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As filed with the Securities and Exchange Commission on November 2, 2000
Registration No. 0-28657
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
Peoplesway.Com, Inc.
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(Name of Small Business Issuer as specified in its charter)
NEVADA 87-0374559
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2969 Interstate Street
Charlotte, North Carolina 28208
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(Address of Principal Executive Office) (Zip Code)
Issuer's Telephone Number, including Area Code: (704) 393-1860
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Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
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(Title of Class)
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THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING
THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS DOCUMENT. THE
FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION AND IS QUALIFIED IN ITS
ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS APPEARING
ELSEWHERE IN THE DOCUMENT AND PARTICULARLY IN THE SECTION ENTITLED "RISK
FACTORS."
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Overview of Business
Peoplesway.Com, Inc. ("Peoplesway") is an electronic commerce and
Internet services company that maintains an Internet destination called
"Peoplesway," located at www.peoplesway.com. The Peoplesway Web site offers
goods and services for sale, including: cosmetics and beauty products, health
supplements, jewelry, flowers, and magnetherapy products, which can be
obtained directly through the Web site, or by calling our customer service
team members. The majority of our goods and services are available through an
alliance with DRM, Inc. and its member network of approximately 14,000
independent contractors who may purchase and sell Peoplesway products and
services through the use of our Web site. We do not retain an inventory of any
product we sell. Payment comes directly to Peoplesway from customers through
a secure Internet server that accepts credit card transactions. We then
forward these orders to DRM or other vendors, who then will drop ship products
to customers as orders are received through our Peoplesway Web sites.
Recent History
Peoplesway, Inc., a closely-held North Carolina corporation incorporated
in August 1999, was acquired by Prospector Energy, Inc. ("Prospector") in a
reverse acquisition, as a wholly-owned subsidiary on September 1, 1999 in a
stock for stock tax free exchange, whereby all outstanding shares of
Peoplesway were exchanged for 12,500,000 shares of Prospector. At inception,
Prospector was authorized to issue 30,000,000 shares of common voting stock,
par value one cent ($0.01) per share. Pursuant to the acquisition of
Peoplesway and resulting amendments to the articles of incorporation, the
authorized shares of common stock increased to 100,000,000, the par value was
changed to $.001, a 400 to 1 reverse split of Prospector's common stock was
effected, resulting in 107,328 shares being issued and outstanding immediately
prior to the acquisition, and the company changed its name to Peoplesway.Com,
Inc. Following the conversion of a convertible debenture, there are an
additional 3,000,000 shares outstanding, for a total of 15,607,328 shares of
common stock. All references in this document to "Peoplesway", "the Company"
or "us", "we" or "our", refer to the North Carolina company that was formed on
August 25, 1999, and all references to Prospector refer to the legal acquirer
that was formed on October 30, 1980. The principal offices of Peoplesway are
located at 2969 Interstate Street, Charlotte, North Carolina 28208, and its
phone number is (704) 393-1860.
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Prior History
Prospector was organized as a Utah corporation on October 30, 1980, for
the purpose of purchasing, owning, holding, selling, disposing of and
otherwise dealing in the oil and gas business and other natural resources. It
became a public company through an offering of common stock to residents of
the State of Utah, pursuant to an exemption from registration under
then-existing Rule 147, Securities Act of 1933. Following the offering,
Prospector acquired an interest in Four Winds Mineral Venture, a Louisiana
partnership that held a 66% interest in a Costa Rican oil and gas company, in
exchange for the issuance 11,250,000 shares of common stock. This acquisition
proved unsuccessful, and thereafter business operations ceased and the company
was dormant from 1983 until 1997, when it actively began seeking a merger or
acquisition candidate, which it accomplished in 1999 when it entered into the
Acquisition Agreement with Peoplesway. As Prospector never left the
development stage and was dormant until 1997, its inception date was
re-designated to be January 1, 1997.
Charter Amendments
The following amendments to the Articles of Incorporation have been
effected since we were organized:
-- Effected a name change from Prospector Energy, Inc. to Peoplesway.Com,
Inc., effective September 13, 1999.
- Effected a 400 to 1 reverse split of the common stock, effective
September 22, 1999.
- Increased the authorized capital to 100,000,000 shares, effective
September 22, 1999.
- Changed domicile from the State of Utah to the State of Nevada on
September 24, 1999.
Copies of the initial Articles of Incorporation, these amendments and the
Bylaws are attached hereto and incorporated herein by reference.
Development Stage Company
As set forth below in our independent auditors report, Peoplesway is a
development stage company with no established source of revenues. Until the
acquisition of Peoplesway, Prospector did not have sales or revenues for over
ten years, and its audited financial statements for the years ended December
31, 1998 and 1997 show no activity. Because our financial statements only
illustrate our first six months of operations in our present structure, they
have limited value to predict our future success. These conditions raise
substantial doubt about our ability to continue as a going concern.
Internet Commerce
The Internet is a world-wide series of interconnected electronic and/or
computer networks. Individuals and companies have recently recognized that the
technological capabilities of the Internet provide a medium for not only the
promotion and communication of ideas and concepts, but also for the
presentation and sale of information, goods and services. According to
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statistics reported by the Computer Industry Almanac, there are projected to
be 110 million Internet users in the United States by the end of 1999, and
nearly 14 million users in Canada by year end. Of this number, approximately
25% purchase goods and services online, according to a December 1999 study by
Scarborough Research.
Historically, the Internet has been accessible principally through
personal computers. Recently, several companies have announced "Web TV"
products designed for attachment to television sets for the purpose of
allowing access to the Internet without the need for a personal computer.
Although these products do not permit the full range of functions provided by
personal computers, they do permit many of the features of the Internet to be
viewed on television sets. Management believes that the new Web TV products
are expected to substantially increase the number of people who will shop
online by accessing the Internet. Already, online purchases have increased
100% in the past year, according to a November, 1999 study by Yankelovich
Partners, Inc.
The term "Internet commerce" encompasses the use of the Internet for
selling goods and services. The use of the Internet as a marketing and
advertising tool is enhanced by the ability to communicate information through
the Internet to a large number of individuals, businesses and other entities.
Because of the "virtual" nature of electronic commerce, the online
presence for certain merchants can significantly reduce or eliminate the costs
of maintaining a physical retail facility. Online merchants can also achieve
significant savings by eliminating traditional product packaging, print
advertising and other point of purchase materials. Marketing on the Internet
can be especially advantageous for smaller companies because it removes many
physical and capital barriers to entry and serves to level the competitive
playing field by allowing smaller companies to effectively compete with larger
companies.
Internet Security
One of the largest barriers to a potential customer's willingness to
conduct commerce over the Internet is the perceived ability of unauthorized
persons to access and use personal information about the user, such as credit
card account numbers, social security numbers and bank account information.
Concerns about the security of the Internet include the authenticity of the
user (i.e., is the user accurately identified), verification and certification
methods of who these users are, and privacy protection for access to private
information transmitted over the Internet. However, recent advances in this
area have greatly reduced the possibility of such unauthorized access or use.
IMC Worldwide, Inc. provides our Unix-based computer system and hosts our Web
site and our independent contractor Web sites, employing state-of-the-art
encryption software to ensure the privacy and protection of our customers. We
have not experienced any occasion in which a user's credit card was
misappropriated while transacting business on Peoplesway.
Alliance with DRM
The majority of our goods and services are available through an alliance
with DRM, Inc. and its subsidiaries, RMC Group, Inc. and RMC Group Canada,
Ltd. ("DRM") . DRM began offering health and beauty products in 1982, and its
sales from inception have exceeded $250,000,000.00 from both U.S. and Canada
operations. It has a member network of approximately 14,000 independent
contractors who may purchase and sell Peoplesway products and services through
the use of our Web site. Peoplesway has established agreements with DRM to
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market and sell to DRM independent contractors. RMC Group, Inc. was
established in 1993 and took over the distribution rights for the United
States from DRM. In 1998 RMC became a subsidiary of DRM. RMC Group Canada,
Ltd. was established in 1987 as a subsidiary of DRM. It was established to
service the Canadian Market.
Products and Services
Products and services currently offered by Peoplesway include:
Health and beauty products. Peoplesway offers approximately 50 products
through DRM from their Rose Marie Collection, including cosmetics, personal
hygiene products, skin care, hair care, and bath products. In addition, DRM
supplies Body Management System nutritional products, including weight loss
and anti-aging supplements. DRM manufactures and packages these products
through a licensing agreement with a health and beauty product manufacturer.
Magnetherapy products. Peoplesway sells Magnetherapy, Inc. products,
which include bracelets, shoe insole inserts, and body patches and wraps,
used to relieve body stress, aches and pains. DRM obtains these products
directly from Magnetherapy, Inc.
Jewelry. Peoplesway offers silver and gold chains, earrings, bracelets
and rings, through an agreement between DRM and a jewelry wholesaler.
Flowers. Peoplesway newest product is flower displays and arrangements
delivered to your door, through an arrangement with Proflowers.Com, Inc.
All of our agreements with our vendors are pursuant to oral agreements
and arrangements with our vendors, DRM, and RMC Group, Inc. While we are
presently negotiating written agreements, none have been finalized.
