate of stock the board of
directors may direct the issuance of a new certificate in lieu
thereof upon such terms and conditions in conformity with law as
it may prescribe. The board of directors may in its discretion
require a bond in such form and amount and with such surety as it
may determine, before issuing a new certificate.
Section 4. Transfer of Shares. Upon surrender to the corporation
or to a transfer agent of the corporation of a certificate of
stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and such
documentary stamps as may be required by law, it shall be the
duty of the corporation to issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such
transfer of stock shall be entered on the stock book of the
corporation which shall be kept at its principal office, or by
its registrar duly appointed.
The corporation shall be entitled to treat the holder of record
of any share of stock as the holder in fact thereof, and,
accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Delaware.
ARTICLE VI
Indemnification of Officers and Directors
Section 1. Exculpation. No director or officer of the corporation
shall be liable for the acts, defaults, or omissions of any other
director or officer, or for any loss sustained by the
corporation, unless the same has resulted from his own willful
misconduct, willful neglect or negligence.
Section 2. Indemnification. Each director and officer of the
corporation and each person who shall serve at the corporation's
request as a director or officer of another corporation in which
the corporation owns shares of capital stock or of which it is a
creditor shall be indemnified by the corporation against all
reasonable costs, expenses and liabilities (including reasonable
attorneys' fees) actually and necessarily incurred by or imposed
upon him in connection with, or resulting from, any claim,
action, suit, proceeding, investigation, or inquiry of whatever
nature in which he may be involved as a party or otherwise by
reason of his being or having been a director or officer of the
corporation or a director or officer of such other corporation
whether or not he continues to be a director or officer of the
corporation or a director or officer of such other corporation at
the time of the incurring or imposition of such costs, expenses
or liabilities, except in relation to matters as to which he
shall be finally adjudged in such action, suit, proceeding,
investigation, or inquiry to be liable for willful misconduct,
willful neglect or negligence toward or on behalf of the
corporation in the performance of his duties as such director or
officer of the corporation or as such director or officer of such
other corporation. As to whether or not a director or officer was
liable by reason of willful misconduct, willful neglect or
negligence toward or on behalf of the corporation in the
performance of his duties as such director or officer of the
corporation or as such director or officer of such other
corporation, in the absence of such final adjudication of the
existence of such liability, the board of directors and each
director and officer may conclusively rely upon an opinion of
independent legal counsel selected by or in the manner designated
by the board of directors. The foregoing right to indemnification
shall be in addition to and not in limitation of all other rights
to which such person may be entitled as a matter of law and shall
inure to the benefit of the legal representatives of such person.
Section 3. Liability Insurance. The corporation may purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or who is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, association or other enterprise against any
liability asserted against him and incurred by him in such
capacity or arising out of his status as such, whether or not he
is indemnified against such liability by this Article VI.
ARTICLE VII
Miscellaneous
Section 1. Transactions Involving Directors or officers. No
contract or other transaction between the corporation and any
person, firm, partnership, business or other corporation and no
other act of the corporation shall in the absence of fraud, in
any way be affected or invalidated by the fact that any of the
directors or officers of the corporation are pecuniarily or are
interested in, or are directors or officers of, such other
corporation, firm, person, partnership, or business. Any officer
or director of the corporation individually or any firm or
association of which any officer or director may be a member, may
be a party to, or may be pecuniarily or otherwise interested in,
any contract or transaction of the corporation, provided that the
fact that he individually or such firm or association is so
interested shall be disclosed or shall have been known to the
board of directors at which action upon any such contract or
transaction shall be taken. Any director or officer of the
corporation who is also a director of officer of such other
corporation or is so interested may be counted in determining the
existence of a quorum at any meeting if the board of directors
which shall authorize any such contract or transaction, and may
vote thereat to authorize any such contract or transaction, with
like force and effect as if he were not such director or officer
of such other corporation or not so interested. Any director of
the corporation may vote upon any contract or other transaction
between the corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a director
or officer of such subsidiary or affiliated corporation.
Section 2. Seal. The seal of this corporation shall consist of a
flat-faced circular die with such words and figures cut or
engraved thereon as the board of directors may from time to time
determine.
Section 3. Amendments. The bylaws of the corporation regardless
of whether made by the stockholders or by the board of directors,
may be amended, added to, or repealed by vote of a majority of
the then existing directors at a regular or special directors'
meeting or by vote of the holders of not less than seventy-five
percent (75%) of the issued and outstanding capital stock of this
corporation, at any meeting of the stockholders, provided notice
of the proposed change is given in the notice of meeting, or
notice thereof is waived.
Section 4. Waiver of Notice. Whenever any notice whatever is
required to be given by these bylaws, or the articles of
incorporation of this corporation, or any of the corporation laws
of the State of Delaware, a waiver thereof in writing, signed by
the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE VIII
Uniformity of interpretation and Severability
The bylaws shall be so interpreted and construed as to conform to
the Articles of Incorporation and the statutes of the State of
Delaware or of any other state in which conformity may become
necessary by reason of the qualification of the corporation to do
business in such foreign state, and where conflict between these
bylaws and the Articles of Incorporation or the statutes of the
State of Delaware has arisen or shall arise, these bylaws shall
be considered to be modified to the extent, but only to the
extent, conformity shall require. If any provision hereof or the
application thereof shall be deemed to be invalid by reason of
the foregoing sentence, such invalidity shall not affect the
validity of the remainder of the bylaws without the invalid
provisions or the application thereof, and the provisions of
these bylaws are declared to be severable.
