Form S-1/A
Registration Statement
Under
The Securities Act of 1933
IPOConnection.com, Inc.
(Exact name of registrant as specified in its charter)
Washington State 6211 43-1868161
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Tax
incorporation or organization) Classification Code Number) Identification)
11605 Studt Avenue, Suite. 100
St. Louis, MO 63141
314-743-6039
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
CT Corporations Systems
520 Pike Street, Suite. 2610
Seattle, WA 91801
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
L. Steven Goldblatt
President and Chief Executive Officer
11605 Studt Avenue, Suite. 100
St. Louis, MO 63141
314-743-6039
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement,
approximately June 20, 2000.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933; check the following box. ( )
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of earlier effective registration
statement for the same offering. ( )
If this form is a post-effective amendment filed pursuant to Rule 46(c) under
the Securities Act, check the following box and list the Securities Act
Registration of the earlier effective registration statement for the same
offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. ( )
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities Proposed Maximum Registration
to be Registered Aggregate Offering Price(1) Fee
Common Stock, $.01 par value per share $9,900,000 $2,613.60
Estimated solely for the purpose of calculating the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment, which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
-----------------------------------------
(1)
1,100,000 shares of common stock at $9 per share.
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IPOCONNECTION.COM, INC.
Information herein is subject to completion or amendment. A registration
statement relating to these securities has been filed with the Securities and
Exchange Commission. These securities may not be sold nor may an offer to buy
be accepted prior to the time the registration statement becomes effective.
This prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy or shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
This is the Company's initial public offering and no public market
currently exists for its shares. The Company expects that the public offering
price will be between $7.00 and $9.00 per share. This price may not reflect the
market price of the IPOConnection.com's shares after this offering.
THE OFFERING
Per Share Total
Public Offering $9 $9,900,000.00
Underwriting Discount N/A N/A
Proceeds to IPOConnection.com $9,750,000.00
The Company expects the expenses of issuance and distribution to be
approximately $150,000.
The Company expects to deliver shares of common stock to purchasers after
the effective date of the offering and after the close of the auction.
The method of distribution being used in this offering differs somewhat
from that traditionally employed in firm commitment underwritten public
offerings. In particular, the public offering price and allocation of shares
will be determined primarily by an auction process. A more detailed description
of this process is included in "Plan of Distribution."
The securities are being offered on a best efforts basis. The offer shall
terminate no later than 60 days following the effective date of this
registration statement, or earlier, at the election of the company, if it has
received offers to purchase the securities which are more than sufficient to
purchase all of the shares being offered for sale hereby. Offers for less than
100 shares will not be accepted. All funds received in connection with this
offering will be deposited in an escrow account with Bank of America.
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THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 4. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JULY 3, 2000.
You should rely only on the information contained in this prospectus.
IPOConnection.com has not authorized anyone to provide you with information
different from that contained in this prospectus. IPOConnection.com is offering
to sell, and seeking offers to purchase, shares of the company's common stock
only in jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or any sale of the
company's common stock.
ONLY RESIDENTS OF THOSE STATES IN WHICH THE SHARES HAVE BEEN QUALIFIED FOR
SALE UNDER APPLICABLE SECURITIES OR BLUE SKY LAWS MAY PURCHASE SHARES IN THIS
OFFERING. EACH POTENTIAL INVESTOR WILL BE REQUIRED TO EXECUTE A UNIVERSAL ORDER
FORM WHICH, AMONG OTHER THINGS, REQUIRES THE POTENTIAL INVESTOR TO CERTIFY HIS
OR HER STATE OF RESIDENCE. A POTENTIAL INVESTOR WHO IS A RESIDENT OF A STATE
OTHER THAN A STATE IN WHICH THE SHARES HAVE BEEN QUALIFIED FOR SALE MAY REQUEST
THAT THE IPOCONNECTION.COM REGISTER THE SHARES IN THE STATE IN WHICH SUCH
INVESTOR RESIDES. HOWEVER, IPOCONNECTION.COM IS UNDER NO OBLIGATION TO DO SO,
AND IT MAY REFUSE ANY SUCH REQUEST.
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<TABLE>
<CAPTION>
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TABLE OF CONTENTS
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Form S-1-A Cover Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Calculation of Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
IPOConnection.com, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary Financial and Operating Data Income Statement Data. . . . . . . . . . . . . . 5
Balance Sheet Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Limited Operating History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Operating Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Minimum Offering Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Dependence Upon Offering for Expansion. . . . . . . . . . . . . . . . . . . . . . . . . 6
Dependence on Stock Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Underwriting Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Determination of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Availability of Broker/Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Management of Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dependency on Key Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Network Interruptions and System Failures . . . . . . . . . . . . . . . . . . . . . . . 8
Failure to Modernize Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Lack of Public Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Price of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Shares Eligible for Future Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Voting Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Authorized Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Limitation of Directors' Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Forward Looking Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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Reverse of Dilution Under Certain Liquidation Situations. . . . . . . . . . . . . . . . 14
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Management's Discussion and Analysis of Financial Condition and Results of Operations 14
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Fiscal Year Ended December 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Quantitative and Qualitative Disclosure About Market Risks. . . . . . . . . . . . . . . 16
Recent Accounting Pronouncements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Business of IPOConnection.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Hidden Cost of a Traditional IPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Obstacles to Going Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The IPOConnection.com Solution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Marketing Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Cooperation with Retail Brokerage Firms . . . . . . . . . . . . . . . . . . . . . . . . 21
Investor Awareness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
IPO Candidates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Compensation of Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . 26
Election and Compensation of Directors. . . . . . . . . . . . . . . . . . . . . . . . . 27
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . 27
Financial Position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Directors and Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Security Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Sale of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Public Relations and Advertising Services . . . . . . . . . . . . . . . . . . . . . . . 30
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Company Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Description of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Limitation of Directors' Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Shares Eligible for Future Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Plan of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Validity of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
More Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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PROSPECTUS SUMMARY
The Company is a developmental stage company with no operating history and
approximately $50,000 in tangible assets. See "Risk Factors" for a discussion
of certain factors that should be considered in connection with an investment in
the common stock offered.
THE COMPANY
IPOConnection.com, Inc. (the "Company") was formed to provide specialized
investment banking services to small and medium sized businesses. The primary
business of the IPOConnection.com will be to provide businesses a cost
effective, expedient, and efficient means of raising capital in the public
markets through the use of Internet technology and the Dutch Auction process.
Through IPOConnection.com's web site, the investing public will have access to
initial public offerings ("IPO's") that would probably not be available to them
in a traditional IPO. Conducting the sale of securities in an IPO over the
Internet through a Dutch Auction process will provide all investors access to
shares in the IPO; speed the delivery of information; reduce the cost of
disseminating the information; eliminate the advantage institutional investors
have had in receiving shares in an IPO; and allow the market of investors to
establish the offering price of the IPO. IPOConnection.com will assist a
business interested in going public through an IPO to structure the transaction;
prepare the business to go public; and market the offering through
IPOConnection.com's web site and traditional mediums. The primary marketing of
an offering through IPOConnection.com's web site will significantly reduce the
marketing costs of an IPO, and since the securities may be sold directly to
investors, the commissions and underwriting fees associated with an IPO will be
reduced. In addition to bringing IPO's to market, IPOConnection.com intends to
provide three other services: become a clearinghouse for development stage
companies seeking to raise capital in private placements available to accredited
investors; provide investment banking advice to educational institutions to
assist them in taking technologies developed by the educational institutions to
the commercial markets; and represent foreign investors seeking investment
opportunities in U.S. start-ups and technology companies.
The IPOConnection.com web site, www.IPOConnection.com, has been operational
---------------------
since early April, 2000. Individuals interested in being contacted regarding
IPOConnection.com offerings can register at the web site, and businesses
interested in going public or raising equity in private placements can contact
IPOConnection.com through its web site. The Company's web site will provide
information to investors about IPO's offered by IPOConnection.com, the process
of going public through an IPO, and private equity offerings. It will also serve
as a link between venture capital firms, insitutional investors, and accredited
investors seeking investment opportunities in start-up and technology companies.
Before the IPOConnection.com can market the securities of a business in an IPO,
it must obtain a broker/dealer license or acquire an existing broker/dealer.
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The traditional process by which businesses raise capital in the public
markets is inefficient. Shares in IPO's are given to favored clients, usually
large institutions, at prices substantially below the price the investing public
is willing to pay. This closed system repeatedly rewards the favored clients,
is unfair to the investing public, and diverts from the company going public in
an IPO to the investment bank's favored clients the substantial difference
between the price the investing public is willing to pay and the discounted
price the favored clients purchase the shares. The true cost of the
underwriting is the value of the "flip," or profit received by the favored
clients, plus the marketing, legal expenses, and underwriters' fees. In many
recent instances, this cost is more than the amount of money raised by the IPO
company in the public offering. When VA Linux went public in December, 1999 it
sold 4,400,000 shares to the public at $30.00 per share. In the first day of
trading, the public purchased more than 8,000,000 shares of its stock at prices
near $250.00 per share. While VA Linux raised $132,000,000.00 less the
underwriting fees, gross spreads, and costs of the underwriting, the investors
that were able to purchase shares at the public offering price of $30.00 per
share would realized a profit of more than $1 Billion, seven times the amount of
money raised by the VA Linux. These institutional clients of the investment
banks have been rewarded in a similar fashion many times. IPOConnection.com
intends to eliminate the intermediaries, and take IPO opportunities directly to
the investing public. The market of investors will be able to evaluate the
merits of an IPO candidate, and attach a value to the IPO candidate's shares.
This is the same analysis that every investor performs when purchasing stock of
a company in the open market. The success of an offering will be partially
dependent upon the IPO candidate's ability to gain widespread exposure.
IPOConnection.com will prepare a complete analysis of an IPO candidate's
business to determine its suitability for an IPOConnection.com offering.
IPOConnection.com will investigate the representations of the IPO candidate's
management in an attempt to verify its veracity, although IPOConnection.com will
not warrant that management's representations are in fact true.
IPOConnection.com will assist the IPO candidate in preparing documents for the
initial public offering. An IPOConnection.com offering will need to be
registered with the SEC before becoming effective, and the closing of the
offering. It is also anticipated that IPOConnection.com will assist the IPO
candidates in this process. Commissions will be charged for investment banking
services rendered by IPOConnection in conducting a Dutch auction IPO or private
placement on the Internet. The commssion charged for an IPO will not be the
customary 7%, but will be a smaller percentage based upon a negotiated best
efforts underwriting engagements with the issuer.