Marketing and Advertising
By leveraging the DRM sales force, we are simultaneously opening
Internet Web sites and marketing the current Peoplesway product lines. Each
independent contractor is encouraged by Peoplesway and DRM to open a sub-Web
site at Peoplesway.com. For example, John Doe would have a site address of
www.peoplesway.com/johndoe. John Doe will advertise his site and will receive
a commission for each sale ordered on his site. John Doe's only
responsibility is to advertise his site. Inventory, shipping, merchant
accounts, payments and customer service will be handled by Peoplesway its
subsidiaries and affiliates. It is envisioned that thousands of site owners
will individually advertise to thousands of Internet shoppers to come and shop
at their site. As of December 1999, after three months of operations, there
are nearly 500 sub Web sites. Our goal is to have 1,000 sites online by July
2000.
Risk Factors
Limited Operating History.
Prospector had limited operations since 1980, and Peoplesway has had
limited operations since its formation in August 1999. We are in the
developmental stage. We posted a net loss of $129,580 for the period August
25, 1999 to December 31, 1999, none of our operations have proved successful,
and there is no assurance that we can profitably market our present products
and services.
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Operating Results.
Prospector had no revenues and substantial losses for the years ended
December 31, 1998 and 1997, and through the acquisition of Peoplesway, and
Peoplesway had substantial loss and limited income for the period August 25,
1999 to December 31, 1999.
Year or Period Ended Retail Net Income
Sales (Loss)
December 31, 1997 -0- $( 2,904)
December 31, 1998 -0- $(56,518)
December 31, 1999 $109,920 $(129,580)
The Net Income shown for the period ending December 31, 1999 does not
reflect an entire twelve-month period of operations since the reverse
acquisition, and the Expenses for the period do not reflect expenses that are
typical for a business and that will be typical for us in the future, such as
salaries, office and equipment rent, utilities, etc. These expenses were
borne by RMC Group, Inc., which shares office space with Peoplesway. All
expenses paid by DRM and/or any of its subsidiaries are being booked as a
Peoplesway expense and an inter-company payable is established with DRM and/or
the appropriate subsidiary. Therefore, no assurance can be given that once we
incur such expenses, we will not continue to incur losses or that our business
operations will prove to be profitable.
Additional Capital Requirements.
Peoplesway has limited capital. Our primary revenues are derived
from the sale of a limited number of goods and services online to limited
markets, and these sales are presently dependent upon the services provided by
our alliance with DRM and a small number of employees. If this alliance ends,
it is likely that we cannot continue as a going concern. We have limited
capital to increase our sales force or to expand operations; accordingly,
without additional capital, growth will be limited.
Economic Considerations.
Any substantial downturn in economic conditions could significantly
depress discretionary consumer spending and have a material adverse
effect on Peoplesway's business operations. At any given time, because of the
search and comparison shopping capabilities using the Internet, it is possible
to locate items similar to that sold by Peoplesway at competitive or lower
prices. Inflation may also affect the future availability of favorable terms
or financing rates for Peoplesway or its customers, and deflation may also
affect revenues derived from these operations.
Reliance on Existing Management.
Peoplesway's operations are primarily dependent upon the experience and
expertise of Donald R. "Pete" Monroe, Chairman; Matthew M.. Monroe, President;
Eugene M. Johnston, CEO and Secretary/Treasurer; and Julie B. Jordan,
Executive Producer. The loss of any of our management may have a material
adverse effect on our present and contemplated business operations.
Our success is also dependant upon our ability to attract and retain
qualified management, administrative and sales personnel to support our
anticipated future growth, of which there can be no assurance. Peoplesway
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does not carry key man insurance upon the lives of any of our directors or
executive officers.
Reliance on Existing Alliance.
Peoplesway's operations are primarily dependent upon the existence of the
alliance with DRM and its subsidiaries, and the contracts that exist between
DRM and vendors. While formal written agreements are being negotiated with
DRM and other vendors, these do not presently exist. The loss of this
alliance or a downturn in the business of DRM would have a material adverse
effect on our present and contemplated business operations.
Lack of Dividends.
We have not paid and do not expect to pay any cash dividends with respect
to our common stock in the foreseeable future. We presently have limited
revenues and capital. Without substantial increases in revenues and capital,
it would be impossible to pay cash dividends.
Limited Market for Common Stock.
There is currently a limited trading market for our shares of common
stock, and there can be no assurance that a more substantial market will ever
develop or be maintained. Any market price for shares of common stock of
Peoplesway is likely to be very volatile, and numerous factors beyond our
control may have a significant adverse effect. In addition, the stock
markets generally have experienced, and continue to experience, extreme
price and volume fluctuations which have affected the market price of many
small capital companies and which have often been unrelated to the operating
performance of these companies. These broad market fluctuations, as well as
general economic and political conditions, may also adversely affect the
market price of our common stock. Further, there is no correlation between the
present limited market price of Peoplesway's common stock and our revenues,
book value, assets or other established criteria of value. The present
limited quotations of our common stock should not be considered
indicative of the actual value of Peoplesway or our common stock.
Shares Eligible for Future Sales.
Sales of unrestricted securities may also have an adverse effect on any
market that may develop in Peoplesway's common stock. Of the 15,607,328
outstanding shares of Peoplesway's common stock, 107,328 have satisfied the
two year "holding period" requirements of Rule 144(k), meaning that they can
presently be sold. In addition, of the 15,607,328 shares, 12,500,000 were
issued on October 18, 1999, and under Rule 144 of the Securities Act of 1933,
if certain conditions are satisfied, a limited number of these shares, up to
1% of the total issued and outstanding shares of the company, approximately
156,000 shares could be sold during any three month period. Once these shares
enter the market, their sale may have a depressive effect on the market price
of our stock.
Conflicts of Interest.
Peoplesway's directors and officers are directors, executive officers,
controlling stockholders and/or partners of DRM and its related subsidiaries.
Thus, there exist potential conflicts of interest including, among other
things, time, effort and corporate opportunity, involved in participation
with other potential business opportunities.
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Risks Associated with Execution of Growth Strategy.
A principal component of Peoplesway's growth strategy is to partner with
additional merchants and service providers that will allow their goods and
services to be sold through Peoplesway's Web site, and to attract additional
customers. Peoplesway's ability to execute its growth strategy depends
on a number of factors including, (i) Peoplesway's ability to acquire
these goods and services and related opportunities on economically feasible
terms; (ii) our ability to obtain the capital necessary to finance the
expansion and to pay any necessary sales, marketing and operational
expenditures; and (iii) our ability to manage potentially rapidly growing
operations effectively and in a manner which will result in significant
customer satisfaction. There can be no assurance that we will be successful
in any of these respects.
Internet and Information Systems.
We rely upon the accuracy and proper utilization of our Internet and
information system to provide timely distribution services, manage our sales
and track our customers' purchase and sale information. To manage our growth,
we are continually evaluating the adequacy of our existing systems and
procedures (including Year 2000 issues) and continue to update and integrate
critical functions. We anticipate that we will regularly need to make
capital expenditures to upgrade and modify our Internet and information
systems, including software and hardware, as we grow and the needs of our
business changes. There can be no assurance that we will anticipate all of the
demands which our expanding operations will place on our information system.
The occurrence of a significant system failure or our failure to expand or
successfully implement its systems could have a material adverse effect on
our operations and financial results.
Dependence On Technical Employees.
The success of our Internet services business depends in large part upon
our ability to attract and retain highly skilled technical employees in
competitive labor markets. There can be no assurance that we will be able to
attract and retain sufficient numbers of skilled technical employees. The
loss existing technical personnel or difficulty in hiring or retaining
technical personnel in the future could have a material adverse effect on our
operations and financial results.
Delivery Time.
Peoplesway does not have a significant backlog of business since our
vendors normally deliver and/or install products and services purchased by our
customers within one to seven days from the date of order. Accordingly,
backlog is not material to our business or indicative of future sales. From
time to time, we may experience difficulty in obtaining products from our
major vendors as a result of general industry conditions. In addition, in
the Internet industry, one to three day delivery options are becoming common
place. If we are unable to deliver products to our customers within a short
time period, we may experience loss of sales.
Rapid Technological Change.
As with all Internet companies, our success will depend in part on our
ability to develop Internet solutions that keep pace with continuing changes
in information technology, evolving industry standards and changing client
preferences. There can be no assurance that we will be successful in
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adequately addressing these developments on a timely basis or that, if these
developments are addressed, we will be successful in the marketplace. In
addition, there can be no assurance that products or technologies developed
by others will not render our services noncompetitive or obsolete. Our
failure to address these developments could have a material adverse effect on
our operating results and financial condition.
Competition; Low Barriers to Entry.
Peoplesway expects competition to persist, intensify and increase in
the retail Internet industry in the future. There are thousands of
individuals and companies that sell goods and services similar to those
offered by Peoplesway. Almost all of our current and potential competitors
have longer operating histories, larger installed customer bases, longer
relationships with clients and vendors, and significantly greater financial,
technical, marketing and public relation resources than Peoplesway. As a
strategic response to changes in the competitive environment,
Peoplesway may from time to time make certain pricing, service technology or
marketing decisions or business or technology acquisitions that could have a
material adverse effect on our business, financial condition, results
of operations and prospects, and similar actions by competitors could
materially adversely affect our present and proposed business operations,
results of operations, financial condition and prospects.