Adopted this 8th day of February, 1988.
==========================
Exhibit 6(1)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that Beltropic, Inc. ("Optionee") is
entitled, subject to the terms and conditions hereinafter set
forth, to purchase One Hundred Eighty Thousand (180,000) shares
of Common Stock, $.0001 par value per share (the "Common Shares")
of NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of One Dollar ($1.00)
commencing on September 24, 1997 until Sixty months after the
date of this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: September 24, 1997
By: /s/ Mark J. Horne
Mark J. Horne, President
=================
Exhibit 6(2)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that Latin Food Corporation ("Optionee")
is entitled, subject to the terms and conditions hereinafter set
forth, to purchase One Hundred Eighty Thousand (180,000) shares
of Common Stock, $.0001 par value per share (the "Common Shares")
of NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of One Dollar ($1.00)
commencing on September 24, 1997 until Sixty months after the
date of this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: September 24, 1997
By: /s/ Mark J. Horne
Mark J. Horne, President
=======================
Exhibit 6(3)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that Spika, Inc. ("Optionee") is
entitled, subject to the terms and conditions hereinafter set
forth, to purchase One Hundred Forty Thousand (140,000) shares of
Common Stock, $.0001 par value per share (the "Common Shares") of
NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of One Dollar ($1.00)
commencing on September 24, 1997 until Sixty months after the
date of this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: September 24, 1997
By: /s/ Mark J. Horne
Mark J. Horne, President
===================
Exhibit 6(4)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that Spika Corporation, ("Optionee") is
entitled, subject to the terms and conditions hereinafter set
forth, to purchase Five Hundred Thousand (500,000) shares of
Common Stock, $.0001 par value per share (the "Common Shares") of
NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of Fifty Cents ($.50)
commencing on December 30, 1997 until Sixty months after the date
of this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: December 30, 1997
By: /s/ Mark J. Horne
Mark J. Horne, President
=====================
Exhibit 6(5)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that Blair J. Merriam ("Optionee") is
entitled, subject to the terms and conditions hereinafter set
forth, to purchase Two Hundred Thousand (200,000) shares of
Common Stock, $.0001 par value per share (the "Common Shares") of
NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of One Dollar ($0.50)
commencing on March 3, 1998 until Sixty months after the date of
this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: 3/10/98
By: /s/ Mark J. Horne
Mark J. Horne, President
==================
Exhibit 6(6)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that James A. Merriam ("Optionee") is
entitled, subject to the terms and conditions hereinafter set
forth, to purchase Two Hundred Thousand (200,000) shares of
Common Stock, $.0001 par value per share (the "Common Shares") of
NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of One Dollar ($0.50)
commencing on March 10, 1998 until Sixty months after the date of
this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: 3/10/98
By: /s/ Mark J. Horne
Mark J. Horne, President
=======================
Exhibit 6(7)
OPTION TO PURCHASE COMMON STOCK OF
NEW YORK BAGEL EXCHANGE, INC.
This is to certify that Latin Food Corporation ("Optionee")
is entitled, subject to the terms and conditions hereinafter set
forth, to purchase One Hundred Thousand (100,000) shares of
Common Stock, $.0001 par value per share (the "Common Shares") of
NEW YORK BAGEL EXCHANGE, INC., a Delaware corporation (the
"Company"), from the Company at a price per share and on the
terms set forth herein and to receive a certificate of the Common
Shares so purchased on presentation and surrender to the Company
with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either by cash or by certified cashier's check or other
check payable to the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of One Dollar ($0.50)
commencing on March 10, 1998 until Sixty months after the date of
this Option.
Subject to the above conditions, the purchase rights
represented by this Option are exercisable at the option of the
registered owner hereof in whole at any time, or in part from
time to time, within the period specified; provided, however,
that such purchase rights shall not be exercisable with respect
to a fraction of a Common Share. In case of the purchase of less
than all the Common Shares purchasable under this Option, the
Company shall cancel this Option on surrender hereof and shall
execute and deliver a new Option of like tenor and date for the
balance of the shares purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
NEW YORK BAGEL EXCHANGE, INC.
Dated: 3/10/98
By: /s/ Mark J. Horne
Mark J. Horne, President
==========================
Exhibit 6(8)
OPTION TO PURCHASE COMMON STOCK OF
WEBBOAT. COM, INC.
This is to certify that Dennis Schlagel, ("Optionee") is
entitled, subject to the terms and conditions hereinafter set
forth, to purchase Five Hundred Thousand (500,000) shares of
Common Stock, $.0001 par value per share (the "Common Shares") of
WEBBOAT.COM, INC., a Delaware corporation (the "Company"), from
the Company at a price per share and on the terms set forth
herein and to receive a certificate of the Common Shares so
purchased on presentation and surrender to the Company with the
subscription form attached, duly executed and accompanied by
payment of the purchase price of each share purchased either by
cash or by certified cashier's check or other check payable to
the order of the Company.
The purchase rights represented by this Option are
exercisable at a price per Common Share of Fifty Cents ($.50)
commencing on April 2, 1999 until Sixty months after the date of
this Option.
Subject to the above conditions, and the rights under this
Agreement, the purchase rights represented by this Option are
exercisable at the option of the registered owner hereof in whole
at any time, or in part from time to time, within the period
specified; provided, however, that such purchase rights shall not
be exercisable with respect to a fraction of a Common Share. In
case of the purchase of less than all the Common Shares
purchasable under this Option, the Company shall cancel this
Option on surrender hereof and shall execute and deliver a new
Option of like tenor and date for the balance of the shares
purchasable hereunder.