The directors and executive officers of the IPOConnection.com are as
follows:
Name Age Position
---- --- --------
Steven R. Lowy 54 Chairman
L. Steven Goldblatt 46 Chief Executive Officer and President
Lloyd R. Abrams 46 Chief Financial Officer
Norman Berger 50 Director
Steven R. Lowy was elected Chairman of IPOConnection.com on May 1,
2000. Mr. Lowy is the CEO of four companies: Lowy Enterprises Investments; Lowy
Enterprises Properties, which owns and manages two office buildings; and two
information technology consulting firms, Envision, Inc. and Quatrix LLC. Q
uatrix, employing over 95 employees, is an IT consulting firm providing computer
programming and internet development for large corporations. Mr. Lowy received
a B.S. and M.S. in Chemical Engineering from Washington University, where he
sponsors nine engineering scholarship programs. He is also the Chairman of the
Capital Formation Committee of the St. Louis Regional Commerce and Growth
Association.
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L. Steven Goldblatt has been the Chief Executive Officer, and President of
the company since its inception in December 30, 1999. Mr. Goldblatt received a
Juris Doctorate from Stanford University School of Law, and has practiced law
for the past 20 years. Mr. Goldblatt specializes in the practice of securities
law. Mr. Goldblatt is a member of Kodner, Watkins, Muchnick & Dunne ("KWMD"), a
law firm in St. Louis, Missouri. Mr. Goldblatt's employment by and legal advice
to the Company is outside the course and scope of his employment by KWMD and
KWMD disclaims any liability therefore. Mr. Goldblatt is Chairman of the Bar
Association of Metropolitan St. Louis Securities Law Committee.
Lloyd R. Abrams has been the Chief Financial Officer of the company since
its inception in December 1999. Mr. Abrams received a Juris Doctorate from
Washington University School of Law, a Masters in Business Administration from
Washington University Graduate Business School, and a Bachelors Degree in Civil
Engineering from the University of Colorado School of Engineering. Mr. Abrams
has been involved in a number of businesses, and sat on the boards of directors
of companies both public and private.
Norman Berger has been a board member of the company since January 2000.
Mr. Berger received a Bachelors Degree from the University of Missouri. Since
1997 Mr. Berger has been the President of Adamson Advertising.
IPOConnection.com's offices are located at 11605 Studt Avenue, Suite. 100,
St. Louis, Missouri 63141. The telephone number is 314-743-6039.
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THE OFFERING
Type of Security Offered Common Stock
Common Stock offered . . . . . . . 1,100,000 shares.
Offering Price . . . . . . . . . . Estimated at $9.00 per share, but
established by auction process, as
described herein. (2)
Common Stock to be outstanding
after the Offering . . . . . . . . 5,000,000 shares.
Dividend policy . . . . . . . . . . The Company does not anticipate
paying dividends on its capital stock
in the foreseeable future.
Use of proceeds . . . . . . . . . The Company expects to use the funds
to obtain a broker/dealer, to enhance
its marketing and sales activities,
and general corporate purposes,
including working capital.
(See "Use of Proceeds").
Proposed NASDAQ National Market Symbol: IPOC
---------------------------------
(2) The method of distribution being used by the IPOConnection.com in this
offering differs from that traditionally employed in firm commitment
underwritten public offerings. In particular, the public offering price and
allocation of shares will be determined primarily by an auction process
conducted by the company. A more detailed description of this process is
included in "Plan of Distribution."
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SUMMARY FINANCIAL AND OPERATING DATA INCOME STATEMENT DATA
Year Ended December 31, 1999
--------------------------------
Revenue 0
Marketing & sales expenses 0
Operating Income 0
Net Income 0
Net Income Per Share 0
Shares Used to Compute per Share Data 5,000,000
BALANCE SHEET DATA
ACTUAL AS ADJUSTED PRO FORMA
------------------- ----------
Cash & Cash Equivalents $10,000 $9,789,000
Working Capital $10,000 $9,789,000
Equipment, net 0 0
Total Assets $10,000 $9,789,000
Preferred Stock 0 0
Stockholders' Equity $10,000 $9,789,000
RISK FACTORS
An investment in IPOConnection.com is highly speculative and should be
considered only by an investor able to bear the economic risk of the investment
for an indefinite period. Prospective investors should carefully consider the
following risk factors relating to the company and its operations. One should
carefully consider the following risks and all other information contained in
this prospectus before deciding to purchase common stock of the company.
Included is a discussion of each material risk that the company has identified
as of the date of this prospectus. However, additional risks and uncertainties
not presently known to the company, or that is deemed immaterial at this time,
may also impair the company's business operations. If any of the following
risks actually occur, the company's business, financial condition or operating
results could suffer. If this occurs, the trading price of the company's common
stock could decline, and you could lose all or part of your investment in the
company's common stock.
---------------------------------
(3) Pro Forma balance sheet data reflects the As Adjusted data further adjusted
to give effect to the sale of all of the Shares offered hereby and the payment
of offering expenses estimated at $150,000.
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LIMITED OPERATING HISTORY
The IPOConnection.com was incorporated on December 30, 1999 and thus has no
operating history. See "Selected Financial Data" and "Management's Discussion
and Analysis of Results of Operations and Financial Condition." No assurance
can be given that future revenues and profits will meet the company's
expectations, or that the Company will ever be able to operate profitably. The
company has a limited operating history and information, which will make it
difficult for you to predict whether the company will be successful.
IPOConnection.com is subject to the risks, expenses and uncertainties frequently
encountered by companies in the new and rapidly evolving markets for Internet
products and services. The company may not be successful in addressing these
risks or other risks it may face. If unable to address these risks adequately,
the company's business, results of operations, and operations and financial
condition may suffer.
OPERATING LOSSES
As IPOConnection.com increases its sales and marketing, significant
general, administrative, and development expenses near term losses may arise.
The company does not currently generate any revenues, and no assurances can be
made as to when, or if, sustained profitability will be achieved. Failure to
become and remain profitable may materially and adversely affect the market
price of the IPOConnection.com's common stock and its ability to raise capital
and continue operations.
MINIMUM OFFERING AMOUNT
IPOConnection.com is offering 1,100,000 Shares for sale in this offering
and there can be no assurance that any or all of the shares offered will be
sold. In the event the company does not receive offers for 1,100,000 shares, it
shall have the right to cancel the offering, and return all funds, or reduce the
number of shares sold in the offering to 500,000 shares. See "Plan of
Distribution."
DEPENDENCE UPON OFFERING FOR EXPANSION
IPOConnection.com has embarked on an ambitious growth plan that requires
the net proceeds from this offering. See "Use of Proceeds." If less than all
of the shares offered are sold, the Company may have to delay or modify its
plan. Any delay or modification of the IPOConnection.com's plan may adversely
affect the company's development. If the company believes that insufficient
funds have been received to implement its business plan, the company reserves
the right to cancel the offering, and return all funds submitted.
DEPENDENCE ON STOCK MARKET
IPOConnection.com's success is dependent upon continued viability of the
equity market, and more specifically the demand for initial public offerings for
development stage companies.
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The IPO market has expanded at a record pace this year. According to Bloomberg
$22.6-billion shares in initial public offerings were sold on the first quarter
of 2000. The NASDAQ index experienced extreme market volatility in April, 2000.
The Bloomberg IPO Index is down 44% since its peak on March 21. More than 40
internet related IPO's planned for April and May 2000 have withdrawn their
offerings. Whether additional IPO's will be successful will be dependent on
market conditions, and the quality of the offering. The success of an
IPOConnection.com offering will be dependent on a variety of other factors,
including investor acceptance of the Dutch Auction process and willingness to
bid on specific offerings.
Dutch Auctions have been criticized. The first Dutch Auction of an IPO was
conducted by W. R. Hambrecht for Ravenswood Winery. After inital registration
in February 1999 the company went public in April, 1999 and raised $10.5
million. Its share price has remained stable at approximately $10.50.
Salon.com's IPO in June 1999 slid from its initial price of $10.50 a share, and
has yet to exceed the offering price. Andover.net tripled in value its first day
closing at $69. The company was shortly thereafter acquired by VA LINUX when it
was trading at approximately $85. Because traditional investment banking firms
have not as yet participated in research, market making, and other traditional
after market activities for Dutch Auction IPO's, such offerings may be less
liquid in the after-market. Because the market sets the offering price, Dutch
Auction IPO's may have less of an initial run-up in price. This may deter
investors looking for a short term gain from purchasing shares in a Dutch
Auction.
COMPETITION
The investment banking business is very competitive. Many competitors have
longer operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources than the company
possesses. These competitors may be able to respond more quickly to new
opportunities in the industry, and to devote greater resources to the
development, promotion, and sale of their products and services than the company
can. IPOConnection.com might not be able to compete successfully against its
current or future competitors. W. R. Hambrecht has conducted two IPO offerings
through a Dutch Auction: Andover.net and Ravenswood. Although it currently has
no Dutch Auction offering pending at the current time, it is a formidable
competitor with experienced personnel and a track record. Other companies have
announced their intent to conduct Dutch Auctions in selling stock.
UNDERWRITING LIABILITY
Investment bankers/underwriters are subject to certain liabilities
resulting from underwriting the sale of securities. The IPOConnection.com
intends to purchase liability insurance, if available at reasonable rates,
before selling securities for other parties. Part of an underwriter's
responsibility is research and fact verification. Although IPOConnection.com
intends to be thorough and accurate in its review, it is possible that
materially inaccurate statements could appear in the offering documentation for
an IPO candidate, or that material information is omitted from such
documentation. As a result of such events, it is possible that the Company
could be held liable, or at least be the subject of claims of liability. The
company intends to utilize the services of independent auditors and lawyers to
perform the research and verification process. If IPOConnection.com were to be
the subject of claims of liability, or in fact found liable, such fact could
adversely impact the financial conditions and results of operations of the
company.
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GOVERNMENT REGULATION
The sale of securities is regulated by both federal and state authorities.
IPOConnection.com will obtain all permits, and licenses required to operate its
business, although there can be no assurance that the company will not become
subject to more restrictive regulations in the future. Prior to the effective
date of this offering IPOConnection.com intends to file all necessary
application with the NASD and SEC to obtain a Broker-Dealer license.
IPOConnection.com must obtain a Broker-Dealer license to engage in the sale of
securities of other companies. The company must register as a Broker-Dealer by
applying with the NASD and the SEC for broker dealer registration. There is no
guarantee that the NASD and SEC will approve the company's Form BD application
or how long it will require for such a Broker-Dealer license to be issued. If
the company acquires another broker-dealer which is currently registered with
the NASD and the SEC prior notification to the NASD and the SEC is required, and
any change of control must be approved. Accordingly, it is uncertain how long
after the effective date of the offering the company will be able to commence
its investment banking operations for public offerings.
LACK OF OPERATING EXPERIENCE
The company does not have personnel with operating experience in investment
banking or internet commerce. After the offering, IPOConnection.com intends to
hire and retain experienced investment banking personnel.
DILUTION
After deducting the estimated costs of the offering, each share offered
hereby will experience immediate dilution of $7.04 or 78% percent in net
tangible book value, based on the sale of 1,100,000 Shares.