In addition, our ability to generate customers will depend to a
significant degree on the uniqueness and quality of our products and
services and our reputation among our customers and potential customers,
compared with the quality of similar services provided by, and the
reputations of, Peoplesway's competitors. To the extent that we lose
customers to our competitors because of dissatisfaction with our
services, or our reputation is adversely affected for any other reason, our
business, results of operations, financial condition and prospects could be
materially adversely affected.
There are relatively low barriers to entry into Peoplesway's
targeted business. Anyone can attempt to purchase and sell the goods and
services which Peoplesway purchases and markets. Accordingly, we are likely
to face additional competition from new entrants into the market in the
future. There can be no assurance that existing or future competitors will
not develop or offer services that provide significant performance, price,
creative or other advantages over those offered by Peoplesway, which
could have a material adverse effect on our business, financial
condition, results of operations and prospects.
Acquisitions.
We may consider acquiring the assets and operations of other companies in
order to expand our business. Integration of acquisitions may involve a
number of risks that could have a material adverse effect on our operating
results and financial condition, including: restructuring charges associated
with the acquisitions and other expenses associated with a change of control;
non-recurring acquisition costs such as accounting and legal fees; investment
banking fees; amortization of acquired intangible assets; recognition of
transaction-related obligations and various other acquisition-related costs;
diversion of management's attention; difficulties with retention, hiring and
training of key personnel; and risks of incurring unanticipated problems or
legal liabilities.
Although we would conduct due diligence, hire outside independent
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financial and accounting consultants, and generally require representations,
warranties and indemnifications from the former owners of any acquisition
candidates, there can be no assurance that such owners will have accurately
represented the financial and operating conditions of their companies. If an
acquired company's financial or operating results were misrepresented, or the
acquired company otherwise failed to perform as anticipated, the acquisition
could have a material adverse effect on the operating results and financial
condition of Peoplesway.
Risks of "Penny Stock."
Peoplesway's common stock may be deemed to be "penny stock" as that
term is defined in Rule 3a51-1 of the Securities and Exchange Commission.
Penny stocks are stocks (i) with a price of less than $5.00 per share;
(ii) that are not traded on a "recognized" national exchange; (iii) whose
prices are not quoted on the NASDAQ automated quotation system
(NASDAQ-listed stocks must still meet requirement (i) above); or (iv) in
issuers with net tangible assets less than $2,000,000 (if the issuer has
been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average revenues of
less than $6,000,000 for the last three years. Until November 1999, there had
been no "established public market" for Peoplesway's common stock
during the last five years. While our stock has traded between $3.00 and
$5.00 per share since November 1999, there is no assurance that this price
level will continue, as there has thus far been low volume, and our stock may
be deemed to be penny stock at any time. Section 15(g) of the Securities
Exchange Act of 1934, as amended, and Rule 15g-2 of the Securities and
Exchange Commission require broker/dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and
to obtain a manually signed and dated written receipt of the document before
effecting any transaction in a penny stock for the investor's account.
Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be a
"penny stock."
Moreover, Rule 15g-9 of the Securities and Exchange Commission
requires broker/dealers in penny stocks to approve the account of any
investor for transactions in such stocks before selling any penny stock to
that investor. This procedure requires the broker/dealer to (i) obtain
from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably
determine, based on that information, that transactions in penny stocks
are suitable for the investor and that the investor has sufficient knowledge
and experience as to be reasonably capable of evaluating the risks of penny
stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker/dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from
the investor, confirming that it accurately reflects the investor's
financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors
in Peoplesway's common stock to resell their shares to third parties or
to otherwise dispose of them.
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Patents, Trademarks, Licenses, Franchisees, Concessions, Royalty Payments
or Vendor Contracts.
Peoplesway has applied for a federal trademark of "Peoplesway" and
"Peoplesway.Com." However, as of this date, these federal trademarks have
not been granted. We have secured the use of Peoplesway.Com on the Internet,
which cannot be used to access any other Web site as long as we remain current
with our Internet registration of the name. Agreements and licenses with our
vendors are directly between DRM and our vendors, other than Proflowers.com,
with which we have an oral agreement, cancelable upon notice by either party.
We have no direct control over the cancellation of these contracts, and if
they are canceled, it may hinder our ability to be profitable or to continue
operations.
NASD OTC Bulletin Board Quotations.
Our common stock is quoted on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD") under the symbol
"PLWY." Effective January 4, 1999, the NASD adopted rules and regulations
requiring that prior to any issuer having its securities quoted on the OTC
Bulletin Board of the NASD that such issuer must be a "reporting issuer" which
is required to file reports under Section 13 or 15(d) of the Securities and
Exchange Act of the 1934, as amended (the "1934 Act"). We are not currently a
"reporting issuer," and this Registration Statement is being filed to bring us
into compliance with these quotations provisions. Under the "phase-in"
schedule of the NASD, we have until March 8, 2000, within which to become a
"reporting issuer," and to satisfy all comments of the Securities and Exchange
Commission respecting this Registration Statement. This Registration
Statement will not become effective for 60 days from the date of its filing,
and it is unknown whether we will timely satisfy these quotation requirements
of the NASD, as it is unknown whether we will have satisfied any and all
comments from the Securities and Exchange Commission. Therefore, OTC Bulletin
Board quotations of our common stock may cease on March 8, 2000, and we would
be required to make application to have our common stock quoted in the "Pink
Sheets" of the National Quotations Bureau, LLC ("NQB"). This result would
further impede the development of an "established trading market" in our
common stock, because the "Pink Sheets" market is not as accepted by most
brokers/dealers in securities as the OTC Bulletin Board, and a broker/dealer
must subscribe to the NQB's service. We would, as soon as practicable
following the satisfaction of all necessary requirements of the NASD and SEC,
file for quotations on the OTC Bulletin Board; however, no assurance can be
given that the NASD would allow the quotations of our common stock to be
reinstated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis of financial condition and results
of operations contain some forward-looking statements. Forward-looking
statements give Peoplesway's and management's current expectations or
forecasts of future events. The reader can identify these statements by the
fact that they do not relate strictly to historical or current facts. They
use words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe," and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. In
particular, these include statements relating to anticipated operating
results for the full year ended December 31, 2000, and anticipated cash flow,
and to future actions, future performance or results of current and
anticipated sales and marketing efforts, expenses, the outcome of
contingencies such as legal proceedings, and other financial results. From
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time to time, we may provide oral or written forward-looking statements in
other materials released to the public.
We do not undertake any obligation to publicly update any
forward-looking statements, whether as a result of new information, future
events or otherwise. The reader is advised, however, to consult any further
disclosures made on related subjects in future SEC filings. Also note that
there is a cautionary discussion of risks, uncertainties and possibly
inaccurate assumptions relevant to our business under this section. These are
factors that could cause actual results to differ materially from expected
and historical results. Other factors besides those listed could also
adversely affect Peoplesway.
Results of Operations
Financial Reports.
The report of Prospector's independent auditors for the year ended
December 31, 1998 included a footnote that there is a substantial doubt about
our ability to continue as a going concern unless it can find an acquisition
candidate or obtain capital. Prospector did not have sales or revenues for
over ten years, and its audited financial statements for the years ended
December 31, 1998 and 1997 show no activity, other than the issuance of a
convertible debenture in June 1997 to compensate its prior president for time,
effort and funds expended to locate a merger candidate, and thus have limited
value to predict our future success.
Peoplesway's recent unaudited financial statements for the period August
25, 1999 to December 31, 1999 are likewise of limited value to predict our
future success. Net revenue, after distributor discounts on product
purchases, for that period were $106,129, on retail sales of $109,920. Cost
of sales for that period, including product cost, commissions, and freight,
were $89,971. Product cost for the period reported was $21,561, or
approximately 20% of retail sales. Expenses for the period, including
furniture and equipment rental, rent, maintenance, utilities and legal
expenses amounted to $145,738, for a total net loss for the period of
$(129,580).
Retail sales and net revenue for the period do not include sales of a
cooperative advertising campaign (Peoplesway Giveaway Certificates) that was
offered to web site owners. Approximately $174,037 in net revenues from these
sales are included on the balance sheet as deferred income, based on revenue
recognition policies of the SEC, regarding these types of sales. As the
certificates are redeemed with an order by customers or expire, the sales will
be included in income in that period. There are certain commission expenses
on these sales that will also be reflected on the balance sheet, as prepaid
expenses. For the period ending December 31, 1999, the prepaid expense amount
totaled $91,122. This expense will be recorded on the income statement in the
period that the certificates are redeemed or expire. Since this was a new
product announcement, a large number of the then current web site owners
placed orders for the Peoplesway Giveaway Certificates and therefore these
sales for the period were a much larger percentage than we will expect in the
future. Had all the income and expense of these sales been included in income
for the period, our loss would have been $(46,665).
All expenses paid by DRM and/or any of its subsidiaries, on behalf of
Peoplesway, are being booked as a Peoplesway expense and an inter-company
payable is established with DRM and/or the appropriate subsidiary. The salary
expense for the period ending December 31, 1999 were for one paid employee.
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We expect this expense to be in excess of $10,000.00 per month, by the end of
our fourth quarter, March 31, 2000.
The financial statements referenced are made part of this filing.
Vendor Sales.