The Company agrees at all times to reserve and hold
available a sufficient number of Common Shares to cover the
number of shares issuable on exercisable of this and all other
Options of like tenor then outstanding.
This Option shall not entitle the holder thereof to any
voting rights or other rights as a stockholder of the Company, or
to any other rights whatever except the rights herein expressed
and such as are set forth, and no dividends shall be payable or
accrue in respect to this Option or the interest represented
hereby or the Common Shares purchasable hereunder until and
unless, and except to the extent that, this Option shall be
exercised.
In the event that the outstanding Common Shares hereunder
are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another
corporation by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination
of shares, stock split-up or stock dividend.
(a) The aggregate number and kind of Common Shares subject
to this Option shall be adjusted appropriately;
(b) Rights under this Option, both as to number of subject
Common Shares and the Option price, shall be adjusted
appropriately; and
(c) Where dissolution or liquidation of the Company or any
merger or combination in which the Company is not the
surviving corporation is involved, this Option shall
terminate, but the registered owner of this Option
shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to
exercise his Option in whole or in part to the extent
that it shall not have been exercised.
The foregoing adjustments and the application of the
foregoing provisions may provide for the elimination of
fractional share interests.
The Option and all the rights hereunder shall be
transferable at the option of the Optionee.
The Company shall not be required to issue or deliver any
certificate of Common Shares purchased in exercise of this Option
or any portion thereof prior to the fulfillment of all the
following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state
law or under the rulings or regulation of the
Securities and Exchange Commission or any other
government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from
any federal or state government agency which is
necessary.
The Company agrees to file an appropriate registration
statement under the Securities Act of 1933 as soon as practicable
in order to register the underlying Common Shares under such Act.
IN WITNESS WHEREOF, the Company has caused this Option to be
executed by the signature of a duly authorized officer.
WEBBOAT.COM, INC.
Dated: April 2, 1999
By: /s/ Dennis Schlagel
Dennis Schlagel, President
=========================
Exhibit 6(9)
STOCK REDEMPTION AND EMPLOYMENT TERMINATION AGREEMENT
This STOCK REDEMPTION AND EMPLOYMENT TERMINATION AGREEMENT (the
"Agreement"), dated as of April 1, 1999, is entered into between
MARK J. HORNE ("Horne") and WEBBOAT.COM, INC., a Delaware
corporation (the "Company").
This Agreement sets forth the terms and conditions upon which
Horne (i) will sell to the Company, and the Company will purchase
from Horne, 1,215,000 shares of the Company's common stock (the
"Stock"), and (ii) will terminate his employment and other
relationships with the Company.
In consideration of the mutual agreements contained herein,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE STOCK
1.1 Purchase and Sale of Stock. Horne agrees to sell, transfer
and deliver the Stock to the Company, and the Company agrees
to purchase the Stock from Horne.
1.2 Consideration for the Stock. The consideration for the
sale, transfer and delivery of the Stock to the Company shall
be $.001 per share, or $121.50 in cash paid by check payable
to Horne.
1.3 The Closing. The closing under this Agreement shall take
place at the offices of Petillon & Hanson, 21515 Hawthorne
Boulevard, Suite 1260, Torrance, California 90503, as soon as
the conditions set forth in Article 5 are met, at 12:00 noon
or at such other time, date and place as are mutually
agreeable to Horne and Company, but not later than April 22,
1999. The effective time of such closing is sometimes
referred to herein as the "Closing."
1.4 Deliveries at Closing. At the Closing:
(a) Horne shall deliver to the Company the following
certificates representing the Stock, duly endorsed in
blank (or accompanied by stock powers duly executed in
blank) by Horne:
LU 1222 representing 250,000 shares
LU 1093 representing 715,000 shares
LU 1221 representing 250,000 shares
(b)The Company shall pay to the Seller the sum of $121.50, as
the cash purchase price of the Stock, in the manner
specified pursuant to Section 1.2 above;
(c) The Company will deliver to Horne a check for $10,000 as
provided for in Section 3.3.
(d)Horne will deliver his resignation and a Unanimous Written
Consent as provided in Section 4.1.
(e) The Company shall convey to Horne all of its rights to the
name "Webboat.com, Inc." and any variations thereof,
and shall obtain a written consent from holders of a
majority of the outstanding common stock of the Company
to amend the Company's Articles of Incorporation
effecting a name change from "Webboat.com, Inc." to
"Windom, Inc." At the Closing, the Company shall
deliver to Horne a copy of the Amendment to the
Company's Articles as certified by the Delaware
Secretary of State. The Company will relinquish and
convey to Horne the domain name "Webboat.com" and all
variations thereof which Horne has reserved with
Internic.
(f)Horne will relinquish and convey to the Company the domain
names "Webbought.com" and "Webought.com" and all legal
rights to the name "ebot."
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF HORNE
Horne represents and warrants to and agrees with the Company
that:
2.1 Due Authorization and Execution. Horne has the necessary
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Horne and,
assuming due execution and delivery by the Company, constitutes a
valid and binding obligation of Horne enforceable against Horne
in accordance with its terms.