DETERMINATION OF PURCHASE PRICE
The purchase price of the shares will be determined by the market of
investors submitting offers for the shares in the offering, and does not
necessarily bear any relationship to the company's asset value, net worth or
other established criteria of value. Each prospective investor should make an
independent evaluation of the fairness of such price. See "Capitalization,"
"Dilution" and "Selected Financial Data."
AVAILABILITY OF BROKER / DEALER
Only Broker-Dealers may legally sell securities of other companies. Prior
to the effective date of this offering, it is the intent of the company to file
for registration as a broker/dealer. The company's failure to obtain a
broker/dealer prior to the effective date of this offering or become a licensed
broker/ dealer will result in the delay of the company's first offering of
another company's securities, and the inability of the company to implement its
business plan. Such an event could cause the company's financial condition and
results of operations to suffer.
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MANAGEMENT OF GROWTH
To implement the IPOConnection.com's business plan, the company must expand
its operations, financial systems, and personnel. The company may be unable to
hire and train sufficient personnel to manage the growth that may result from a
successful offering, which would result in the company being unable to
capitalize on the opportunity in the market, and might cause the company's
financial condition and results from operations to suffer.
DEPENDENCY ON KEY OFFICERS
The success of IPOConnection.com depends on the continued services of its
key officers, Steven R. Lowy, Chairman; L. Steven L. Goldblatt, it President and
Chief Executive Officer; and Lloyd R. Abrams, its Vice President and Chief
Financial Officer. The loss of the knowledge and industry expertise of any of
these officers could seriously impede the company's success, and the company's
financial condition and results of operations could suffer.
NETWORK INTERRUPTIONS AND SYSTEM FAILURES
IPOConnection.com's business is dependent on the operation of the Internet,
and the hardware and software of the company's Internet service provider.
Interruptions in the operation of the Internet or the company's Internet service
provider, may interfere with the company's ability to sell securities over the
Internet, and the financial condition and results of operations could suffer.
IPOConnection.com's business could also be adversely impacted by security
problems, viruses, other forms of technological terrorism, and new government
regulation of the Internet.
FAILURE TO MODERNIZE SYSTEMS
Failure of IPOConnection.com to modernize its system as technological
innovations appear may result in the company not being able to compete with
competitors offering similar services, and its financial conditions and results
of operations could suffer. The cost of acquiring the latest technology in the
rapidly evolving Internet industry could be costly, and could cause the
Company's financial conditions and results from operations to suffer.
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RECOGNITION
IPOConnection.com owns the Internet domain name "IPOConnection.com," and
has registered its trade name with the United States Patent and Trade Mark as
IPO Connection TM. The domain name is important because it allows visitors to
locate our web site, and build brand recognition. Internet regulatory bodies
regulate domain names. The regulation of domain names in the United State and
in foreign countries is subject to change. Regulatory bodies could establish
additional top-level domains, appoint additional domain name registrars or
modify the requirements for holding domain names. As a result, the company
might not be able to acquire or maintain the "IPOConnection.com" name in all
countries in which the company desires to do business. Therefore,
IPOConnection.com might be unable to prevent third parties from acquiring domain
names that infringe or otherwise decrease the value of its trade name, and other
proprietary rights. If this occurs, the company's financial condition and
results of operations could suffer. However, IPOConnection.com will take every
reasonable measure including the filing of federal or state court litigation to
prevent misuse or misappropriation of its name.
LACK OF PUBLIC MARKET
The shares offered hereby will be registered with the Securities Exchange
Commission pursuant to the Securities Act and Regulation S-1. As such, the
shares purchased in the offering will be freely tradable under Federal
securities laws. However, the shares will be registered in only a limited
number of states, and may not be sold or otherwise transferred to persons who
are residents of any state in which the shares have not been registered, unless
they are subsequently registered, or there exists an exemption from the
applicable state's registration requirements with respect to such sale or
transfer.
Prior to the offering, there was no public trading market for the company's
common stock. Following the offering, the company plans to facilitate trading
of its common stock by listing the shares on the NASDAQ National Market System
or the NASDAQ Small Cap Market with the proposed listing "IPOC." There is no
guaranty that the shares will qualify for listing on NASDAQ or any other
exchange. Failure to obtain listing on an exchange would severely limit the
sale of the shares.
The Commission recently adopted rules that regulate broker-dealer practices
in connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in
the transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the penny stock rules
require that prior to a transaction in a penny stock, not otherwise exempt from
such rules, the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. If the
company's common stock becomes subject to the penny stock rules, investors in
this offering may find it more difficult to sell their shares.
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PRICE OF SHARES
Following the offering, the price at which the shares will trade may be
extremely volatile. The public market may not agree with or accept the
valuation determined in connection with the offering. In addition, the stock
market has from time to time experienced significant price and volume
fluctuations that have affected the market prices for the securities of
companies, particularly Internet companies. After the offering, the price of
the shares may not be at or above the initial public offering price.
SHARES ELIGIBLE FOR FUTURE SALE
Once a trading market develops for the common stock of the company, the
stockholders will have an opportunity to sell their stock for the first time.
Approximately 4,000,000 more shares will become eligible for sale in the public
market within six months from the date of this prospectus.
No prediction can be made as to the effect, if any, that future sales of the
above described outstanding common stock, or the availability of such common
stock for sale, will have on the market price prevailing from time to time.
Sales of substantial amounts of such common stock in the public market, or the
perception that such sales may occur, could adversely affect the then prevailing
market price.
VOTING CONTROL
Stockholders of IPOConnection.com are not entitled to cumulative voting
rights. Consequently, the elections of directors and all other matters
requiring stockholder approval will be decided by majority vote except as
otherwise provided by law. Assuming all of the shares offered hereby are sold,
after the offering Mr. Goldblatt will own 25.4% of the outstanding common stock,
and Mr. Abrams will own 25.4% of the outstanding Common Stock. Thus, Mr.
Goldblatt and Mr. Abrams will be in a position to substantially control the
election of the Board of Directors of the company and the management and
policies of the company. See "Security Ownership."
AUTHORIZED STOCK
The Board of Directors of the company has the authority to issue up to
5,000,000 shares of "blank check" preferred stock with such designations, rights
and preferences as may be determined by the Board of Directors. Accordingly,
the Board of Directors of the Company is empowered, without further shareholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's common stock. Certain companies have
used the issuance of preferred stock as an anti-takeover device and the Board of
Directors could, without further shareholder approval, issue preferred stock as
an anti-takeover device, and the Board of Directors could, without further
shareholder approval, issue preferred stock with certain rights that could
discourage an attempt to obtain control of the company in a transaction not
approved by the Board of Directors. The Board of Directors of the company also
has authority to issue up to 11,000,000 shares of common stock. See
"Description of Capital Stock."
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LIMITATION OF DIRECTORS' LIABILITY
The By-laws of the company provide that a director of the company will not
be personally liable for monetary damages to the company or its stockholders for
breaches of its fiduciary duty as a director, unless the director acted in bad
faith, knowingly or intentionally violated the law, personally gained a
financial profit or other advantage to which the director was not entitled, or
violated federal or state securities law.
FORWARD LOOKING STATEMENTS
This prospectus contains "forward looking statements." These statements
include: the company's business plan; plans for hiring additional personnel;
acquiring a broker/dealer; adequacy of anticipated sources of funds, including
the proceeds from this offering; and other statements regarding the plans of the
company, and its objectives, expectations, and intentions contained in this
prospectus that are not historical facts. When used in this prospectus, the
word "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," and similar expressions are generally intended to identify forward
looking statements. Because these forward looking statements involve risks and
uncertainties, actual results could differ materially from those expressed or
implied by these forward looking statements for a number of reasons, including
those discussed under "Risk Factors" and elsewhere in this prospectus.
Following the offering, the company assumes no obligation to update any forward
looking statements contained in this prospectus.
USE OF PROCEEDS
The estimated net proceeds to the company from the sale of the shares,
after deduction of estimated offering expenses, will be $9,789,000 if all of the
shares offered are sold at $9.00 per share and $7,589,000 if the shares are sold
at $7.00 per share.
The following table sets forth the company's anticipated use of proceeds at
each level of shares sold. Depending on the number of shares sold, and the price
at which the shares are sold, the amounts available for promotion, advertising
and salaries would be reduced.
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Shares sold Shares sold Shares sold
$9 per share $8 per share $7 per share
-------------- ------------ ------------
Estimated Gross Proceeds $9,900,000 $8,800,000 $7,700,000
from Offering
Less: Offering expenses ($150,000) ($150,000) ($150,000)
Estimated Net Proceeds
from Offering $9,750,000 $8,650,000 $7,550,000
IPOConnection.com intends to use the net proceeds of the offering for the
purpose of forming a broker/dealer, or acquiring an existing broker/dealer, and
for general corporate purposes, including obtaining listing on a stock exchange,
working capital and expansion of sales, marketing, and operations personnel.
The amounts actually expended for such working capital purposes may vary
significantly and will depend on a number of factors, including the amount of
future revenues and the other factors described under "Risk Factors."
Accordingly, the timing and exact amounts of operating expenditures have not
been determined at this time. Pending use of these funds, the IPOConnection.com
intends to invest the proceeds in short term, investment grade, interest-bearing
investments. The anticipated proceeds from the offering should be sufficient to
allow the company to continue operating for the foreseeable future. The
anticipated offering expenses will consist of legal and accounting expenses,
registration and "Blue Sky" fees, printing costs, document delivery costs, order
fulfillment, transfer agent fees, and similar costs. The Company also plans to
use offering proceeds to purchase a directors' and officers' liability policy
for the company's officers and directors providing coverage in an amount not
less than $10 million. The availability and cost of such coverage is unknown
but estimated at less than $100,000.00.
DIVIDEND POLICY
The company has never paid dividends and does not anticipate paying
dividends in the foreseeable future. See "Dividend Policy."
CAPITALIZATION
The following table shows the capitalization as of December 31, 1999, on an
actual basis, and on a pro forma basis, giving further effect to the offering
(assuming the 1,100,000 shares offered are sold at the estimated price of $9.00
per share and the payment of offering expenses estimated at $150,000). The
table does not reflect shares of common stock subject to options, as there are
none outstanding under the company's stock option plan.
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December 31, 1999
-------------------
Actual Pro Forma
------ ----------
Stockholders' Equity:
Common stock, $.01 par value, 10,000,000
shares authorized; 1,000,000 issued
and outstanding, actual, and 6,000,000
issued and outstanding, pro forma $10,000 $50,000
Additional paid-in capital $9,739,000
Total stockholder Equity $10,000 $9,789,000
See "Selected Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
Notes thereto included in this prospectus.
DILUTION
IPOConnection.com was initially capitalized by a sale of common stock to
its founders, Lloyd Abrams and L. Steven Goldblatt and Steven R. Lowy and Norman
Berger. The following table sets forth the difference between the company's
founders, first round private investors, and purchasers of the shares in this
offering with respect to the number of shares purchased from the Company, the
total consideration paid and the average price per share paid. The table
assumes all of the shares offered hereby are sold.