The majority of our revenues come from product and service sales on our
Web site. We collect full payment for all products ordered, regardless of
vendor, and realize our gross profit from sales based upon the margin
agreements we have with each of our vendors. Each of our vendors delivers the
product or service directly to our customers, based on purchase orders
generated by Peoplesway. Presently, our vendors are DRM, Inc., which offers
approximately 50 health and beauty products, as well as silver and gold
jewelry through Monarch Jewelry; Magnetherapy, Inc., which offers magnetherapy
products designed to relieve body stress, aches and pains; and ProFlowers.com,
Inc., which offers flowers and floral arrangements. All of our agreements
with vendors are pursuant to oral agreements and arrangements. While we are
presently negotiating written agreements, none have been finalized. We will
continue to focus on a distribution method whereby Peoplesway is able to
retain an inventory of product at the vendors location and uses the vendors to
drop ship the product or install the service. As we add additional vendors and
customers, we hope to increase our sales and profit margins, through our added
purchasing power.
Calculation of Sales.
We state sales at the retail value, less distributor discounts on product
purchases, to determine net revenues. Other sales include items such as fees
for supplies and materials, site maintenance and upgrade services, and
eventually web hosting services.
Commission from Sales.
Our independent contractors are paid commissions from products sold to
customers by: their Peoplesway Internet web site; calling 1-800 customer
lines; facsimile; and by mail. There are six sales achievement levels
available to all independent contractors: Business Distributor, Master
Distributor, Director, Senior Executive Director, Diamond Senior Executive
Director, and International Diamond Senior Executive Director. Each
achievement level is paid a percentage of each sale to customers. Business
Distributors earn up to 35% on all customer orders. Other levels can earn up
to 50% on all customer orders. The achievement level of each independent
contractor is established by sales volume of that independent contractor and
the sales volume in that independent contractors Multi-eNetwork.
Each achievement level that an independent contractor reaches also pays
an additional percentage of 3% to 6% on sales of other independent contractors
that are in their Multi-eNetwork. The Multi-eNetwork is created through
sponsorship, by existing independent contractors, of additional independent
contractors who establish a Peoplesway web site and market their products
through that web site. Using this commission model, Business Distributors may
earn up to an additional 3%, Master Distributors and Directors earn up to an
additional 5%, Senior Executive Directors and Diamond Senior Executive
Directors and International Diamond Senior Executive Directors may earn up to
6%. These additional commissions do not reduce the sales commissions paid to
the selling independent contractor.
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All commissions will be expensed at the time the sale occurs. Commissions
on Peoplesway sales will be paid and invoiced by the appropriate DRM
subsidiary.
Focus on Sales Through E-Commerce.
Our independent contractors are paid by a compensation program written so
that when a customer purchases a Peoplesway product or service through an
independent contractor, a percentage of sales is paid to that independent
contractor, and also to a given number of independent contractors who are
responsible for introducing and training that independent contractor and
others regarding Peoplesway's business. Peoplesway focuses its efforts on
sales and service to the end customer. If a customer desires to become an
independent contractor and assist in selling Peoplesway products and services,
he or she can, but there is no pressure or preconceived plan to do so.
Peoplesway will continue to refine this business model and educate its
independent contracts and customers as to our emphasis on sales of quality
products and services to our quality customers.
Web Site Hosting.
In addition to our product and service sales, Peoplesway provides sub-Web
sites at a cost of $19.95 per month. All web hosting fees are currently
collected by a third party vendor and are not shared with Peeoplesway. Our
plans are to begin collection of these fees directly in the third quarter
2000, as we plan to host the sites, rather than through a third party. We
currently have almost 500 web site owners, all of which have been added in the
past four months. We plan on expanding this number by July 2000 to over 1,000
web site owners. During 2000, we plan on expanding our hosting fee offerings
to include more advanced hosting services including technology updates,
periodic design updates and data gathering services, and which will allow us
to charge higher fees for more premium services.
Expansion.
We plan to expand our position as an Internet commerce destination where
businesses and consumers from around the globe can purchase goods, services
and information. To achieve this goal, Peoplesway will focus on acquiring new
merchants and product lines, and increasing its shopper and customer base.
Product lines expected to added in the near future include household products,
additional nutritional and beauty products, clothing, lingerie, gift items,
and other products.
The customer base of DRM has steadily increased since inception, growing
to over 14,000 active members and customers. Peoplesway expects this number
to increase to between 16,000 and 20,000 by the end of the year 2000, as a
result of the marketing, advertising and business model provided by Peoplesway
and its Web sites.
Peoplesway believes that acquisitions are an excellent method of
increasing presence in existing markets, expanding into new geographic
markets, adding experienced service personnel, gaining new product offerings
and services, obtaining more competitive pricing as a result of increased
purchasing volumes of particular products and improving operating
efficiencies through economies of scale.
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Acquisitions.
In recent years, there has been consolidation among providers of Internet
retail products and services and we believe that this consolidation will
continue, which, in turn, may present additional opportunities for us to grow
through acquisitions. Although Peoplesway continually seeks to identify and
evaluate potential acquisition candidates, no significant acquisitions are
probable or expected at this time.
Additional Capital Not Expected Short Term.
As a result of the alliance between Peoplesway and DRM and its
subsidiaries, and the shared use of facilities, equipment and employees,
management believes that additional capital will not be needed over the next
12 months, during which time we will focus our efforts on expanding sales
through our Web site. All expenses paid by DRM and/or any of its subsidiaries
are being booked as a Peoplesway expense and an inter-company payable is
established with DRM and/or the appropriate subsidiary. However, although we
do not expect a need for capital within the next 12 months, we will be limited
in our ability to expand sales and operations without additional capital. In
addition, if the alliance between Peoplesway and DRM and its subsidiaries
ends, it is likely that we cannot continue as a going concern.
ITEM 3. DESCRIPTION OF PROPERTIES.
Peoplesway maintains offices at 2969 Interstate Street, Charlotte, North
Carolina. We share 1,900 square feet of office space and 2,600 square feet of
warehouse space with RMC Group, Inc., to whom we pay $1,850.00 per month as a
subtenant for one-third of the total space and utilities. There is no formal
sublease agreement between the parties, but the parties are presently
negotiating such an agreement RMC Group, Inc. allows us to use its office
equipment, including computers and related hardware. The primary system is an
HP 9000 computer network operating on a Unix system. Currently RMC Group,
Inc. leases this equipment and outsources the hosting of its Web sites with
IMC Worldwide, Inc. There is no formal agreement between Peoplesway and RMC
Group, Inc. for the shared use of this system, but the parties are presently
negotiating such an agreement. We believe that we currently have sufficient
space and computer systems to carry on our operations for the foreseeable
future. If we are unable to come to a formal agreement with RMC Group, Inc.,
or if they terminate our sub-tenancy or use of office equipment and computer
system, there is no assurance that we can continue as a going concern.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following Table sets forth the shares held by those persons who own
more than five percent of Peoplesway's common stock as of December 21, 1999,
based upon 15,607,328 shares outstanding.
Title of Class Name and address of Number of shares Percent of class
beneficial owner
Common Donald R. "Pete" Monroe 12,000,000 77.9%
2969 Interstate Street
Charlotte, NC 28208
The following table sets forth the shares held by Peoplesway directors
and officers as of December 21, 1999.
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Title of Class Name and address of Number of shares Percent of class
beneficial owner
Common Donald R. "Pete" Monroe 12,000,000 77.9%
2969 Interstate Street
Charlotte, NC 28208
Common Matthew M. Monroe 0 0%
2969 Interstate Street
Charlotte, NC 28208
Common Eugene M. Johnston 0 0%
2969 Interstate Street
Charlotte, NC 28208
Ownership of shares by directors and officers of Peoplesway as a group:
77.9%
There are no present arrangements or pledges of Peoplesway securities
that may operate as a change in control of Peoplesway.
ITEM 5. SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
CONTROL PERSONS
Identification of Directors and Executive Officers and Significant Employees.
The following table identifies all current executive officers, directors
and significant employees of Peoplesway. The officers and directors will
serve until the next annual meeting of the stockholders or until their
successors are elected or appointed and qualified, or they resign or are
terminated.
Name Age Position Date Position Commenced
Donald R. "Pete" Monroe 55 Chairman 8/99
Matthew M. Monroe 30 President & Director 8/99
Eugene M. Johnston 36 CEO, Secretary/ 8/99
Treasurer & Director
Julie B. Jordan 40 Executive Producer 10/99
None of our directors hold directorships in other reporting companies.
Business Experience and Personal Background.
Management and Key Personnel.
Donald R. "Pete" Monroe, Chairman
Education: BS, Mathematics, UNC of Pembroke, Magna Cum Laude
Present work positions: Chairman of the Board of Directors,
Peoplesway.Com, Inc., 1999 to present; Chairman of the Board of Directors,
DRM, Inc., 1978 to present;
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Work history:
1966-1970 United States Department of Defense, Mathematician and
System Programmer for Naval Weapons Laboratory, Dahlgren,
Virginia
1970-1972 Private Business, Independent Distributor, Direct Sales
Industry, Virginia & Alabama
1972-1973 GWT Enterprises, Vice President, Direct Sales Industry,
Orlando, Florida
1973-1978 Koscot, Inc., President, Direct Sales Industry, Orlando,
Florida
1978-Today DRM, Inc. and subsidiaries: WeCare Distributors, Inc., RMC
Group, Inc., RMC Group Canada, Ltd., KAM Marketing, LLC,
Owner/Chairman, Direct Sales Industry, Charlotte, North
Carolina
1999-Today Chairman, Peoplesway.Com, Inc., Direct Sales Industry,
Charlotte, North Carolina
Present responsibilities: As Chairman of DRM and Chairman of
Peoplesway, Mr. Monroe oversees marketing, product development, production,
seeks business opportunities, and strategic alliances with other companies and
organizations. He continuously directs and coordinates financial programs to
provide funding for new or continuing operations in order to maximize return
on investments, and increase productivity.