2.2 Ownership and Transfer of Stock. Horne is the lawful record
and beneficial owner of the Stock, free and clear of all liens,
encumbrances, security agreements, equities, options, charges,
restrictions and claims of every kind (other than restrictions on
transfer imposed by applicable securities laws), and the Seller
has full legal right, power and authority to sell, transfer and
deliver the Stock in accordance with the terms and subject to the
conditions of this Agreement. Other than the Stock, the Seller
owns no shares of capital stock of the Company or any interest
therein, and at the Closing, will have no subscription, warrant,
option or other right (contingent or otherwise, and of any nature
whatsoever, either written or oral) to purchase or acquire any
shares of capital stock of the Company.
2.3 Relinquishment of Options. Horne relinquishes and surrenders
any and all stock options, or other rights to purchase stock or
any other securities of the Company.
2.4 Litigation. Horne represents that the only action presently
pending against the Company of which he is aware is a civil
action filed by Steve Fenstermacher.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to and agrees with Horne as
follows:
3.1 Due Authorization and Execution. The Company has the
necessary power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Company
and, assuming due execution and delivery of this Agreement by
Horne, constitutes the valid and binding obligation of the
Company enforceable against it in accordance with its terms.
3.2 Investment. The Company is acquiring the Stock for
cancellation, returning to the status of authorized by unissued
common stock and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of
distributing or selling the same.
3.3 Sale of Store. The company will pay the sum of $10,000 to
Horne at the Closing upon the sale of the New York Bagel
Exchange bagel store.
3.4 Release by the Company of Driver Sponsorship Agreement. The
Company will waive, relinquish and cancel all of its rights
under the Driver Sponsorship Agreement dated December 1, 1997
between the Company, Horne and Arie Luyendyk.
ARTICLE IV
EMPLOYMENT TERMINATION AGREEMENT
4.1 Resignation. Horne hereby resigns all of his positions as an
officer, director and employee of the Company, effective as of
the date hereof, and immediately prior thereto will, by a duly
executed Unanimous Written Consent of Director, elect Dennis
Schlagel to all of Horne's positions as officer and director of
the Company.
4.2 Horne's Release of Compensation and Loans. Horne and his
father, George F. Horne, will cancel, relinquish and forgive
all claims to accrued and unpaid compensation and indebtedness
represented by their loans to the Company in the aggregate
amount of $256,438.62.
4.3 Mutual Releases.
(a)Horne hereby releases the Company and its Affiliates, and
their respective officers, directors, employees and
shareholders (for the purposes of this Section 4,
collectively called "Released Parties"), from any and all
claims, demands and causes of action of any kind or nature,
whether known or unknown or suspected or unsuspected to
Horne, which Horne now owns or holds, or has at any time
before this owned or held against the Released Parties, or
any of them, including specifically any and all claims,
demands, grievances and causes of action which arise out of,
are in any way connected with, any loss, damage,
grievance, or injury whatever to Horne resulting from any
act committed or omission made by the Released Parties, or
any of them, prior to the date of this Agreement or
connected to his relationship with the Company as an
employee, officer, director or shareholder of the Company.
(b) The Company and its directors hereby release Horne and his
heirs, executors, successors and assigns (collectively
"Affiliates') from any and all claims, demands and causes of
action of any kind or nature, whether known or unknown or
suspected or unsuspected to the Company or directors, which
the Company now owns or holds, or has at any time before
this owned or held against Horne or Affiliates, including
specifically any and all claims, demands, grievances and
causes of action which arise out of, or are in any way
connected with, any loss, damage grievance, or injury
whatever to the Company or directors resulting from any act
committed or omission made by Horne or Affiliates prior to
the date of this Agreement or connected to Horne's
relationship with the Company as an employee, officer,
director or shareholder of the Company.
(c) It is the intention of the parties hereto that their execution
of this Agreement will forever bar every claim, demand and
cause of action described in this Agreement, except as
provided herein, and each party hereto expressly waives any
and all rights and benefits conferred upon each party by the
provisions of Section 1542 of the California Civil Code,
which provides:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing the release,
which if know by him must have materially affected
his settlement with the debtor."
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Horne's Obligation to Close. Horne's
obligation to close is subject to satisfaction of the following
conditions:
(a)Amendment of the Company's Articles of Incorporation effecting a
name change from "Webboat.com, Inc." to "Windom, Inc."
(b)A certificate of Dennis Schlagel, as the President and CEO of
the Company, that all of the representations and warranties
are true and correct and that the covenants have been
performed.
(c)The sale of the New York Bagel Exchange bagel store has been
consummated.
5.2 Obligation of the Company to Close. The Company's obligation
to close is subject to the following conditions:
(a)Delivery of a Unanimous Written Consent by Horne electing Dennis
Schlagel as a successor officer and director and a resignation
of Horne as officer and director of the Company.
(b)A certificate of Horne that all of his representations and
warranties are true and correct and that the covenants have
been performed.
ARTICLE VI
ARBITRATION
6.1 Arbitration. Should there be any dispute concerning any
provision hereof, the parties agree to submit the matter to one
arbitrator before the American Arbitration Association ("AAA") in
Los Angeles, California, and to use their best efforts to obtain
an expeditious resolution. The decision of the AAA, shall be
final and binding and may be enforced by judgment upon
application to a court of competent jurisdiction.
Notwithstanding any rule of the AAA to the contrary, California
Civil Code Section 1283.05 shall dictate the rights of both
parties to conduct discovery. The parties also agree that a
restraining order maintaining the status quo and/or a writ of
attachment may be obtained by any party pending the resolution of
the dispute from the AAA. If, for any reason, AAA refuses to
hear and decide the question of imposition of a restraining order
and/or a writ of attachment as herein contemplated, a party then
may apply to a court of competent jurisdiction for the issuance
of such an order. The arbitration shall then proceed in regards
to all other issues and matters.