Shares Issued Total Consideration Average Share Price
-------------- -------------------- ---------------------
Founder(4) 4,900,000 $39,000 $.01
New Investors 1,100,000 $9,900,000 $9.00
Total 5,000,000 $9,939,000
Assuming all of the shares offered in the offering are sold, there will be
an immediate dilution of $7.04 per share to investors purchasing shares at the
estimated offering price. For this purpose, dilution per share represents the
difference between the price to be paid by new stockholders and the net tangible
book value per share as of December 31, 1999, as adjusted to give effect to the
offering. Net tangible book value per share represents the amount of total
tangible assets less total liabilities, divided by the number of shares
outstanding.
-----------------------------------
(4) Specifically, a founder purchased 1,000,000 shares at $.01 per share in
December of 1999, and the founders purchased an additional 2,900,000 shares at
$.01 per share in May, 2000.
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The following table illustrates such dilution:
Estimated Offering Price $9.00
Net tangible book value per share as of December 31, 1999 $1.99
Per share dilution to new investors $7.01
After deduction of the assumed expenses of $150,000 $7.04
REVERSE OF DILUTION UNDER CERTAIN LIQUIDATION SITUATIONS
In the event IPOConnection.com is unable to obtain a broker/dealer within
twelve months from this offering (thus, the company is unable to implement the
company's business plan), and the company's board of directors determines that
it is in the shareholders' best interest to liquidate the company, the founders
and directors of the company will sell their shares back to the company for
their cost, $.01 per share, pursuant to written agreements entered into with the
company. The effect of the sale of the founders' and directors' shares back to
the company for cost will eliminate the dilution in the net tangible book value
experienced by shareholders purchasing shares in this offering.
SELECTED FINANCIAL DATA
The selected financial data as of December 31, 1999 is derived from
financial statements of the company audited by Rubin, Brown, Gornstein &
Company, independent public accountants, which are included elsewhere in this
prospectus. Pro forma data gives effect to the successful completion of the
offering of securities as described in this prospectus. The data should be read
in conjunction with the Financial Statements and the attached Notes, and with
Management's Discussion and Analysis of Financial Condition and Results of
Operations appearing elsewhere in this prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with
the financial statements and related notes included elsewhere in this
prospectus. Except for historical information, the discussion in this
prospectus contains certain forward looking statements that involve risks and
uncertainties. The principal factors that could cause or contribute to
differences in the company's actual results are discussed in the section titled
"Risk Factors."
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OVERVIEW
IPOConnection.com, Inc. was formed in December 1999 to provide specialized
investment banking services to small and medium sized businesses. The primary
business of the company will be to provide businesses a cost effective,
expedient, and efficient means of raising capital in the public markets through
the use of Internet technology and the Dutch Auction process. Through the
company's web site, the investing public will have access to initial public
offerings ("IPO's") that would probably not be available to them in a
traditional IPO. Conducting the sale of securities in an IPO over the Internet
through a Dutch Auction process will provide all investors access to shares in
the IPO; speed the delivery of information; reduce the cost of disseminating the
information; eliminate the advantage institutional investors have had in
receiving shares in an IPO; and allow the market of investors to establish the
offering price of the IPO. IPOConnection.com will assist a business interested
in going public through an IPO to structure the transaction; prepare the
business to go public; and market the offering through IPOConnection.com's web
site and traditional mediums. The primary marketing of an offering through
IPOConnection.com's web site will significantly reduce the marketing costs of an
IPO, and since the securities may be sold directly to investors, the gross
spread associated with an IPO will be reduced. In addition to bringing IPO's to
market, the Company intends to become a clearing house for development stage
companies seeking to raise capital in private placements that will only be
available to accredited investors and institutions, as well as assist foreign
investors make investments in start-up and technology companies. IPOConnection
will verify accreditation of potential private placement investors and e-mail a
code word for entry to the private placement site.
IPO Connection.com's web site, www.IPOConnection.com became operational in
---------------------
April, 2000. The company's web site will provide information to investors about
IPO's offered on the web site, the process of going public through an IPO, and
private equity offerings. IPOConnection.com has been contacted by businesses
that may be interested in going public through IPOConnection.com's auction
process, or raising capital through its private placement web page. Before the
company can market the securities of one of these businesses in an IPO or
through a private placement, it must obtain a broker/dealer license, or acquire
an existing broker/dealer. However IPOConnection.com cannot immediately proceed
with an offering of securities of another company, as considerable time may be
required to obtain the necessary licenses.
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LIQUIDITY AND CAPITAL RESOURCES
Since the inception, the IPOConnection.com's operations have been funded by
its founders, and the contribution of their services. In December 1999 the
company sold 1,000,000 shares of common stock to its founders for $10,000, and
in May, 2000 sold another 2,900,000 shares for $29,000.00. IPOConnection.com
anticipates that its working capital will be sufficient to meet the its cash
requirements for working capital and capital expenditures through the completion
of this offering. Should this offering not close, the company would alter its
expenditures appropriately, such that its currently available funds would be
sufficient for the company to continue as a going concern until it was able to
raise funds through an alternative means. If additional funds are raised
through the issuance of equity, equity related or debt securities, such
securities may have rights, preferences or privileges senior to those of the
rights of the common stock, and common stockholders may experience additional
dilution. No assurance can be made that such additional financing will be
available on favorable terms, or at all. If additional financing is not
available when required, or is not available on acceptable terms, the company
may be unable to continue operations as a going concern. In addition, the
company may be unable to take advantage of business opportunities, or to respond
to competitive pressures. Any of these events could harm the company's
financial condition and results of operations.
IPOConnection.com has a limited operating history, and to date has not generated
any revenues. No assurance can be given that future revenues and profits will
meet the its expectations or that it will ever be able to operate profitably.
IPOConnection.com has a limited operating history and information, which will
make it difficult for you to predict whether the it will be successful. The
company is subject to the risks, expenses and uncertainties frequently
encountered by companies in the new and rapidly evolving markets for Internet
products and services. The company may not be successful in addressing these
risks or other risks it may face. If unable to address these risks adequately,
the company's business, results of operations, and operations and financial
condition may suffer.
As IPOConnection.com increases its sales and marketing, significant general,
administrative, and development expenses will increase, and near term losses may
arise. The company does not currently generate any revenues, and no assurances
can be made as to when, or if, sustained profitability will be achieved.
Failure to become and remain profitable may materially and adversely affect the
market price of the its common stock and its ability to raise capital and
continue operations.
FISCAL YEAR ENDED DECEMBER 31, 1999
Revenues. IPOConnection.com generated no revenues in 1999.
Expenses. The company incurred no expenses in 1999. It has not commenced
its sales and marketing programs, as its web site was in its development stage
during 1999. Similarly, the company incurred no general and administrative
expenses during 1999. IPOConnection.com's founders worked without compensation
during this period.
YEAR 2000
Operations commenced subsequent to the 1st of January 2000. Therefore,
there were no disruptions to its business as a result of problems associated
with computer systems misinterpreting the year change. The company does not
expect to spend any funds to address the Y2K problem.
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
IPOConnection.com has no derivative financial instruments or derivative
commodity instruments in its cash and cash equivalents and investments. The its
cash and cash equivalents are invested in short-term, interest-bearing grade
securities, and the company anticipates investing the net proceeds from this
offering in similar investment grade investments pending their use as described
in this prospectus. See "Use of Proceeds." All of the company's transactions
are conducted, and its accounts are denominated, in United States dollars.
Accordingly, the company is not exposed to foreign currency risk.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contract, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measures those instruments at fair value. Pursuant to SFAS
No. 137, Account for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB Statement No. 133, SFAS 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. SFAS No. 133 is
not expected to have a material impact on the Company's financial statements.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. SOP 98-1 requires computer
software costs associated with internal use software to be charged to operations
as incurred until certain capitalization criteria are met.
SOP 98-1 is effective beginning January 1, 1999. The adoption of this statement
did not have impact the company's financial position or results of operations.
DIVIDEND POLICY
IPOConneciton.com has never paid dividends, and does not expect to pay
dividends in the foreseeable future.
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BUSINESS OF IPOCONNECTION.COM
IPOConnection.com, Inc. was formed to provide specialized investment
banking services to small and medium sized businesses. The primary business
will be to provide businesses a cost effective, expedient, and efficient means
of raising capital in the public markets through the use of Internet technology
and the Dutch Auction process. Through the IPOConnection.com's web site, the
investing public will have access to initial public offerings ("IPO's") that
would probably not be available to them in a traditional IPO. Conducting the
sale of securities in an IPO over the Internet through a Dutch Auction process
will provide all investors access to shares in the IPO; speed the delivery of
information; reduce the cost of disseminating the information; eliminate the
advantage institutional investors have had in receiving shares in an IPO; and
allow the market of investors to establish the offering price of the IPO.
IPOConnection.com will assist a business interested in going public through an
IPO to structure the transaction; prepare the business to go public; and market
the offering through IPOConnection.com's web site and traditional mediums. The
primary marketing of an offering through IPOConnection.com's web site will
significantly reduce the marketing costs of an IPO, and since the securities may
be sold directly to investors, the commissions and underwriting fees associated
with an IPO will be reduced. In addition to bringing IPO's to market, the
company intends to become a clearinghouse for development stage companies
seeking to raise capital in private placements that will only be available to
firms and accredited investors. IPO Connection.com will review and verify the
accreditation provided and will issue a code for entry into the private
placement site.
The company has recently commenced operations, including the creation of its web
site, www.IPOConnection.com. Its web site will provide information to investors
about IPO's offered by the company, the process of going public through an IPO,
and private equity offerings. IPOConnection.com has commenced discussions with
businesses that may be interested in going public through IPOConnection.com's
auction process, or raise capital through its private placement web page.
IPOConnection.com's failure to acquire a broker/dealer and qualify as a
broker/dealer with the National Association of Securities Dealers and Securities
and Exchange Commission within a short period of time will result in the delay
of its first offering of another company's securities. Such an event will cause
the company's financial condition and results of operations to suffer.
HIDDEN COST OF A TRADITIONAL IPO
The traditional process by which businesses raise capital in the public
markets has served the American capital market and helped build and maintain
the largest capital market in the world. By arranging placement of IPO shares
with institutional and high net worth individuals the large investment banking
concerns can virtually guarantee the success of an underwriting even on a best
effort basis. These firms and their syndicate members may act as market makers
adding liquidity to thinly traded issues, Class action lawsuits have been
recently filed alleging that the dominant investment banking firms fix prices on
investment banking fees, penalize small investors and produce public offerings
which may be manipulated. According to March 2000 Wall Sreet & Technology "POP
Fizzle"" More than 80% of IPO shares are allocated to institutions, but soon
thereafter they hold less than 25% of the securities""For the most part, online
brokers and underwriters can still only get their hands on 1% to 2% of a deal to
fill requests of millions of investors."" To make matters worse for individuals,
they are discouraged from turning around and selling their shares. Many online
brokers carry stipulations starting they have to hold onto their shares for 60
days. If they "flip" the stock they will not be given shares in future
offerings. If the stock price starts settling back to reality, the individual
investor can't even get rid of it" These institutions?. Their streets are paved
with gold. They buy the stock at a price set by the issuer and their lead
managers-generally at least 100% lower than the opening day closing price on
some of these technology IPO's. They are free to hold it or sell it after the
IPO has made its splash." In the "great IPO Swindle" in the March 20, 2000
Industry Standard the odds of obtaining a hot issue IPO through an online
service is estimated in excess of one in 60.