Mr. Monroe has two sons and one daughter and resides with his wife in
Charlotte, NC.
Matthew M. Monroe, President and Director
Education: BS, Journalism & American Studies, University of Southern
Mississippi
Present work positions: President, Peoplesway.Com, Inc., 1999 to present;
Vice President of Marketing, RMC Group, Inc., 1993 to present
Work history:
1993-Today RMC Group, Inc., Vice President, Direct Sales Industry,
Charlotte, North Carolina
1999-Today President/Director, Peoplesway.Com, Inc., Direct Sales
Industry, Charlotte, North Carolina
Present responsibilities: For both Peoplesway and RMC Group, Inc., Mr.
Monroe is responsible for new product development, monthly and quarterly
newsletter (circulating to as many as 5,000 readers), product catalogues,
brochures, company product announcements, customer specials, sales force
training, sales presentations, and event coordinating. Mr. Monroe trains top
level producers on sales force automation. Mr. Monroe worked with other
management team members on bringing RMC Group, Inc., closer to the sales force
home office. After two years of development and beta testing, the sales force
now uses a software program that dials directly into the mainframe database.
This allows the independent contractor access to customer ordering information
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as well as complete data filters to run valuable reports for sales leadership
information. Mr. Monroe also developed the Peoplesway concept and business
model over the past three years.
Mr. Monroe has one son and resides with his wife in Corneilus, North
Carolina.
Eugene M. Johnston , CEO, Secretary/Treasurer and Director
Education: BA, Business Administration, University of North Carolina at
Charlotte
Work history:
1984-1992 WeCare Distributors, Inc., Vice President, Direct Sales
Industry, Charlotte, North Carolina
1993-Now RMC Group, Inc., Vice President, Direct Sales Industry,
Charlotte, North Carolina
1999-Today CEO, Secretary/Treasurer/Director, Peoplesway.Com, Inc.,
Direct Sales Industry, Charlotte, North Carolina
Present responsibilities: Mr. Johnston is responsible for all day to
day operations of Peoplesway and RMC Group, Inc. In addition to his daily
administrative duties, Mr. Johnston works closely with Marketing and Sales.
He is involved in company training and motivation and travels throughout the
US and Canada helping to conduct training seminars. Mr. Johnston was also
instrumental in recently upgrading the company computer system to ensure it
was Year 2000 compliant, including the web related software.
Mr. Johnston has two children and resides with his wife in Charlotte,
North Carolina.
Julie B. Jordan, Executive Producer
Education: BS, Industrial Engineering; Masters of Science Degree,
Educational Technology, Mississippi State University
Work history:
1985-1988 BESCO Office Products, IBM system specialist, installed and
maintained MS-DOS based computer systems and networks,
Columbus, Mississippi
1988-1996 Mississippi School for Mathematics and Science, Coordinator
of Technology and computer teacher, Columbus, Mississippi
1996-1997 The Internet Learning Company, Owner, provider of Internet
dial-up and digital Internet access, Columbus, Mississippi
1998-1999 Ayrix Technologies, Inc., Chief Executive Officer, Internet
solutions provider of Internet connection, Web design and
hosting, Columbus, Mississippi
Present responsibilities: Ms. Jordan is responsible for Peoplesway's
Web site development, content and connections to users and to the Web, and for
information technology issues for the Company. Ms. Jordan often speaks and
conducts seminars on the growth of the Internet, eCommerce and its impact on
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our economy, our businesses, and society. Ms. Jordan adds valuable experience
in the high-tech Internet industry and leadership experience in managing
rapidly growing Internet businesses to the Peoplesway.Com executive team.
Ms. Jordan has three children and resides with her husband in
Mississippi.
Family Relationships
The following table details the family relationships among our directors
and officers.
Name Position Relationships
Donald R. "Pete" Monroe Chairman Father of Matthew M. Monroe; Uncle
of Eugene M. Johnston
Matthew M. Monroe President Son of Donald R. "Pete" Monroe;
& Director Cousin of Eugene M. Johnston
Eugene M. Johnston CEO, Secretary/ Nephew of Donald R."Pete" Monroe;
Treasurer Cousin of Matthew M. Monroe
& Director
Involvement in Legal Proceedings
None of our directors, officers, promoters, or control persons have been
involved in legal proceedings in the past five years that are material to an
evaluation of their ability or integrity to represent Peoplesway.
ITEM 6. EXECUTIVE COMPENSATION
None of our directors or officers have received any compensation from
Peoplesway, including salary, stock, stock options, or otherwise, and no
compensation is accruing. There are no arrangements or agreements for
employment, compensation, or change in control that exist with the Peoplesway
for either our officers or directors. Our officers and directors are
presently compensated by DRM and/or RMC Group, Inc., at the same levels at
which they were compensated prior to the formation of Peoplesway, and it is
anticipated that this arrangement will continue for the foreseeable future.
Presently, our only paid employee is Julie B. Jordan, Executive Producer, who
receives a salary of $40,000 per year. All other individuals who provide
services for Peoplesway are either additional employees of DRM and/or RMC
Group, Inc., which are paid directly by those companies, or Peoplesway's
independent contractors, and it is anticipated that this arrangement will
continue for the foreseeable future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Following are the transactions between Peoplesway and members of
management, directors, officers, 5% shareholders, and promoters of Peoplesway:
Oral Agreements with DRM and its Subsidiaries.
The majority of our goods and services are available through an
"alliance" with DRM, Inc. and its subsidiaries, RMC Group, Inc. and RMC Group
Canada, Ltd. ("DRM"). Each of the officers and directors of Peoplesway is
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also an officer and/or director of DRM, Inc., RMC Group, Inc., and/or RMC
Group Canada, Ltd, and therefore, all sales through Peoplesway benefit related
parties. The "alliance" between the parties has not been reduced to a formal
written agreement, but is based upon oral agreements between the parties such
that all goods and service which DRM or its subsidiaries offer for sale, are
listed on, and for sale through, the Peoplesway Web site. Following each
internet sale of a DRM-related good or service, Peoplesway then pays to DRM an
agreed upon wholesale price. While Peoplesway is presently negotiating
written agreements with DRM and directly with other vendors, none have been
finalized.
Peoplesway has had discussions with public relations companies that would
promote Peoplesway, but none of these discussions have resulted in any
definitive agreements.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock.
Peoplesway has one class of securities authorized, consisting of
100,000,000 shares of $0.001 par value common voting stock. The holders of
Peoplesway's common stock are entitled to one vote per share on each matter
submitted to a vote at a meeting of stockholders. The shares of common
stock do not carry cumulative voting rights in the election of directors.
Stockholders of Peoplesway have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is
not subject to redemption rights and carries no subscription or conversion
rights. All shares of the common stock now outstanding are fully paid and
non-assessable.
There are no outstanding options, warrants or calls.
No Provisions Limiting Change of Control
There is no provision in Peoplesway's Articles of Incorporation or
Bylaws that would delay, defer, or prevent a change in control of Peoplesway.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON PEOPLESWAY'S EQUITY AND OTHER
STOCKHOLDER MATTERS
Market Information.
Quotations of Peoplesway's common stock can be found on the OTC Bulletin
Board of the National Association of Securities Dealers, Inc. (the
"NASD"). Prior to the acquisition of Peoplewsay, Prospector had not had an
established trading market for its stock for over ten years. There is no
assurance that any current market for our common stock can be maintained.
Effective January 4, 1999, the NASD adopted rules and regulations requiring
that prior to any issuer having its securities quoted on the OTC Bulletin
Board of the NASD that such issuer must be a "reporting issuer" which is
required to file reports under Section 13 or 15(d) of the Securities Exchange
Act of 1934. Under the "phase-in" schedule of the NASD, we have until March
23, 2000, within which to become a "reporting issuer," and to satisfy all
comments of the Securities and Exchange Commission respecting this
Registration Statement. This Registration Statement will not become
effective for 60 days from the date of its filing, and it is unknown whether
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we will timely satisfy these quotation requirements of the NASD, as it is
unknown whether we will have satisfied any and all comments from the
Securities and Exchange Commission. Therefore, OTC Bulletin Board quotations
of our common stock may cease on March 23, 2000, and we would be required to
make application to have our common stock quoted in the "Pink Sheets" of the
National Quotations Bureau, LLC ("NQB"). This result would further impede the
development of an "established trading market" in our common stock, because
the "Pink Sheets" market is not as accepted by most brokers/dealers in
securities as the OTC Bulletin Board, and a broker/dealer must subscribe to
the NQB's service. We would, as soon as practicable following the
satisfaction of all necessary requirements of the NASD and SEC, file for
quotations on the OTC Bulletin Board; however, no assurance can be given that
the NASD would allow the quotations of our common stock to be reinstated.