The award must be based on, and accompanied by, a written
statement of decision explaining the factual and legal basis for
the award as to each of the principal converted issues at the
hearing. The award shall be confirmed and entered as a judgment
by the Superior Court of this state. The award may be appealed
under the same standards specified in California law applicable
to appeals from the Superior Court.
6.2 Attorneys' Fees. Should any dispute arise between the
parties to this Agreement regarding the rights, remedies or
relief afforded by this Agreement, then in addition to the relief
the prevailing party may be awarded by a court or arbitrator,
that party shall also be entitled to reasonable attorney's fees
and other costs of such proceeding incurred by him.
ARTICLE VII
INDEMNIFICATION
7.1 General Indemnification
(a)The Company shall indemnify, defend and hold harmless Horne
against and in respect of any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies, including interest, penalties and reasonable
attorneys' fees, that Horne shall incur or suffer, that arise,
result from, or relate to any breach of, or failure by Seller
to perform, any of its representations, warranties, covenants
or agreements in this Agreement or any action to which Horne
is a party by reason of his relationship with the Company as
an officer, director or shareholder.
(b)Horne shall promptly notify the Company of the existence of any
claim, demand or other matter to which the Company's
indemnification obligations would apply, and shall give the
Company a reasonable opportunity to defend the same at its own
expense and with counsel of its own selection; provided that
Horne shall at all times also have the right to fully
participate in the defense at his own expense. If the Company
shall, within a reasonable time after this notice, fails to
defend, Horne shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle
(exercising reasonable business judgment), the claim or other
matter on behalf, for the account, and at the risk, of the
Company. If the claim is one that cannot by its nature be
defended solely by the Company, then Horne shall make
available all information and assistance that the Company may
reasonably request.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Transaction Expenses. All legal and other expenses incurred
in connection with the negotiation, execution and delivery of
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring the expense.
8.2 Certain Filings and Consents. Horne and the Company will use
their respective best efforts to comply with all legal
requirements which may be imposed on them with respect to the
transactions contemplated by this Agreement. Horne and the
Company will use their respective best efforts to obtain (and to
cooperate with any other party in obtaining) any consent,
authorization, order or approval of, or exemption by, any
regulatory authority, or third party, required to be obtained in
connection with the transactions contemplated by this Agreement.
8.3 Further Assurances. Each party hereto agrees to use such
party's best efforts to cause the conditions to such party's
obligations herein set forth to be satisfied at or prior to the
Closing insofar as such matters are within its control. Each of
the parties agrees to execute and deliver any and all further
agreements, documents or instruments necessary to effectuate this
Agreement and the transactions referred to herein or contemplated
hereby or reasonably requested by the other party to perfect or
evidence its rights hereunder. All parties will use their best
efforts to complete all transactions contemplated by this
Agreement as promptly as practicable.
8.4 Notices. All notices or other communications which are
required or permitted to be given pursuant to this Agreement
shall be given in writing by confirmed telex, facsimile or
telecopy, by certified or registered mail, postage prepaid, or by
a nationally-recognized overnight courier service which provides
a receipt acknowledging delivery, addressed as follows:
If to Horne: Mark J. Horne
7933 Kentland Avenue
West Hills, CA 91304
If to Company: WEBBOAT.COM, INC.
21057 Victory Boulevard
Canoga Park, CA 91303
or to such other address as the party addressed shall have
previously designated by written notice to the serving party,
given in accordance with this Section 7.4. Any such notice shall
be deemed given if and when actually received by the party to
whom it is given.
8.5 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of each of the Company and
Horne and their successors and assigns.
8.6 Entire Agreement. This Agreement, together with the
exhibits hereto and the other instruments and documents to be
delivered by the parties hereto at the Closing, constitutes
the entire agreement between the Company and the Seller
pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in
connection herewith.
8.7 Severability. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. If any provision is held to be invalid or
unenforceable, such provision shall be construed by the
appropriate judicial body by limiting or reducing it to the
minimum extent necessary to make it legally enforceable.
8.8 Governing Law. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the
State of California.
8.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
/s/ Mark J. Horne
MARK J. HORNE
WEBBOAT.COM, INC.
By: /s/ Dennis Schlagel
Dennis Schlagel, Executive Vice President
=================
Exhibit 6(10)
CONSULTING AGREEMENT
This Agreement (the "Agreement") is made and entered into on
April 15, 1999, by and between Web4Boats.com, Inc. ("the
Corporation"), a Delaware corporation, and Internet Advisors
Group, Inc. ("the Consultant"), a Wyoming corporation (herein
collectively referred to as "the Parties").
The Parties hereto agree to enter into this Agreement under
the following terms and conditions.
1) The Consultant shall render the following services to
the Corporation:
a) Day to day management of the corporate affairs and
business; and
b) Act as liaison between the Corporation and it's
Web Site server, Web-Light Consulting and Design; and
c) Act as an advisor to the Corporation with respect
to the communications and information disseminated to the public
community; and
d) Act as an advisor to the Corporation with respect
to the planning, designing, developing, organizing, and writing
and distributing the materials and content required to develop
and maintain the Web Site; and
e) Act as advisor to the Corporation with respect to
the preparation of and filing of a Form 10 with the Securities
and Exchange Commission, specifically to act as liaison with the
Corporation's attorney, accountant, and related providers of
services for the completion of said filing; and
f) Act as advisor to the Corporation with respect to
hiring and retaining outside consultants, outsource services, and
any and all providers necessary for the development and growth of
the Corporation.
g) The Consultant shall not disclose to any third
Party any confidential non-public information furnished by the
Corporation or otherwise obtained by it with respect to the
Corporation.