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In traditional investment banking, clients usually large institutions, buy
IPO shares well below the price the investing public is willing to pay. This is
not only unfair to the investing public, but the substantial difference between
the price that shares are sold to the favored clients for and the price that the
investing public pays once the shares start trading goes into the pockets of the
favored clients, rather than to the IPO company. The true cost of the
underwriting is the profit received by the favored clients, plus the marketing,
legal expenses, and underwriters' fees. A recent "Wall Street Journal" article
regarding the IPO of VA Linux stated, "While the IPO netted a mere $132 million
for the company, $1.2 billion fell into the pockets of somebody somehow
selected by the underwriters." IPOConnection.com intends to eliminate the
intermediaries, and take IPO opportunities directly to the investor. The market
of investors will evaluate the merits of an IPO candidate, and attach a value to
the IPO candidate's shares, the same way every investor does when purchasing
shares of a company in the open market. The success of an offering will be
partially dependent upon the IPO candidate's ability to gain widespread exposure
through its contacts in its industry and the resources it elects to devote to a
publicity campaign.
OBSTACLES TO GOING PUBLIC
A major determinant in which companies go public, and how successful their
offerings are, is the investment bank. The investment bank's perception of a
company's business, and the ability of the investment bank to sell the shares to
institutional investors at prices that will allow them to "flip" their shares
immediately in the after-market determines the level of the investment bank's
interest. Their decision to take a company public is not necessarily dependent
upon the merit of a company's business, or the level of retail investor
interest. IPOConnection.com provides a democratic and merit-based method
allowing companies to raise capital through an IPO. The demand for shares in
the public market of investors will determine the price that a company is able
to sell shares.
THE IPOCONNECTION.COM SOLUTION
IPOConnection.com will attempt to remove barriers for a company going
public through an IPO. The Internet and the age of information facilitate the
dissemination of information on a broad, open, and democratic basis. The public
makes investment decisions based on information. The SEC and its Chairman
Arthur Levitt have criticized "selective disclosure" Some investment banks,
large financial institutions, and analysts have attempted to keep information
tightly controlled. Some entities insist that companies have private investment
conferences, conveying information to them before the general public has access,
despite the SEC's directives and the federal securities lawsNow, this
information is readily, and inexpensively, available to everyone with access to
the Internet. Whether traditional investment banks seize the opportunity
presented by the Internet is a question yet to be answered.
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IPOConnection intends to conduct the due diligence process in part over the
internet. This process will allow all the issuer's employees to review and
comment on the prospectus as it is drafted. IPOConnection believes this will
maximize the flow of information to the underwriter and to the general public.
IPOConnection will preserve these comments along with its manual due diligence
files.
IPOConnection.com's web site, www.IPOConnection.com, will provide companies
---------------------
and the investing public the forum to purchase shares in exciting companies
creating first time public investment opportunities. All investors will have
equal access to the offerings. In most traditional IPO's, retail investors
fortunate enough to receive shares, will only be allocated 50 or 100 shares in
an IPO. Subject to offering restrictions, an investor in an IPOConnection.com
offering is able to purchase almost any quantity of shares desired, so long as
the investor's offer exceeds the offering price established by the Dutch Auction
process. The largest financial institutions will need to submit offers to
purchase shares in exactly the same manner as the smallest investor.
Companies looking to raise capital through an IPO will be attracted to
IPOConnection.com's auction because the underwriting fees and offering expenses
will be significantly lower than through a traditional IPO. Most important, the
large discount to the price that the public market is willing to pay will no
longer go into the pockets of the favored clients of the investment bankers.
IPOConnection.com's private placement web page will create a marketplace for
development stage companies to raise capital through the sale of unregistered
securities to venture capital firms, institutions, and other accredited
investors. IPOConnection.com will also offer investment banking advisory
services, research and fact verification, document preparation assistance, and
public relations/investor relations help.
The services offered by the IPOConnection.com are more specifically
Described below:
Investment Banking Advisory Services: Companies interested in raising capital
--------------------------------------
through an IPO are often not familiar with the capital markets and securities
regulations. IPOConnection.com will review a company's business, operations,
and financial information, and provide the company with advice concerning the
efficacy of a public offering, potential pricing, as well as the advantages and
disadvantages of becoming a public company.
Research and Fact Verification: The prospectus for an IPO requires extensive
---------------------------------
disclosure on a company's business, and the industry in which it operates.
IPOConnection.com will assist the company in assembling the necessary
information, and verifying its accuracy. In addition to utilizing
IPOConnection.com's personnel, outside auditors and lawyers will be engaged to
assist in the process and reduce potential liability from errors or omissions in
the process.
Document Preparation: IPOConnection.com will offer its clients assistance in
---------------------
preparing the offering documents required to effect its IPO. Through its own
employees, and law and accounting firms associated with IPOConnection.com,
IPOConnection.com will offer fixed fee arrangements for its clients.
IPOConnection.com believes that it will be able to offer these services to its
clients at prices lower than that which they will be able to obtain from most
professional service firms, and the clients will be more comfortable having
fixed bids for these services.
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Promotional and Publicity Services: IPOConnection.com will offer its clients
-------------------------------------
assistance in preparing and implementing its promotional and publicity
campaigns. Through its own employees, and advertising and public relations
firms associated with IPOConnection.com, IPOConnection.com will offer fixed fee
arrangements for its clients. IPOConnection.com believes that it will be able
to offer these services to its clients at prices lower than that which they will
be able to obtain from most professional service firms, and will be more
comfortable having fixed bids for these services. IPOConnection.com may engage
Adamson Advertising of St. Louis, Missouri to assist in providing promotion and
public relations services. Norman Berger, a director of the Company, is
president and principal owner of Adamson Advertising. IPOConnection.com
believes that a substantial amount of publicity will be available to all of its
clients through IPOConnection.com's web site, www.IPOConnection.com. There will
---------------------
be no charge to IPOConnection.com's clients for this publicity, other than
IPOConnection.com's standard underwriting fee. IPOConnection.com will provide
its clients with access to IPOConnection.com's proprietary e-mail and mailing
lists for the purpose of promoting its IPO's. IPOConnection.com believes that
these lists will have significant value, and will enhance the success of an
offering.
MARKETING STRATEGY
COOPERATION WITH RETAIL BROKERAGE FIRMS
IPOConnection.com intends to establish agreements with any retail brokerage
firms interested in selling IPOConnection.com offering to its clients. This
could provide IPOConnection.com with a retail sales force numbering in the
thousands, without any fixed costs or overhead. A traditional initial public
offering is only available to the clients of the underwriter, co-underwriters,
and syndicate members. Since IPOConnection.com maintains a perfectly democratic
philosophy, whereby IPO's are available to all investors, IPOConnection.com will
not limit the number of brokerage firms that can sell IPOConnection.com
offerings.
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INVESTOR AWARENESS
The primary means of contact with the investing public is intended to be
IPOConnection.com's web site, www.IPOConnection.com. Initially,
---------------------
IPOConnection.com intends to utilize conventional public relations and
advertising mediums to educate investors about the products and services that
IPOConnection.com offers. Once IPOConnection.com begins offerings for other
companies, the primary means of publicizing IPOConnection.com's web site,
www.IPOConnection.com, will be through each offering company's promotion and
---------------------
public relations efforts. IPOConnection.com will benefit from the publicity
generated by these offerings at no cost to IPOConnection.com. IPOConnection.com
intends to assemble and maintain an extensive database of investors that have
visited IPOConnection.com's web site, and registered to receive information
regarding IPOConnection.com offerings. Investors will be contacted by e-mail
regarding an IPOConnection.com offering. IPO Connection will require a
registrant to specifically opt in to allow sale or distribution of a registrants
e-mail address to third parties. IPOConnection.com will not disclose or
disseminate any other information concerning the registrant without the
registrant's express written consent.
There is no fee for registration. All who register will receive via e-mail
notification of IPOConnection.com's public offerings. Registrants will be able
to place an Indication of Interest after the offerings effective date and before
close. The registrant will be granted three business days to submit an
unconditional offer and transfer funds to an escrow account. At close the shares
will be allocated based on the price bid and shares delivered to successful
bidders. All unsuccessful bidders will receive return of their funds from
escrow within 3 business days of close of auction.
IPO CANDIDATES
IPOConnection.com intends to utilize traditional public relations methods,
its own web site, www.IPOConnection.com, and conventional advertising to educate
corporate executives of the products and services offered by IPOConnection.com.
IPOConnection.com's efforts to reach retail investors will simultaneously
increase awareness among potential IPO candidates. IPOConnection.com will also
create close relationships with investment bankers and investment advisors with
clients who would be potential IPO candidates.
GOVERNMENT REGULATION
The issuance of securities is subject to substantial federal and state
regulation. The issuance of securities is governed by the Securities Act and
the Exchange act. The Securities Act requires that issuers of securities obtain
registration of their securities with the Commission before they may be sold.
IPOConnection.com anticipates that the vast majority of its clients'
offerings will be conducted under Regulation A, through the registration of the
offering on Form SB-2, or through traditional registration on Form S-1. For a
registered offering, the issuer must file a registration statement containing a
proposed form of prospectus for review by the SEC. If the SEC deems that the
registration statement satisfies the requirements of the Securities Act, the
Commission will declare the registration statement effective. For an offering
under Regulation A, the issuer must file an offering statement with the SEC and
obtain qualification of that offering before sales of the securities may be
made. This procedure is similar in most respects to the registration process.
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The SEC regulates all offerings under the Federal securities laws. Special
SEC rules govern internet offerings. These rules and regulations may change
from time to time. IPOConnection.com expects to staff a compliance department
to assure compliance with all applicable Federal and State rules, regulations,
statutes and court decisions.
The sale of securities is also subject to extensive regulation by the
states. These laws, commonly referred to as "Blue Sky" laws, generally require
that offers or sales conducted in those states must be first registered or
qualified with the state securities regulatory agency. As is the case with the
Securities Exchange Commission, many state regulatory agencies have implemented
new rules designed to facilitate equity offerings. These include adoption of
the Small Company Offering Registration ("SCOR") for securities offerings under
$1 million and coordinated and regional equity reviews, where reviews of
multi-state offerings are coordinated by the regulatory agency in one state
rather than multiple jurisdictions. However, compliance with the various Blue
Sky laws can still prove expensive and time consuming.