The following quotations were provided by the National Quotation
Bureau, and do not represent actual transactions; these quotations do not
reflect dealer markups, markdowns or commissions.
STOCK QUOTATIONS*
CLOSING BID
Period: High Low
1/1/98 to 12/31/98 $0.0 $0.0
1/1/99 to 3/31/99 $0.10 $0.10
4/1/99 to 6/30/99 $0.10 $0.10
7/1/99 to 9/30/99 $0.10 $0.10
10/1/99 to 11/30/99 $5.3875 $0.10
* Peoplesway's common stock had not traded before the first calendar
quarter of 1999 for over ten years.
Holders.
The number of record holders of Peoplesway's securities as of the date of
this Registration Statement is approximately 249.
Dividends.
Peoplesway has not declared any cash dividends with respect to its common
stock, and does not intend to declare dividends in the foreseeable future.
The future dividend policy of Peoplesway cannot be ascertained with any
certainty. There are no material restrictions limiting, or that are likely
to limit, our ability to pay dividends on our securities.
Transfer Agent
Peoplesway's transfer agent is Interwest Transfer Company, Inc., 1981
East Murray-Holladay Road, Salt Lake City, Utah 84117, (801) 272-9294.
ITEM 2. LEGAL PROCEEDINGS
Neither Peoplesway nor its property is the subject of any legal
proceeding.
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ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Jones, Jensen & Co., Certified Public Accountants located in Salt Lake
City, Utah, audited the financial statements of Peoplesway, fka Prospector
Energy, Inc., for the years ended December 31, 1997 and 1998. Pursuant to a
resolution of the Board of Directors of Peoplesway, dated February 24, 2000,
Jones, Jensen & Co. was dismissed as the Company's principal independent
accountant.
Michael J. Bongiovanni, C.P.A., P.A., Certified Public Accountant located
in Charlotte, North Carolina, audited the financial statements of Peoplesway
for the period ended August 31, 1999, and has been engaged by Peoplesway as
our principal independent accountant. Mr. Bongiovanni was named principal
auditor on February 24, 2000 pursuant to a resolution of the Board of
Directors of Peoplesway.
There were no disagreements between the Company and Jones, Jensen & Co.,
whether resolved or not resolved, on any matter of accounting principles or
practices, financial statement disclosure or auditing, scope or procedure
which, if not resolved, would have caused them to make reference to the
subject matter of the disagreement in connection with their reports. The
reason for the change in accountants was the close proximity of Mr.
Bongiovanni to the Company, and the history of the management of Peoplesway
with Mr. Bongiovanni.
The Reports of Jones, Jensen & Co. for the years 1997 and 1998 did not
contain any adverse opinions or disclaimers of opinion and were not modified
as to uncertainty, audit scope or accounting principles, other than the
modification for going concern contained in both audits.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities of Peoplesway were sold by us within the past
three years without registration.
Common Stock
------------
Name Date Number of Shares
Acquired Aggregate Consideration
Donald Bowles December 1996 28,125 (1)
Donald Bowles June 1997 3,000,000 (1)
Donald R. "Pete" Monroe September 1999 12,500,000 (2)
* Please refer to the below information for details on aggregate
consideration
(1) In December 1996, Donald Bowles was issued 11,250,000 shares (28,125
shares after the October 1999 400 to 1 reverse split) in exchange for services
rendered. In June 1997, Peoplesway, then known as Prospector Energy, Inc.,
issued a $50,000 convertible debenture to its then president, Donald Bowles,
for services performed by him for the Company prior to June 1997. Mr. Bowles
subsequently resigned from the Company, after which he assigned the debenture
to Geotech Management Resources, Ltd., a company unaffiliated with Peoplesway.
The debenture was then converted on October 18, 1999 to 3,000,000 shares of
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common stock of the Company, which were issued to thirteen
individuals/entities, from 25,000 to 750,000 shares each, pursuant to a 144(k)
legal opinion. Subsequent to the issuance of the 3,000,000 shares and review
of the transactions by the Securities and Exchange Commission, it is the
position of the SEC, as expressed in the no action letter to Ken Worm, dated
January 21, 2000, that these individuals and entities are underwriters and
that their shares cannot be sold without a registration statement under the
Securities Act. The shareholders to whom the shares were issued on October
18, 1999, are identified as follows:
Shareholder Shares
Kelly Adams 300,000
1026 East 1st Ave.
Salt Lake City, Utah 84103
Nathan E. Alberty 200,000
21037 Norman Shores Dr.
Cornelius, NC 28031
Alliance Leasing 30,000
4685 South Highland Drive #202
Salt Lake City, UT 84117
Peter Falvo 300,000
7736 Avondale
Salt Lake City, Utah 84121
Patricia Holly Hanzel 150,000
2609 Richelleu Ave., SW
Roanoke, VA 24014
John B. Hanzel 150,000
3376 Londonderry Ln., SW
Roanoke, VA 24018
John F. Hanzel, P.A. 500,000
19425-G Liverpool Parkway
Cornelius, NC 28031
John F. Hanzel, P.A. 150,000
19425-G Liverpool Parkway
Cornelius, NC 28031
Health & Beauty Holdings, Ltd. 750,000
PO Box 701195
St. Cloud, FL 34770-1195
Nicholas Julian 70,000
4685 South Highland Drive #202
Salt Lake City, UT 84117
Lake Norman Tax & Business 100,000
Services, Inc.
21037 Norman Shores Dr.
Cornelius, NC 28031
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Sam Lincoln 100,000
339 East 6th Ave. #1212
Salt Lake City, Utah 84103
John Lund 50,000
Address unknown
Nathan W. Drage, P.C. Escrow 150,000
6975 South Union Park Center
#600
Salt Lake City, UT 84047
(2) In September 1999, pursuant to the reverse acquisition transaction and
a stock-for-stock exchange between Prospector Energy, Inc. and Peoplesway.Com,
Inc., Donald R. "Pete" Monroe was issued 12,500,000 shares of common stock of
Peoplesway, which were valued at par value of $.001 per share, for total
consideration of $12,500.00.
All of the shares were issued to directors or executive officers
who had access to all material information respecting Peoplesway. The
offers and sales of all of these securities are believed to have been exempt
from the registration requirements of Section 5 of the Securities Act of
1933, as amended, pursuant to Section 4(2) thereof, and from similar
applicable states' securities laws, rules and regulations exempting the offer
and sale of these securities by available state exemptions from required
registration.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee, or corporate
agent "who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1)
extends this protection "against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by or
in the right of the corporation. The party must have been acting in good
faith and with the reasonable belief that his or her actions were not opposed
to the corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification
must not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or agent
is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.751(1) or 78.751(2), Section
78.751(3) of the NRS requires that he be indemnified "against expenses,
including attorneys' fees, actually and reasonably incurred by him or her in
connection with the defense."
24
<PAGE>
Section 78.751 (4) of the NRS limits indemnification under Sections
78.751 (1) and 78.751(2) to situations in which either (1) the stockholders,
(2)the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may advance
an officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement, stockholder
vote or vote of disinterested directors. Section 78.751(6)(b) extends the
rights to indemnification and advancement of expenses to former directors,
officers, employees and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or
her corporate role.
The articles of incorporation of Peoplesway provide that the corporation
shall indemnify any and all persons who may serve or who have served at any
time as directors or officers of the corporation, and their respective heirs,
administrators, successors and assigns, against any and all expenses,
including amounts paid upon judgments, counsel fees, and amounts paid in
settlement before or after suit is commenced, in connection with any claim,
action, suit or proceeding in which they are made parties, except in relation
to matters as to which any such officer or director shall be judged in any
action, suit or proceeding to be liable for his own negligence or misconduct
in the performance of his duty.
PART F/S
Index to Financial Statements
Audited Financial Statements of Peoplesway.Com, Inc. for the period ended
August 31, 1999.
Independent Auditors' Report.
Balance Sheet.
Statement of Operations.
Statement of Stockholders' Equity.
Statement of Cash Flows.
Notes to Financial Statements.
Audited Financial Statements of Prospector Energy, Inc. for the years ended
December 31, 1998 and December 31, 1997
Independent Auditors' Report.
Balance Sheet.
Statements of Operations.
Statements of Stockholders' Equity.
Statements of Cash Flows.
Notes to the Financial Statements.
25
<PAGE>
Unaudited Consolidated Financial Statements of Peoplesway.Com, Inc. for
the period ended December 31, 1999.
Balance Sheet.
Income Statement.
Statement of Cash Flows.
Unaudited Financial Statements of Prospector Energy, Inc. for the period ended
August 31, 1999.
Balance Sheet.
Income Statement.
Statement of Stockholders' Equity.
Statement of Cash Flows.
26
<PAGE>
-----------------
AUDITED FINANCIAL STATEMENTS
Peoplesway.com, Inc.
August 31, 1999
----------------
CONTENTS
====================================================
INDEPENDENT AUDITOR'S REPORT 1
BALANCE SHEET
ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-7
=====================================================
<PAGE>
To the Board of Directors
Peoplesway.com, Inc.