2) The Corporation shall use it's best efforts to promptly
supply to the Consultant full and complete copies of any and all
documents and information necessary for the Consultant to fulfill
it's part of this Agreement.
3) The Consultant shall be entitled to the following
compensation for services to be rendered:
a) A monthly consulting fee in the amount of Ten
Thousand Dollars ($10,000) per month. The Parties hereto agree
that the payments may be made in either cash, stock, or any
combination thereof.
4) The term of this Agreement shall be one (1) year from
the date set forth hereinabove. The Parties shall have the
option of renewing this Agreement prior to the termination date
set forth herein.
5) The Parties may not amend or modify this Agreement
unless such amendment or modification is in writing and signed by
both Parties hereto.
6) This Agreement may be executed in any number of
counterparts delivered through facsimile transmission. All
executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the
original or the same counterpart.
IN WITNESS WHEREOF, the Parties have executed this Agreement
effected on the 15th day of April 1999.
WEB4BOATS.COM INTERNET ADVISORS GROUP, INC.
P.O. Box 1028 P.O. Box 3235
La Jolla, CA 92038 Cheyenne, WY 82003
BY: /s/ Dennis Schlagel BY:/s/ Blair J. Merriam
Dennis Schlagel Blair J. Merriam
President President
=================
Exhibit 6(11)
July 2, 1999
Jim Merriam
Web4boats.com Inc.
2658 Bridgeway
Sausalito, CA. 94965
Dear Mr. Merriam,
It is a privilege to provide you with this proposal for the WEB4BOATS.COM
project. This proposal is based on our discussions about web site needs
mentioned in our meetings on June 22, 1999 (both you and Terry present) and
June 29 1999 (with Terry only present).
As per our meetings, I am providing WEB4BOATS.COM with:
* Outline of Database Procedures
* Web Design Overview
* Complete Price Schedule - broken down by project
* Total equipment cost (up to 100,000 hits per day)
* Web Development Costs
* Projected equipment costs up to 10,000,000 hits per day
* Change Order procedure
* Payment Schedule
It has been a sincere pleasure to meet you and provide you with this proposal.
I hope that this is the beginning of a close working relationship.
Respectfully submitted,
Andre Delgado,
Web-Light Consulting & Design
Web4Boats.Com
Phase 1
Web Site Goal
Web-Light will work closely with WEB4BOATS.COM to design a professional site
that is fast to load, simple to navigate, technologically sound and secure.
Our goal will be to:
Provide the boating community with the most relevant, intuitive and up to date
boating Classifieds/Portal on the Internet.
DATABASE DESIGN
The outline of the program and database design is visually demonstrated in the
accompanying flow chart.
The on-line program is based on 3 columns:
1. The Web Object Manager
2. The Database Object Manager
3. The Security Object Manager
Web Object Manager
The web object manager handles all web pages transmitted by the server. These
are static pages, external links and dynamic pages.
* Static Pages - A web page that does not contain any variable data.
* External Links - Routed information which is stored on external servers which
are displayed within a frame on the site. External links may also appear in a
second browser window so that the users attention is not taken away from the
original site.
* Dynamic Pages - Are the major part of the web site and are handled by the
"Template Manager"
The Template Manager
The Template Manager can handle an unlimited number of templates. Each template
represents an independent program. Phase 1 will require two templates.
1. Classifieds- All users will be able to search and look up classified records.
The goal is an intuitive user interface with a maximum of search options. Only
members and agents will have the ability to place ads. Agents will be provided
with an upload interface in order to export their own database into the system.
2. On-Line Boat and Accessory Auction - Members will be able to place boats and
boat accessories into an auction database which can be viewed by members only.
Members can bid on items according to the rules, which need to be developed by
Web4Boats legal staff.
The Interface Selector
The Interface Selector is connected with the Security Object Manager and is
responsible for displaying the web pages according to the user status. The
status will be designed as follows:
* Visitor
* Member
* Supervisor
* Administrator
* System Administrator
The Banner Placement Manager
The Banner Placement Manager is connected to the Database Object Manager and
handles individually managed banner advertising. This includes a "click thru"
counter and a "visibility" counter. The Database Object Manager will handle
client reports.
The Mail Listing Manager
The Mail Listing Manager is connected to The Database Object Manager and the
Security Object Manager and handles user subscriptions and event driven
subscriptions. For example: A user can sign up in the classified section to
be notified by e-mail when a certain boat model or accessory becomes available.
Database Object Manager
The Database Object Manager handles all database files and database
relationships
The Template Manager Database
The Template Manager Database handles the access management and the template
data for static pages and external link pages.
The Statistic and Report Database
The Statistic and Report Database contains detailed statistic data and report
data which can be defined by the MIS (Management Information System) staff.
The Template Database
Each template for dynamic pages will have an individually designed database.
This database will be interfaced with the member database and the security
object manager.
Security Object Manager
The security object manager handles all security requests from the Web Object
Manager and the Data Object Manager. The reference for the security object
manager is the administrative database and the member database in
relationship to the Access Rights Database.