As a registered broker/dealer, IPOConnection.com would be required to
comply with certain laws and regulations. Much of the regulation of
broker/dealers has been delegated to self-regulatory organizations, principally
the NASD. These self-regulatory organizations adopt rules, subject to approval
by the SEC, that govern the industry and will conduct periodic examinations of
their operations. Securities firms are also subject to regulation by state
securities administrators in those states in which they conduct business.
Broker/dealers are subject to regulations covering all aspects of the
securities business, including sales methods, trade practices among
broker/dealers, use and safekeeping of customers' funds and securities, capital
structure, record keeping, and the conduct of directors, officers and employees.
Broker/dealers are required to comply with many complex laws and rules.
Additional legislation, changes in rules promulgated by the SEC, the NASD, the
Board of Governors of the Federal Reserve System, the various stock exchanges,
and other self-regulatory organizations, or changes in the interpretation or
enforcement of existing laws and rules, may directly affect the mode of
operation and profitability of broker/dealers. The SEC, the NASD or other
self-regulatory organizations, and state securities commissions may conduct
administrative proceedings which can result in censure, fine, the issuance of
cease-and-desist orders, or the suspension or expulsion of a broker/dealer or
any of its officer or employees. Broker/dealers are also subject to periodic
examinations by the NASD, SEC, and states in which they are licensed. These
examinations can focus on a particular area of a firm's business, or they can
cover the entire range of a firm's products and operations. These examinations
can result in disciplinary actions such as fines, suspension or expulsion of
personnel, or the withdrawal of certain products or services that a firm can
offer its customers.
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IPOConnection.com's ability to comply with all applicable laws and rules is
dependent in large part upon the establishment and maintenance of a compliance
system reasonably designed to ensure such compliance, and IPOConnection.com's
ability to attract and retain qualified compliance personnel. The principal
purpose of regulation and discipline of broker/dealers is the protection of
customers to maintain the integrity of the securities markets, rather than
protection of creditors and stockholders of broker/dealers. IPOConnection.com
could, in the future, be subjected to disciplinary or other actions due to a
claimed noncompliance, which could have a material adverse effect on the
Company's business, financial condition, and operating results.
All marketing activities by IPOConnection.com's planned broker/dealer
business will be regulated by the NASD. The NASD can impose certain penalties,
including censure, fine, suspension of all advertising, the issuance of
cease-and-desist orders, or the suspension or expulsion of a broker/dealer or
any of its officer or employees for violations of the NASD's advertising
regulations. If IPOConnection.com were to engage in soliciting orders from its
customers and making investment recommendations, it would become subject to
additional rules and regulations governing, among other things, the suitability
of recommendations to customers and sales practices.
IPOConnection.com will be required to comply with record keeping, data
processing, and other regulatory requirements as a result of proposed federal
legislation or otherwise, and it may be subject to additional regulation as the
market for online commerce evolves. Because of the growth in electronic
commerce, federal or state authorities could enact laws, rules, or regulations
affecting the it's business or operations. IPOConnection.com also may be
subject to federal, state, and foreign transmitter laws and state and foreign
sales and use tax laws. If enacted or deemed applicable, such laws, rules or
regulations could be imposed on the company's activities or its business, thus
rendering its business or operation more costly or burdensome, less efficient or
even impossible, any of which could have a material adverse effect on the
company's business, financial condition, and operating results.
COMPETITION
The market for Internet-based information and services is new, intensely
competitive, and subject to rapid technological change. Services similar to
those to be offered by IPOConnection.com are provided in whole, or in part, by
other companies, and as the success of securities offering over the Internet,
with or without the Dutch Auction process, becomes established, more competitors
will appear. The most significant competitor to date utilizing the Dutch
Auction process is H.R. Hambrecht. The company believes that competition for
its services is based on service, price, reputation, and the success of its
prior offerings.
Many of the IPOConnection.com's expected competitors have longer operating
histories and significantly greater financial, technical, and marketing
resources. The general financial success of companies within the securities
industry has strengthened existing competitors, and such success will attract
new competitors to the industry.
An increase in competition, or the failure of the company to capture an
adequate market share, could cause it to sustain significant losses and would
have a material adverse effect on the company's financial results.
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TRADEMARKS
IPOConnection.com believes that its trade name has significant value, and
will be important to the marketing of its services and products. The company
has no patents, and relies primarily on copyright, trade secret, and trademark
law to protect its business. IPOConnection.com is the owner of the registered
trademark "IPO Connection."
EMPLOYEES
The company employs no full time employees. Its founders expend a portion
of their time on the business affairs of IPOConnection.com It is currently
seeking, and intends to hire, employees. The company's success will be
dependent to a large degree on its ability to retain the services of its
existing executive officers and to attract, train, and retain qualified
additional personnel. The company's employees will not be subject to collective
bargaining agreements or represented by a union. The company intends to have
signed employment and nondisclosure agreement with each employee.
FACILITIES
The company's offices are located in a leased facility in Creve Coeur,
Missouri, within the offices of Lowy Enterprises under a month-to-month
arrangement. The company currently pays no rent for use of its premises.
Additional space will be required as the business expands. The company will
have to pay market rental rates at such time.
LEGAL PROCEEDINGS
IPOConnection.com is not currently a party to any legal proceedings.
PLAN OF OPERATION
The following discussion concerning the plan of operation of the company
contains forward-looking statements which involve risks and uncertainties. The
company's 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 prospectus.
IPOConnection.com intends to provide various business and financial
services. To date, it has operated in a startup phase, developing its business,
receiving almost all of its capital from its founders. Future revenues are
expected to derive primarily from fees for services, including preparing
business plans, assisting clients with preparing the clients' public and private
offerings, and underwriting fees from offerings on the Internet. Additional
revenues may come from accrued interest, equity positions in client companies,
merger and acquisition activity, and advisory fees. The company may elect to
receive of its compensation in the form of stock in companies that it takes
public.
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To date, IPOConnection.com's operations have been concentrated on
developing its web site, www.IPOConnection.com. It expects operating expenses
---------------------
to increase during the next six months, and may incur net operating losses
during this period. If the Company cannot form or acquire a broker-dealer, its
financial condition and results of operations will suffer.
IPOConnection.com may enter into strategic business alliances and gain
access to specialized services by issuing stock rather than expending operating
capital, though no such actions are currently planned. Strategic alliances such
as these could internalize certain external costs associated with the company's
services, though there is no guarantee that such savings would occur.
IPOConnection.com believes that the cash proceeds from this offering will
be sufficient to meet its operational cash requirement for the next thirty-six
(36) months, and it will not be necessary to raise additional funds with the
next thirty-six (36) months. If the amount actually received by the company is
significantly less than the estimated proceeds from the offering, management
believes that it can continue operations for the foreseeable future, but will
not be able to expand its business as projected. If this offering is not
completed, the company will seek other means of raising capital to continue
operations. The company does not expect to seek loan financing of any kind for
the foreseeable future.
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REPORTS
IPOConnection.com has not prepared, nor had prepared on its behalf, any
engineering, management, or similar reports for external use in connection with
the offering.
DIRECTORS
The directors and executive officers of the Company are as follows:
Name Age Position
---- --- --------
Steven R. Lowy 54 Chairman
L. Steven Goldblatt 46 Chief Executive Officer and President
Lloyd R. Abrams 46 Chief Financial Officer
Norman Berger 50 Director
Steven R. Lowy became Chairman of IPOConnection.com on May 1, 2000.
Mr. Lowy is the CEO of four companies: Lowy Enterprises Investment; Lowy
Enterprises Properties, which owns and manages two office buildings; and two
information technology consulting firms, Envision, Inc. and Quatrix LLC, and IT
consulting firm doing computer porgramming and internet development for large
corporations with over 95 employees. Mr. Lowy received a B.S. and M.S. in
Chemical Engineering from Washington University, where he sponsors 9 engineering
scholarship programs. Steven R. Lowy is also the Chair of the Capital Formation
Committee of the St. Louis Regional Commerce and Growth Association.
L. Steven Goldblatt has been the Chief Executive Officer, and President of
the Company since its inception in December 30, 1999. Mr. Goldblatt received a
Juris Doctorate from Stanford University School of Law, and has practiced law
for the past 20 years. Mr. Goldblatt specializes in the practice of securities
law. Mr. Goldblatt is a member of Kodner, Watkins, Muchnick & Dunne ("KWMD"), a
law firm in St. Louis, Missouri. Mr. Goldblatt's employment by and legal advice
to the Company is outside the course and scope of his employment by KWMD and
KWMD disclaims any liability therefore. Mr. Goldblatt is Chairman of the Bar
Association of Metropolitan St. Louis Securities Law Committee.
Lloyd R. Abrams has been the Chairman and Chief Financial Officer of the
Company since its inception in December, 1999. Mr. Abrams received a Juris
Doctorate from Washington University School of Law, a Masters in Business
Administration from Washington University Graduate Business School, and a
Bachelors Degree in Civil Engineering from the University of Colorado School of
Engineering. Mr. Abrams has been involved in a number of businesses, and sat on
the boards of directors of companies both public and private.
Norman Berger has been a board member of the company since December 1999.
Mr. Berger received a Bachelors Degree from the University of Missouri. Since
1997 Mr. Berger has been the President of Adamson Advertising.
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COMPENSATION OF DIRECTORS AND OFFICERS
IPOConnection.com paid no salaries to its officers or directors during
1999. The company will form a compensation committee to establish the salaries
of its executive officers. The compensation committee will consist of Norman
Berger and Steven Lowy who are outside directors. The compensation committee
reviews and evaluates the compensation and benefits of all of the company's
officers, reviews general policy matters relating to compensation and employee
benefits and makes recommendations concerning these matters to the board of
directors. The compensation committee also administers stock options and stock
purchase plans. See "Employee Benefits Plans." The audit committee of the
board of directors will consist of Norman Berger and Steven Lowy who are outside
directors of the company. The audit committee reviews, with the company's
independent auditors, the scope and timing of the auditors' services, the
auditors report on the company's financial statements following completion of
the auditors' audit, and the company's internal accounting and financial control
policies and procedures. In addition, the audit committee will make annual
recommendations to the board of directors for the appointment of independent
auditors for the ensuing year.
ELECTION AND COMPENSATION OF DIRECTORS
IPOConnection's certificate of incorporation provides for three directors.
The articles were amended to increase the number of directors to four. At each
annual meeting of stockholders, beginning with the 2000 annual meeting, the
successors to directors will be elected to serve from the time of election and
qualification until the following annual election, and until their successors
have been duly elected and qualified, or until their earlier resignation or
removal, if any. Current directors receive no compensation for serving as
directors; however, they may be reimbursed for expenses they incur in attending
meetings of the board or board committees. The Company intends to grant in the
future non-qualified stock options to its non-employee directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the directors serves as a member of the board of directors or
compensation committee of any other company that has one or more executive
officer serving as a member of the Company's board of directors or compensation
committee.