2969 Interstate Street
Charlotte, NC 28208
We have audited the accompanying balance sheet of Peoplesway.com, Inc. (a
development stage company) as of August 31, 1999 and the related statements of
operations, stockholders' equity, and cash flows for the period from August
25, 1999 (date of inception) through August 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Peoplesway.com, Inc. as of
August 31, 1999, and the results of its operations and its cash flows for the
period from August 25, 1999 (date of inception) through August 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will operate as a going concern. As discussed in Note C to the
financial statements, the Company has suffered recurring losses from
operations and has not generated revenues. This raises substantial doubt about
the Company's ability to continue as a going concern. Managements plans in
regard to these matters are also described in Note C. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Michael J Bongiovanni, CPA
Michael J. Bongiovanni, C.P.A.
Charlotte, North Carolina
September 13, 1999
1
<PAGE>
BALANCE SHEET
Peoplesway.com, Inc.
(A Development Stage Company)
August 31, 1999
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 1,000
------
TOTAL CURRENT ASSETS 1,000
------
TOTAL ASSETS $ 1,000
======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable - Trade $ 1,000
------
TOTAL CURRENT LIABILITIES 1,000
------
LONG-TERM DEBT
STOCKHOLDERS' EQUITY
Common Stock (no par value, 1,000,000
shares authorized; 1,000 issued and
outstanding at August 31, 1999 -
Additional Paid in Capital 1,000
Retained Deficit (1,000)
------
TOTAL STOCKHOLDERS' EQUITY -
------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,000
======
See notes to audited financial statements and auditor's report.
2
<PAGE>
STATEMENT OF OPERATIONS
Peoplesway.com, Inc.
(A Development Stage Company)
For the Period from August 25, 1999 (date of inception)
through August 31, 1999
REVENUE
Net Sales $ -
------
GROSS PROFIT -
OPERATING EXPENSES
Professional Fees $ 1,000
-------
TOTAL EXPENSES 1,000
-------
NET LOSS $ (1,000)
Retained Earnings,
Beginning of Period -
-------
Retained Deficit,
End of Period $ (1,000)
=======
See notes to audited financial statements and auditor's report.
3
<PAGE>
STATEMENT OF STOCKHOLDERS' EQUITY
Peoplesway.com, Inc.
(A Development Stage Company)
For the Period from August 25, 1999 (date of inception)
through August 31, 1999
Common Common Additional
Shares Stock Paid-in Retained
(000's) $ Capital Deficit
------ ------ ---------- ---------
Balances, August 25, 1999 - $ -0- $ -0- $ -0-
Initial Capital Contribution 1 - 1,000 -
Net loss for period - - - (1,000)
------ ------ ---------- ---------
Balances, August 31, 1999 1 $ - $ 1,000 $(1,000)
====== ====== ========== =========
See notes to audited financial statements and auditor's report.
4
<PAGE>
STATEMENT OF CASH FLOWS
Peoplesway.com, Inc.
(A Development Stage Company)
For the Period from August 25, 1999 (date of inception)
through August 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (1,000)
Adjustments to reconcile net loss
To net cash used in operating activities:
Accounts payable - trade 1,000
-------
NET CASH USED IN
OPERATING ACTIVITIES -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from initial capital contribution $ 1,000
-------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,000
-------
NET INCREASE IN CASH
AND CASH EQUIVALENTS $ 1,000
-------
Cash and cash equivalents,
beginning of period $ -
-------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 1,000
=======
See notes to audited financial statements and auditor's report.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Peoplesway.com, Inc.
(A Development Stage Company)
For the Period from August 25, 1999 (date of inception)
through August 31, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - Peoplesway.com, Inc. (The Company) was organized under the
laws of the State of North Carolina on August 25, 1999. The Company is a
development stage company and has not yet commenced operations.
Peoplesway.com, Inc. plans to provide an E-commerce Internet web site for sale
of hundreds of its products to customers across the world.
Inherent in the Company's Internet related business are various risks and
uncertainties, including its limited operating history, recent development of
the Internet market and unproven acceptance and effectiveness of Web
E-commerce, unproven business model, risks associated with technological
change, and the limited history of commerce on the Internet. The Company's
success may depend in part upon the emergence of the Internet as a
communications medium, prospective product development efforts, and the
acceptance of the Company's products by the marketplace.
Basis of Presentation - The financial statements included herein include the
accounts of the Peoplesway.com, Inc. prepared under the accrual basis of
accounting.
Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the
Company considers liquid investments with an original maturity of three months
or less to be cash equivalents.
Management's Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported amounts of assets
and liabilities, disclosures of contingent assets and liabilities at the date
of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Revenue Recognition - Revenue is recognized when the products are shipped.
Internet related services revenue is recorded when earned, which is upon
completion of setup of web site or appropriate service has been provided. All
revenue transactions are reviewed for credit worthiness prior to commencement
of the revenue process. Accordingly, all costs incurred in the preliminary
project stage of software development, are expensed. All costs incurred
during the application development stage of software development, are
capitalized. All training and application maintenance costs incurred during
the post implementation (operation stage) of software development, are
capitalized.
Web Site Research and Development - Costs incurred in the development,
classification, organization of web site listings, and web site enhancements
are charged to expense as incurred and are recorded in accordance with SOP
98-1.
6
<PAGE>
Comprehensive Income (Loss) - The Company adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income"' which establishes standards for the
reporting and display of comprehensive income and its components in the
financial statements. There were no items of comprehensive income (loss)
applicable to the Company during the period covered in the financial
statements.
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS
In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, which the Company has adopted. The Statement, which is
effective for fiscal years beginning after June 15, 1999, establishes
standards for accounting and reporting for derivative instruments and hedging
activities. Statement of Financial Accounting Standards No. 133 does not have
an impact on its financial statements because the Company does not currently
hold any derivative instruments.
In March, 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) No. 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use", which establishes
guidelines for the accounting for the costs of all computer software developed
or obtained for internal use. The Company adopted this SOP but the adoption of
the SOP does not yet have any impact on the Company's financial statements.
In April, 1998, the AICPA issued SOP 98-5. "Reporting on the Costs of Start-Up
Activities". The SOP is effective for fiscal years beginning after December
15, 1998. The SOP requires costs of start-up activities and organization costs
to be expensed as incurred. The Company has adopted SOP 98-5, however, the
adoption of SOP 98-5 does not yet have any impact on the Company's financial
statements.
NOTE C - GOING CONCERN
As shown in the accompanying financial statements, the Company has suffered
recurring losses from operations and has not generated revenues to date. This
raises substantial doubt as to the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern is
dependent on generating sales and obtaining capital. Management has enacted a
plan of seeking out merger candidates and obtaining capital that may add value
to the Company and its stockholders.
NOTE D - SUBSEQUENT EVENT
Subsequent to August 31, 1999, the Company changed its year-end to a March 31
fiscal year-end.
7
<PAGE>
PROSPECTOR ENERGY, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998 and 1997
CONTENTS
Independent Auditors' Report 2
Balance Sheet 3
Statements of Operations 4
Statements of Stockholders' Equity (Deficit) 5
Statements of Cash Flows 6
Notes to the Financial Statements 7
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Prospector Energy, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheet of Prospector Energy, Inc. (a
development stage company) as of December 31, 1998 and the related statements
of operations, stockholders' equity (deficit) and cash flows for the years
ended December 31, 1998 and 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 my management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Prospector Energy, Inc. (a
development stage company) as of December 31, 1998 and the results of its
operations and its cash flows for the years ended December 31, 1998 and 1997,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
established source of revenues. These conditions raise substantial doubt about
its ability to continue as a going concern. Management's plans concerning
these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ Jones Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
August 6, 1999
2
<PAGE>
PROSPECTOR ENERGY, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
December 31
1998
CURRENT ASSETS:
Cash $ -
-------
Total Current Assets -
-------
TOTAL ASSETS $ -
=======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable debenture $ 1,518
Convertible bond - related party (Note 3) 50,000
Accrued interest payable - related party 7,904
-------
Total Current Liabilities 59,422
STOCKHOLDERS' EQUITY
Common stock, 30,000,000 shares
authorized at $0.001 par value;
75,000 shares issued and
outstanding 75,000
Capital in excess of par value 764,425
Deficit accumulated during the
development stage (826,922)
--------
Total Stockholders' Equity (Deficit) (59,422)
--------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT) $ -
========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PROSPECTOR ENERGY, INC.
(A Development Stage Company)
Statement of Operations
From
Inception on
January 1,
1997 to
December 31, December 31,
1998 1997 1998
---------- ---------- -----------
REVENUE $ - $ - $ 22,468
------ ------ -------
EXPENSES 56,518 2,904 849,390
------ ------ -------
NET LOSS $ (56,518) $(2,904) $(826,922)
====== ====== ========
NET LOSS PER SHARE $ (0.00) $ (0.00)
====== ======
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 75,000 75,000
========== ==========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PROSPECTOR ENERGY, INC.