Web Site Design
Web-Light will design a site that is obvious in its navigation and pleasing to
the eyes. Web-Light Consulting & Design will be responsible for all artwork
associated with the site. This artwork may be original or the use of
photographs that help to portray your on-line image. Web-Light will implement
your artistic suggestions and do all it can to provide you with a clean and
visually superior site.
Web-Light Consulting will design your web site with the following criteria in
mind:
1. Overall appearance - The site must be inviting to the boating community,
possible advertisers, the general public and potential investors.
2. Use of graphics - Web-Light will design the site with custom graphics scheme
that contains an underlying nautical theme. Graphics will be compressed to a
high degree enabling pages to load extremely fast.
3. Site navigability - Web4Boats.Com will have a simple, straightforward
navigation scheme. The first time Internet user must feel comfortable and
easily able to navigate every portion of the site.
4. Quality of content - Site content will be arranged in a logical order to make
classified browsing and selection as easy as possible. All other content will
be put through the filter of our site "Goal" (Providing the boating community
with the most relevant up to date boating Classifieds/Portal on the Internet.
5. Efficiency of code - All HTML and Database coding will be streamlined for
ultimate site performance.
6. Site Design Management and Communication - The site design will be managed by
Andre Delgado, owner of Web-Light Consulting & Design, who will communicate on
progress and provide Web4Boats with access to web site developments through a
password protected site. It is our belief that communication with the client is
essential and necessary to develop a site that properly reflects your goals.
Web-Light's doors are open to Web4Boats anytime. We will make ourselves
available for meetings and strategy sessions when called for.
7. Security - In every facet of design, steps will be taken to ensure highest
levels of security.
Web Site Promotion (Internet)
Web-Light will professionally promote the Web4Boats.Com web site on the
Internet. This promotion strategy will be implemented in every portion of
the web site design. We will develop a site that scores high in search
engines. Designing web sites to score high in search engines is almost an
art form. We take into account what "Search Engine Robots" are looking for.
We will embed Meta Tags into the HTML of each web page. Meta Tags are in the
form of a "Description" of services and "Keywords" separated by a comma.
These words are invisible to the eye but highly visible to "Search Engine
Robots". During the design process, Web-Light Consulting will utilize the
latest promotion techniques that will assist us in placing high in search
engines.
Upon design completion, Web-Light will submit the web site to the top 400
Search engines (including Yahoo!). After search engine submission, we will
utilize a "Search Engine Position Analyzer" to monitor Web4Boats.com position
in the various search engines. If Web4Boats.Com does not score high enough on
a particular search engine, we will customize a page to score high for that
particular search engine criteria.
Web-Light will also actively seek out advertising opportunities on appropriate
web sites. Ad fees will be confirmed and provided to Web4Boats.Com for
consideration. An variety of banner ads will be created for placement on
other web sites.
E-Commerce
The E-Commerce module allows the Web Object Manager to:
1. Handle credit card and paperless electronic check (ACH) transactions
2. Have Complete Control of Recurring Billing and Membership
3. Perform Automated Credit Card Address Verification (AVS)
4. Receive a Comprehensive Settlement Report on Every Deposit made in your
Account
5. "Scrub" Each Transaction in order to Defer Fraud
6. BEGIN PROCESSING ACH AND LIVE, REAL-TIME CREDIT CARD TRANSACTIONS
Transaction Flow
1. Customer places order on merchant's web site.
2. Merchant securely transfers order information to ATS over the Internet via
the Simple Commerce Messaging Protocol (SCMP). ATS receives order information
and performs requested services simultaneously.
3. ATS routes transaction authorization request through payment processor to the
appropriate card association.
4. The card association contacts issuing bank (customer's bank) to request
transaction authorization (if American Express or Discover are used, no
issuing bank is involved; see step 6).
5. Issuing bank returns authorization to card association. If the transaction is
not authorized, ATS returns a message to the merchant and remaining portions of
the transaction are canceled.
6. ATS receives transaction authorization and, if physical fulfillment is
required, sends a message to the merchant or distribution center authorizing
order fulfillment. Merchant or distribution center sends ATS a fulfillment
notification to permit settlement, and ATS sends a settlement request to the
issuing bank (customer's bank). If authorization is for the sale of a
digitally delivered product or service, the settlement request is made
concurrent with the authorization.
7. Issuing bank approves transfer of money to acquiring bank (merchant's
account).
ATS Bank Fees (paid directly to ATS Bank)
We are providing the following costs from ATS Bank (Automated Transaction
Services Bank). ATS Bank provides outstanding security with very reasonable
flat rates.
1. Setup Fee: $295.00
2. Credit Card Processing fee $.80 per transaction
3. ACH processing fee 1.25% per transaction. $1.25 minimum per transaction.
4. Monthly minimum fee is $35.00 only if total monthly transaction fees do
not amount to $35.00.
Merchant Account
Web4Boats will need to obtain a valid Merchant Bank Account with the bank of
their choosing if a merchant account does not already exist. This account
should be set up with an Internet capable bank. Web-Light can provide you
with the right questions to ask a bank when setting up a Merchant Account for
an Internet Company.
E-Commerce Development Costs
Total Costs for setting up a real-time e-commerce solution on the server
including SSL (Secure Socket Layer) connection, Verisign Secure Server
Digital ID and programming time is $6,250.00. I have adjusted the Web
Development costs to include these costs.