FINANCIAL POSITION
As seen in the attached audited Financial Statement of IPOConnection.com,
Inc., the Company has no current expenses or current revenues. However, it is
contemplated that the capital contribution by the officers and directors will
adequately finance the Company through the offering period.
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LIQUIDITY AND CAPITAL RESOURCES
Since the inception, the IPOConnection.com's operations have been funded by
the company's founders, and the contribution of their services. In December
1999 the company sold 1,000,000 shares of common stock to its founders for
$10,000. In May, 2000 an additional sale of 2,900,000 shares of common stock to
its founders and directorsIPOConnection.com's management believes its financial
resources will be sufficient to meet the company's cash requirements for working
capital and capital expenditures through the completion of this offering.
Should this offering not close, the company would alter its expenditures
appropriately, such that its currently available funds would be sufficient for
the company to continue as a going concern until the company was able to raise
additional funds are raised through an alternative means. If additional funds
are raised through the issuance of equity, equity related or debt securities,
such securities may have rights, preferences or privileges senior to those of
the rights of the common stock, and common stockholders may experience
additional dilution. The company cannot be certain that such additional
financing will be available on favorable terms, or at all. If additional
financing is not available when required, or is not available on acceptable
terms, the company may be unable to continue operations as a going concern. In
addition, the company may be unable to take advantage of business opportunities,
or to respond to competitive pressures. Any of these events could harm the
company's financial condition and results of operations.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information regarding the Company's directors
and executive officers:
NAME AGE POSITION
---- --- --------
Steven R. Lowy 54 Chairman
L. Steven Goldblatt 46 President, Chief Executive Officer,
Assistant Secretary
Lloyd R. Abrams 46 Chief Financial Officer and Secretary
Norman Berger 50 Director
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Steven R. Lowy was elected Chairman on May 1 2000. Mr. Lowy is the
CEO of four companies: Lowy Enterprises Investments; Lowy Enterprises
Properties, which owns and manages two office buildings; and two information
technolgy consulting firms, Envision, Inc. and Quatrix LLC. Quatrix with more
than 95 employees, is an IT consulting firm doing computer programming and
internet development for large corporations. Mr. Lowy received a B.S. and M.S.
in Chemican Engineering from Washington University, where he sponsors nine
engineering scholarship programs. Steven Lowy is also the Chair of the Capital
Formation Committee of the St. Louis Regional Commerce and Growth Association.
L. Steven Goldblatt has been the Chief Executive Officer, and President of
the Company since its inception in December 1999. Mr. Goldblatt received a
Juris Doctorate from Stanford University School of Law. Mr. Goldblatt is a
member in good standing of the Missouri, Illinois and California Bar
Associations, admitted to practice in the federal court of those states and
admitted to practice to the United States Supreme Court. Mr. Goldblatt
specializes in Securities Law and is currently Chairman of the Bar Association
of Metropolitan St. Louis Securities Committee. Mr. Goldblatt is licensed with
the NASD as a General Securities Representative (Series 7) and General
Securities Principal (Series 24).
Lloyd R. Abrams has been the Vice President, Chief Financial Officer, Chief
Information Officer, and a Board Member since IPOConnection.com's inception in
December, 1999. Mr. Abrams received a Juris Doctorate from Washington
University School of Law, a Masters in Business Administration from Washington
University Graduate Business School, and a Bachelors Degree in Civil Engineering
from the University of Colorado School of Engineering. Mr. Abrams has been
involved in a number of businesses, and sat on the boards of directors of
companies both public and private.
Norman Berger has been a board member of the Company and Vice-President for
Investor Relations since December 1999. Mr. Berger received a Bachelors Degree
from the University of Missouri. Since 1997 Mr. Berger has been the President
of Adamson Advertising.
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DIRECTOR COMPENSATION
IPOConnection.com does not compensate directors for their services as such.
See "Transactions with Related Parties."
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
remuneration paid by the Company to each of its officers and to all officers as
a group for services rendered in all capacities during the year ended December
31, 1999.
Name of Individual Capacities in Which Served 1999 Compensation
-------------------- ----------------------------- -----------------
L. Steven Goldblatt President and Assistant Secretary None
Lloyd R. Abrams Chairman, Chief Financial Officer None
and Assistant Secretary
Upon closing of the offering it is anticipated that the company will hire a
full-time employee to serve as chief executive officer, and such individual will
be paid commensurate with the position's responsibilities and the individual's
qualifications.
SECURITY OWNERSHIP
The following table sets forth certain information regarding beneficial
ownership of the company's common stock as of December 31, 1999, adjusted to
reflect the sale of common stock offered hereby, with respect to each director
and officer, all directors and officers as a group, and any person who is known
to be the beneficial owner of more than 5 percent of the company's common stock.
Percentage of ownership is calculated as required by the Securities and Exchange
Commission. Except as indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
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Number of Percentage Percentage
Shares Before Offering After Offering
------ ---------------- ---------------
L. Steven Goldblatt 1,269,450 32.55% 25.4%
Lloyd R. Abrams(5) 1,269,450 32.55% 25.4%
STEVEN LOWY 975,000 25.00% 19.5%
NORMAN BERGER 195,000 5.00% 5.0%
OFFICERS AND DIRECTORS
AS A GROUP (3 PERSONS) 3,900,000 100.00% 74.2%
TRANSACTIONS WITH RELATED PARTIES
SALE OF COMMON STOCK
THE COMPANY ISSUED AND SOLD 3,900,000 SHARES OF COMMON STOCK TO ITS
FOUNDERS AND DIRECTORS FOR $.01 PER SHARE.
EMPLOYMENT AGREEMENTS
THERE ARE CURRENTLY NO EMPLOYMENT AGREEMENTS WITH ANY OF THE OFFICERS OR
DIRECTORS OF THE COMPANY.
PUBLIC RELATIONS AND ADVERTISING SERVICES
THE COMPANY MAY, BUT HAS NO OBLIGATION TO UTILIZE THE SERVICES OF ADAMSON
ADVERTISING, A ST. LOUIS-BASED ADVERTISING AND PUBLIC RELATIONS FIRM, WHOSE
PRESIDENT AND PRINCIPAL SHAREHOLDER IS NORMAN BERGER, ONE OF THE COMPANY'S
DIRECTORS. TO THE EXTENT THE COMPANY UTILIZES THE SERVICES OF ADAMSON
ADVERTISING, IT WILL PAY NO MORE FOR SUCH SERVICES THAN IS REASONABLY AVAILABLE
FROM SIMILAR COMPANIES.
---------------------------------
(5) Shares listed as held by Lloyd R. Abrams are currently held by
Conroad Associates. L.P., as to which Mr. Abrams maintains full voting power.
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STOCK OPTIONS
There are no stock options outstanding at this time.
COMPANY OFFICES
IPO Connection.com's offices are currently located within the offices of
Lowy Enterprises. The company currently pays no rent for its premises. Either
party has the right to terminate the arrangement on 30 days notice.
DESCRIPTION OF CAPITAL STOCK
Upon completion of the offering, the authorized capital stock will consist
of 11,000,000 shares of common stock, $.01 par value per share, of which
5,000,000 shares will be outstanding. There are no shares of preferred stock.
The following description of the company's capital stock and certain provisions
of its restated certificate of incorporation, or the certificate of
incorporation, and bylaws is a summary and is qualified in its entirety by the
provisions of the certificate of incorporation and bylaws, copies of which have
been filed as exhibits to this registration statement of which this prospectus
is a part.
COMMON STOCK
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders, including the election of
directors. Accordingly, holders of a majority of shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election if they choose to do so. The certificate of incorporation
does not provide for cumulative voting for the election of directors. Holders
of common stock are entitled to receive ratably such dividends, if any, as may
be declared from time to time by the board of directors out of funds legally
available therefor, and shall be entitled to receive, pro rata, all assets of
the Company available for distribution to such holders upon liquidation.
Holders of common have no preemptive, subscription or redemption rights.
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PREFERRED STOCK
The company may issue "blank check" preferred stock from time to time in
one or more series upon authorization by the board of directors. The board of
directors, without further approval of the stockholders, is authorized to fix
the dividend rights and terms, conversion rights, voting rights, redemption
rights and terms, liquidation preferences and any other rights, preferences,
privileges and restrictions applicable to each series of preferred stock. The
issuance of preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could, among other things,
adversely affect the voting power of the holders of common stock and, under
certain circumstances, make it more difficult for a third party to gain control
of the company, discourage bids for our common stock at a premium or otherwise
adversely affect the market price of the its common stock. There are currently
no plans to issue any preferred stock.
LIMITATION OF DIRECTORS' LIABILITY
The By-laws provide that a director of the company will not be personally
liable for monetary damages to the Company or its stockholders for breaches of
its fiduciary duty as a director, unless the director acted in bad faith,
knowingly or intentionally violated the law, personally gained a financial
profit or other advantage to which the director was not entitled, or violated
federal or state securities law.
TRANSFER AGENT
Subsequent to the offering the company intends to use Chase Mellon
Shareholder Services as its transfer agent.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the company will have 5,000,000 shares of
common stock outstanding. Of these shares, the 1,100,000 shares offered hereby,
will be freely tradable without restriction or further registration under the
Securities Act, unless purchased by "affiliates" of the company as that term is
defined in Rule 144 described below. The remaining 3,900,000 shares of common
stock outstanding upon closing of the offering are "restricted securities" as
that term is defined in Rule 144.
In general Rule 144, as amended, the beneficial owner of shares for at
least one year is entitled to sell in "brokers' transactions" or to market
makers, within any three-month period commencing 90 days after the date of this
prospectus, a number of shares that do not exceed the greater of (i) one percent
of the number of shares of common stock then outstanding, approximately 60,000
shares immediately after completion of this offering; or (ii) generally, the
average weekly trading volume in the company's common stock during the four
calendar weeks preceding the required filing of a Form 144 with respect to such
sale. Sales under Rule 144 are subject to the availability of current public
information about the Company. Under Rule 144(k), a person who is not deemed to
have been an affiliate of the Company at any time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two years, is entitled to sell such shares without having to comply with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.
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Following this offering and the expiration of the lockup periods of 180
days for directors, officers and greater than 5% shareholders, the holders of
3,900,000 shares of common stock will have the right to request the company
register those shares under the Securities Act of 1933, as amended. The company
will be required to use its best efforts to register these shares if the Company
registers any of its common stock for its own account or for the account of
other security holders, or to register these shares in a registration statement
on Form S-3 when the Company is eligible to use that form, provided that the
proposed aggregate price to the public of any offering is at least $500,000.
The Company will bear all fees, costs and expenses of the registration, other
than underwriting discounts and commissions. Registration of any shares of
common stock held by holders with registration rights would result in these
shares being freely tradable, without restriction under the Securities Act upon
the effective date of the registration.