(A Development Stage Company)
Accumulated
Capital in During the
Common Stock Excess of Development
Shares Amount Par Value Stage
-------- -------- ---------- -----------
Balance at January 1, 1997 75,000 $ 75 $767,425 $(767,500)
Net loss for the year ended
December 31, 1997 - - - (2,904)
---------- -------- ---------- ----------
Balance, December 31, 1997 75,000 75 767,425 (770,404)
Net loss for the year ended
December 31, 1998 - - - (56,518)
---------- -------- ---------- ----------
Balance, December 31, 1998 75,000 75 767,425 (826,922)
========== ======== ========== ==========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PROSPECTOR ENERGY, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
January 1,
1997 to
December 31, December 31,
1998 1997 1998
---------- ---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (56,518) $ (2,904) $ (826,922)
Stock issued for services - - 112,500
Change in operating assets and
liability accounts:
Increase in convertible
debenture payable 50,000 - 50,000
Increase in accrued
interest payable 5,000 2,904 7,904
Increase in accounts payable 1,518 - 1,518
------- ------- ---------
Net Cash Used by
Operating Activities - - (655,000)
------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
------- ------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash - - 655,000
------- ------- ---------
Net Cash Provided by
Financing Activities - - 655,000
------- ------- ---------
INCREASE (DECREASE) IN CASH - - -
CASH AT BEGINNING PERIOD - - -
------- ------- ---------
CASH AT END OF PERIOD $ - $ - $ -
======= ======= =========
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PROSPECTOR ENERGY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Prospector Energy, Inc. (a
development stage company) (the Company). The Company was incorporated in the
State of Utah on November 4, 1980 for the purpose of purchasing, owning,
holding, selling, disposing of and otherwise dealing in the oil and gas
business and other natural resources. The Company attempted to deal in the oil
and gas business, but no operations commenced and this effort was abandoned.
Thereafter business operations ceased and the company was dormant from 1983
until 1997, when it actively began searching for and evaluating potential
business acquisitions and combinations, which it accomplished in 1999 when it
entered into the Acquisition Agreement with Peoplesway. As Prospector never
left the development stage and was dormant until 1997, the Company's inception
date has been re-designated to be January 1, 1997.
b. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
c. Net Loss Per Share
The computation of net loss per share of common stock is based on the weighted
average number of shares outstanding during the period.
d. Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid investments with an original maturity of three months or less to be
cash equivalents.
e. Provision for Taxes
No provision for federal income taxes have been recorded due to net operating
losses. The Company accounts for income taxes pursuant to FASB Statement No.
109. The Internal Revenue Code contains provisions which may limit the loss
carryforwards available should certain events occur, including significant
changes in stockholder ownership interests. Accordingly, the tax benefit of
the loss carryovers is offset by a valuation allowance of the same amount.
The loss carryforwards of approximately $56,000 will expire by the year 2013.
f. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
7
<PAGE>
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to seek a merger with an existing, operating
company. Currently, certain stockholders have committed to covering all
operating and other costs until sufficient revenues are generated through a
merger.
NOTE 3 - CONVERTIBLE DEBENTURE PAYABLE - RELATED PARTY
The Company has issued a $50,000 debenture to its president for services
performed on its behalf. Interest is imputed at 10% per annum from June 1,
1997. The terms of the conversion are to be determined at a later date. The
debenture is unsecured and due upon demand.
8
<PAGE>
Peoplesway.Com, Inc.
Consolidated Balance Sheet
December 31, 1999
(Unaudited)
ASSETS
Current Assets
Cash - Peoplesway.Com - Lincoln $(1,095)
Prepaid Expenses 91,122
------
Total Current Assets 90,027
------
Total Assets $90,027
======
LIABILITIES AND CAPITAL
Current Liabilities
Accounts Payable $14,115
Related Party Notes Payable 14,848
Deferred Income $174,037
------
Total Current Liabilities $203,000
------
Total Liabilities $203,000
Shareholders= Equity
Common stock, 100,000,000 shares
authorized at $.001 par value;
15,607,328 shares issued and
outstanding 15,607
Additional Paid in Capital 1,000
Deficit accumulated during the
development stage (15,607)
Current Year Retained Earnings (Loss) (113,973)
-------
Total Shareholders= Equity (112,973)
-------
Total Liabilities & Equity $ 90,027
=======
9
<PAGE>
Peoplesway.Com, Inc.
Consolidated Income Statement
From inception on August 25, 1999 to December 31, 1999
(Unaudited)
Current
Period
Revenue
Retail Sales $109,920
Less: Distributor Discounts (32,976)
Other Income 29,184
-------
Net Revenues 106,129
-------
Cost of Sales
Product Cost 21,561
Commissions 41,005
Freight 11,799
Other Cost 15,607
-------
Total Cost of Sales 89,971
-------
Gross Profit 16,158
-------
Expenses
Salary & Related Expenses 60,623
Selling Expenses 13,108
Administrative Expenses 72,007
-------
Total Expenses 145,738
-------
Net Income (Loss) $(129,580)
Net Loss Per Share $ (0.03)
Weighted Average Number of
Shares Outstanding 5,014,177
10
<PAGE>
Peoplesway.Com, Inc.
Consolidated Shareholders Equity
(Unaudited)
Accumulated
Additional During the
Common Stock Paid in Development
Shares Amount Capital Stage
-------- -------- ---------- -----------
Inception on August 25, 1999 3,107,328 $ 3,107 $ 1,000 $ (15,607)
Issuance of stock for
acquisition 12,500,000 12,500
Net loss for the period ended
December 31, 1999 (129,580)
---------- -------- ---------- ----------
Balance, December 31, 1999 15,607,328 $ 15,607 $ 1,000 $ (145,187)
========== ======== ========== ==========
11
<PAGE>
Peoplesway.Com, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
December 31,
1999
----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (129,580)
Change in operating assets and
liability accounts:
Increase in accounts payable (45,887)
Prepaid Expenses (91,122)
Deferred Income 174,037
Related Party Notes Payable 14,848
-------
Net Cash Used by
Operating Activities (77,704)
-------
CASH FLOWS FROM INVESTING ACTIVITIES -
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash -
-------
Net Cash Provided by
Financing Activities -
-------
INCREASE (DECREASE) IN CASH (77,704)
CASH AT BEGINNING PERIOD 1,000
-------
CASH AT END OF PERIOD $(76,704)
========
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ -
Income taxes $ -
12
<PAGE>
PROSPECTOR ENERGY, INC.
BALANCE SHEET
(UNAUDITED)
ASSETS
August 31
1999
CURRENT ASSETS:
Cash $ -
-------
Total Current Assets -
-------
TOTAL ASSETS $ -
=======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable debenture $ 1,518
Convertible bond - related party 50,000
Accrued interest payable - related party 7,904
-------
Total Current Liabilities 59,422
-------
STOCKHOLDERS' EQUITY
Common stock, 100,000,000 shares
authorized at $00.01 par value;
107,328 shares issued and
outstanding 107
Capital in excess of par value 767,393
Deficit accumulated during the
development stage (826,922)
--------
Total Stockholders' Equity (Deficit) (59,422)
--------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT) $ -
========
13
<PAGE>
PROSPECTOR ENERGY, INC.
Statement of Operations
(Unaudited)
August 31
1999
----------
REVENUE $ -
------
EXPENSES -
------
NET INCOME $ -
======
NET INCOME PER SHARE $ -
======
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 107,328
=========
14
<PAGE>
PROSPECTOR ENERGY, INC.
Shareholders Equity
(Unaudited)
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
Shares Amount Par Value Stage
-------- -------- ---------- -----------
Balance at January 1, 1997 75,000 $ 75 $ 767,425 $ (770,404)
Net loss for the year ended
December 31, 1997 - - - (2,904)
---------- -------- ---------- ----------
Balance, December 31, 1997 75,000 75 767,425 (770,404)
Net loss for the year ended
December 31, 1998 - - - (56,518)
---------- -------- ---------- ----------
Balance, December 31, 1998 75,000 75 767,425 (826,922)
Stock issued in relation
to reverse split 32,328 32 (32)
---------- -------- ---------- ----------
Balance, September 30, 1999 107,328 $ 107 $767,393 $(826,922)
========== ======== ========== ==========
15
<PAGE>
PROSPECTOR ENERGY, INC.
Statements of Cash Flows
(Unaudited)
August 31,
1999
----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ -
Stock issued for services -
Change in operating assets and
liability accounts: -
-------
Net Cash Used by
Operating Activities -
-------
CASH FLOWS FROM INVESTING ACTIVITIES -
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash -
-------
Net Cash Provided by
Financing Activities -
-------
INCREASE (DECREASE) IN CASH -
CASH AT BEGINNING PERIOD -
-------
---------
CASH AT END OF PERIOD $ -
=======
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ -
Income taxes $ -
16
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
(b) The following exhibits are filed as a part of this Registration
Exhibit
Number Description*
EX-3(i) Articles of Incorporation of Prospector Energy, Inc., a Utah
corporation (including amendments) (1)
EX-3(ii) Bylaws (1)
EX-99.1 Articles of Incorporation of Peoplesway.Com, Inc. (1)
EX-99.2 Articles of Incorporation of Prospector Energy, Inc., a Nevada
corporation (including amendments) (1)
Ex-99.3 Articles of Merger of Peoplesway.Com, Inc. Into Prospector
Energy, Inc. (1)
EX-2 Acquisition Agreement (1)
EX-16 Letter regarding change of certifying accountant (1)
Ex-27 Financial Data Schedule (2)
* Summaries of all exhibits contained within this Registration
Statement are modified in their entirety by reference to these
Exhibits.
(1) Previously filed.
(2) Filed herewith electronically.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
PEOPLESWAY.COM, INC.
Date: November 2, 2000 By: /s/ Eugene M. Johnston
Eugene M. Johnston
CEO, Secretary/Treasurer and Director