Web Development Costs
Total cost of Web Development includes:
* General Design / Corporate Identity
* Web Page Design
* Database Design
* Server Program Design
* Web Page and Database Coding
* Web Page and Database Implementation on NT Platform
* Beta Testing
* Finalizing and Production
* Project Management
* Web Site Promotion (on Internet)
* SSL (Secure Socket Layer) Connection
* Verisign Digital ID
* E-Commerce Programming
Total Cost for Web Development is $32,760.00 (this cost has been adjusted to
reflect e-commerce)
Monthly Hosting Fees - Phase 1 (two servers and one full T1 line)
Equipment Hosting Fees including air conditioning, electric costs, security,
insurance and weekly traffic reports for two server connected to one full T1
line is $600.00 per month.
Telephone Company fees for one full T1 line based on a 3 year contract is
$1,200.00 Part-Time System Administration Hosting fees for two server connected
to one full T1 line is $1,950.00. The System Administrator is on call 24 hours
a day.
Total Monthly Fees are $3,750.00
Change Orders
Changes and extensions to the accepted contract must be requested in writing.
Web-Light Consulting & Design will provide a written proposal for the change.
Equipment and Setup Costs
Investment Plan for Phase I
(Fast reliable Internet Server Connection - Hosting WWW,MAIL,FTP Services)
Quantity Description Category Price Sub Total
2 Intel - Server 450Mhz, RAM512MB,
HDD12GB 1 WWW,MAIL,FTP 1 Database Hardware 6,000.00 12,000.00
1 Router incl. Firewall Hardware 2,200.00 2,200.00
1 Network Hub Hardware 800.00 800.00
1 UPS 1.400 W 19" Hardware 1,000.00 1,000.00
1 19' Rack complete Hardware 1,200.00 1,200.00
1 NT 4 Server License (10 User) Software 1,300.00 1,300.00
1 SQL Database Server Software 2,300.00 2,300.00
1 Mail Server SL Mail Software 800.00 800.00
1 Web Server OR WebSite 2 Software 800.00 800.00
1 ColdFusion4Enterprise (Script Server)Software 4.000,00 4.000,00
24 Assemble and Setup Tech 65.00 1,560.00
1 T1 Line Setup Fee 3.200,00 3.200,00
Total 31,160.00
One-Time Charges
Description Cost
Equipment and Setup Costs $31,160.00
Web Development Costs $32,760.00
Total $63,920.00
Monthly Fees
Description Cost
Two Servers $600.00
One T1 Line with Internet Access $1,200.00
Part Time System Administrator for
one hour a day and 24 hour availability $1,950.00
Total $3,750.00
Terms and Conditions
* Costs for hardware and 3rd party software are due at contract signing.
* 50% of Web Development costs are due at contract signing.
* 25% of Web Development costs are due 30 days after contract signing
* 25% of Web Development costs are due at completion and delivery of test
report
* Monthly Hosting fees will be invoice for 3 month periods. First 3 month fees
are due at contract signing.
* Web4boats.Com is responsible for covering the telecommunication contract for
the T1 line.
Web4Boats.com has the right to resell this contract.
Description Cost
100% of Equipment and Setup Costs $31,160.00
50% of Web Development Costs $16,380.00
First Three Months of Hosting Costs 11,250.00
Total to begin project $58,790.00
Re: Equity Shares
If given the opportunity, Web-Light would gladly exchange 35% of the Web
Development costs for Stock of equal value in Web4Boats.com.
Optional Module
Mail Management
Mail Management provides the web site with an HTML e-mail client (similar to
hotmail) and will have an intelligent keyword based sort mechanism for
incoming e-mail. This sort mechanism will forward the incoming e-mail to the
corresponding departments of the company.
=====================
Exhibit 6(12)
WEB4BOATS.COM/Luvia.com Proposal
Confidential
Overview
Luvia.com will create a framed and co-branded section for
Web4Boats.com. This section will allow Web4Boats.com visitors to
shop Luvia.com's inventory. Luvia.com will pay Web4Boats.com 8%
of sales that originated from Web4Boats.com.
Luvia.com links and Inventory
Luvia.com will track the revenues generated from Web4Boats.com
shopping carts.
Luvia.com will produce, develop and maintain the content for the
co-branded site and provide hosting services for the co-branded
site during the term. The service will be co-branded in a
mutually agreeable format, but is intended to include the
WEB4BOATS.COM brand and selected navigation elements, and
otherwise reflect Luvia.com's branding and look and feel. Pages
within the secured server will be fully Luvia.com branded.
The Luvia.com would be promoted in the following ways:
1. WEB4BOATS.COM will add a button to the front page of
Web4Boats.com that directs users to the co-branded store. All
graphics and buttons will be mutually agreed upon and approved
by Web4Boats.com and Luvia.com.
2.Luvia.com will create a co-branded site framed by Web4Boats.com's
look and feel for navigation. This site will track the
revenues generated from constituents originating from
Web4Boats.com.
Prominence
Luvia.com will be the exclusive provider of home
accessories/decor products on the WEB4BOATS.COM site.
Payments
In compensation for allowing viewers to shop Luvia's inventory,
Luvia.com will pay WEB4BOATS.COM a fee of 8% on every purchase
originating from Web4Boats.com. Payments will be monthly cycle
and the first billing cycle will begin 30 days after the first
month's tally of revenue data.
Term
This agreement will be effective from the launch date of the
Luvia.com links on the WEB4BOATS.COM site and will remain in
effect until April 30, 2000.
Web4Boats.com Luvia.com.com
/s/ Blair J. Merriam /s/ Kevin Lu
Blair J. Merriam Kevin Lu
Date 10/26/99