Prior to this offering, there has not been any public market for the
IPOConnection.com's common stock. Future sales of substantial amounts of common
stock in the public market could adversely affect the prevailing market prices
and impair the company's ability to raise capital through the sale of equity
securities.
PLAN OF DISTRIBUTION
IPOConnection.com is offering to sell up to 1,100,000 newly issued shares
at a price determined by the market of investors pursuant to a Dutch Auction
process. The plan of distribution of the offered shares differs somewhat from
traditional underwritten public offering of equity securities.
The auction process will proceed as follows:
Prior to the effectiveness of the registration statement relating to this
offering, the company will solicit conditional offers to purchase from
prospective investors through the Internet, as well as by traditional means. At
least two days prior to closing of the Dutch Auctionrior the company will send
e-mails (the confirmation e-mails) to or contact by mail, telephone, voice mail
or facsimile potential investors who have submitted conditional offers, advising
them that the registration statement for the offering has been declared
effective, that a potential investor should carefully consider the conditional
offer that they have transmitted by e-mail, or other means accepted by the
company. An affirmative confirmation from potential investors remains valid for
a period of five business days from the transmission of the confirmation e-mail,
unless subsequently withdrawn by the investor. All conditional offers to
purchase that are not confirmed prior to the time specified, or it the time is
not specified, by the close of the auction, will be deemed withdrawn. A
confirmed offer is not binding on a potential investor until the close of the
auction.
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After effectiveness, the company will contact by e-mail, telephone, voice
mail or facsimile all offerors who have affirmatively confirmed their condition
offers, to notify them the registration statement is effective and the company
can accept the confirmed conditional offer to purchase after the auction has
closed and the offering has been priced. The auction will close after the
registration statement is effective at a time designated by the company.
Offerors will be able to withdraw their conditional offers between the time of
effectiveness of the registration statement and the close of the auction. The
actual time at which the auction closes will be determined by the company based
on general market conditions during the period immediately following
effectiveness of the registration statement. It is anticipated that the time
period between effectiveness and confirmation of a sale will be comparable to
the corresponding time period in traditional public offerings. Acceptance of
confirmed conditional offers will be communicated by e-mail to the offeror by
the company, unless the potential investor specifies some other means of
communication. The offeror has the right to withdraw the conditional offer by
notifying the Company at any time prior to the close of the auction. After the
auction is closed and a clearing price is set as described below, the company
will accept the conditional offers to purchase from those offerors with
conditional offers to purchase at or above the Clearing Price.
The public offering price will ultimately be determined by the company
following the close of the auction. The principal factor in establishing the
public offering price will be the price per share, or Clearing Price, resulting
from the auction that equals the highest price set forth in valid conditional
offers at which all of the shares may be sold to potential investors. The
public offering price may be lower, but will not be higher, than the Clearing
Price. The Clearing Price will always determine the allocation of shares. If
the public offering price is below the clearing price, all conditional offers
which are below the Clearing Price will be rejected, even if they are higher
than the public offering price. If sufficient conditional offers are not
received, or the Company does not consider the clearing price to be adequate,
the Company will either postpone or cancel the offering, file a post effective
amendment and conduct a new auction, or reduce the number of shares in the
offering to 500,000.
To illustrate how the auction process works, imagine the company intends to
sell 1,000 shares. If the company receives ten offers at various prices for
2,000 shares, the offers will be organized from highest price offered to lowest
price offered. The highest price offers totaling demand for 1,000 shares will
be accepted at the lower of the Clearing Price, or the lower public offering
price. In this example, if the prices offered ranged from $7.00 per share to
$20.00 per share, and the offers at $12.00 per share and above totaled 1,000
shares, the "Clearing Price" would be $12.00 per share. This means that all
purchasers would acquire their shares at $12.00 per share, even if an offer was
submitted at a higher price. The Company reserves the right to sell the shares
at a discount to the Clearing Price, but cannot accept an offer for more than
the Clearing Price, but only those offerors submitting offers at, or above, the
Clearing Price will purchase shares in the offering, even if the company elects
to sell the shares below the Clearing Price. The offers at the Clearing Price
may be accepted with proportionate reductions if there are not enough shares
available for sale to satisfy these offers. All offers for shares above the
Clearing Price will be accepted with full allocations.
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<PAGE>
Valid conditional offers to purchase are those that meet the requirements,
including eligibility, and size. Funds sufficient to satisfy the amount of the
offer must have been received by the escrow agent prior to the closing of the
auction. No funds will be transferred to the company until the acceptance of
the offer and the subsequent closing of the offering.
The auction will close on a date estimated and publicly disclosed in
advance by the company on the Company's web site, www.IPOConnection.com. The
---------------------
offered shares will be purchased from the company by the investors who have
submitted offers to purchase at, or above, the Clearing Price, and these
investors will be notified by e-mail, telephone, voice mail, facsimile, or mail
as soon as practicable following the close of the auction that their conditional
offers to purchase have been accepted. The number of shares sold to an investor
submitting a conditional offer to purchase precisely at the clearing price may
be subject to a proportionate reduction. The company reserves the right to
reject offers that it deems manipulative, disruptive to facilitate the orderly
completion of the offering, and reserves the right, in exceptional
circumstances, to alter this method of allocation, as it deems necessary, to
effect a fair and orderly distribution of shares. For example, large orders may
be reduced to insure a public distribution and the ability of the company to
satisfy stock exchange listing requirements.
IPOConnection.com will not offer, sell, contract to sell, or otherwise
dispose of any shares of common stock, or any options or warrants to purchase
common stock other than the shares of common stock or option to acquire common
stock issued under the company's stock option plan, for a period of 90 days
after the date of this prospectus. Each of our directors, executive officers
and holders of 5% or more of our outstanding capital stock has agreed to certain
restrictions on their ability to sell, offer, contract or grant any option to
sell, pledge, transfer or otherwise dispose of shares of our common stock for a
period of 180 days after the date of this prospectus, without the prior written
consent of the company. Each of the holders of less than 5% of the outstanding
capital stock has agreed to identical restrictions covering a period of 90 days
from the date of this prospectus.
Prior to the offering, there has been no public market for the company's
common stock. The initial offering price for the common stock will be
determined by the process described above and does not necessarily bear any
direct relationship to the company's assets, current earnings, book value, or to
any other established criteria of value, although these factors were considered
in establishing the initial public offering price range. Other factors
considered in determining the initial public offering price range
include:
Market conditions;
The industry in which the company operates;
The business potential of the company; and
The demand for securities in companies creating new Internet business
opportunities.
<PAGE>
In the event the company does not receive offers to purchase at least
1,100,000 shares, the ompany reserves the right to lower the minimum number of
shares sold in the offering to 500,000 shares. The offering will begin on the
effective date of this prospectus, and continue until all of the shares offered
are sold or such earlier date as the company may close or terminate the
offering. The minimum investment for the offering is 100 shares. The maximum
investment, subject to a waiver by the company, is 50,000 shares, unless
otherwise waived by the company.
The shares will be offered and sold directly by the company. No broker or
dealer has been retained or is under any obligation to purchase any shares. All
funds accompanying offers to purchase Shares will be held in an escrow account
at Bank of America until the close of the offering and acceptance of offers.
Funds accompanying offers not accepted by the company will be refunded by check
or wire transfer, pursuant to the directions provided in the offer.
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The expenses of the offering include the Securities Exchange Commission
registration fee, the NASD filing fee, the NASDAQ National Market listing fee,
printing expenses, legal fees and expenses, accounting fees and expenses, travel
expenses, Blue Sky fees and expenses, transfer agent and registrar fees,
directors' and officers' liability coverage, and other miscellaneous fees. The
company estimates these fees and expenses will be an aggregate of approximately
$150,000, which will be paid entirely by the company from the proceeds of the
offering.
The company intends to contact prospective investors by publicizing the
offering through its web site at www.IPOConnection.com, newspapers, magazines,
----------------------
and media coverage. All of such publications will invite persons interested in
the offering to obtain a copy of the prospectus by contacting the company or
visiting its web site. In addition, the company may contact additional
potential investors by direct mail solicitation.
To subscribe for shares, each prospective investor must complete, date,
execute and deliver to the company a Universal Offer Form, submit an Indication
of Interest form through the IPOConnection.com's web site, fax, or mail, and
have paid the purchase price of the shares subscribed for by wire transfer or
check payable to Bank of America. A copy of the Universal Offer Form is
attached as an exhibit at the end of this registration statement.
The company reserves the right to reject any subscription in its entirety
or to allocate shares among prospective investors. If any subscription is
rejected, funds received by the company for such subscription will be returned
to the subscriber without interest or deduction.
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Within five days of its receipt of a subscription agreement accompanied by
a check for the purchase price, the company will send by first class mail a
written confirmation to notify the subscriber of the extent, if any, to which
such subscription has been accepted by the company. Not more than thirty days
following the mailing of its written confirmation, a subscriber's Common Stock
certificate will be mailed by first class mail. The company shall not use the
proceeds paid by any investor until the common stock certificate evidencing such
investment has been mailed.
Although the company's long-term plan for providing liquidity to its
shareholders is to develop a public market for its common stock by soliciting
securities brokers to become market-makers of the shares, to date the company
has not solicited any such securities brokers. See "Limitations on Transfer of
Shares."
VALIDITY OF COMMON STOCK
The validity of the common stock offered hereby will be passed upon for the
company by L. Steven Goldblatt acting in his capacity as general counsel of the
Company. Mr. Goldblatt is also the company's president and chief executive
officer as well as a director and significant shareholder. See "Security
Ownership"
EXPERTS
The financial statements of the company, as of December 31, 1999 included
in the registration statement of which this prospectus forms a part have been
audited by Rubin, Brown Gornstein, & Company, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
MORE INFORMATION
The company has filed a registration statement on Form S-1 with the
Securities and Exchange Commission, or SEC, for the common stock offered in this
prospectus. This prospectus does not contain all of the information set forth
in the registration statement and exhibits and schedules thereto. For further
information with respect to the company and its common stock, make reference to
the registration statement and to the exhibits and schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference. A copy of the registration statement may be
inspected by anyone without charge at the SEC's principal office in Washington,
D.C., and copies of all or any part of the registration statement may be
obtained from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of certain fees prescribed by the SEC.
Please call the SEC at 800-SEC-0330 for further information on the operation of
the public reference rooms. The SEC maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. The address of the web site is
http://www.sec.gov. Upon completion of the offering, the company will be
-----------
subject to the information reporting requirements of the Securities Exchange Act
of 1934, as amended and, in accordance therewith, will file reports, proxy
statements and other information with the SEC.
The company intends to furnish its stockholders with annual reports
containing financial statements audited by our independent public accountants
and quarterly reports for the first three fiscal quarters of each fiscal year
containing unaudited interim financial information.
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EXECUTED under penalty of perjury this 6th day of July, 2000.
IPOConnection.com, Inc.,
a Washington corporation
By:______________________________
L. STEVEN GOLDBLATT
President
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