<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 6, 2000
ZEBRAMART.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
10 PIEDMONT CENTER, SUITE 900
ATLANTA, GEORGIA 30305
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(404) 467-6955
(REGISTRANT'S TELEPHONE NUMBER)
ROYAL ACQUISITION, INC.
1850 EAST FLAMINGO RD., SUITE 111
LAS VEGAS, NEVADA 89119
(FORMER NAME AND FORMER ADDRESS)
<TABLE>
<S> <C> <C>
NEVADA 58-2516038
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
________________________________________________________________________________
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
<PAGE>
This Report includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. This Act provides a "safe
harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those described in the forward-looking statements. All
statements other than statements of historical fact we make in this Report are
forward-looking. In particular, the statements herein regarding industry
prospects and our future results of operations or financial position are
forward-looking statements. Forward-looking statements reflect our current
expectations and are inherently uncertain. Our actual results may differ
significantly from our expectations. Exhibit 99.1 of this Form 8-K, entitled
"Cautionary Statements and Risk Factors" describes some, but not all, of the
factors that could cause these differences.
(a) On March 6, 2000, pursuant to an Acquisition Agreement and Plan of
Merger (the "Merger Agreement") dated as of March 1, 2000, effective as of
March 6, 2000, zebramart.com, inc., a Nevada corporation ("ZMRT"), acquired
100% of the issued and outstanding stock of Royal Acquisition, Inc., a Nevada
corporation ("Registrant"). The Merger Agreement has previously been reported
on Form 8-K and filed on March 6, 2000.
As a result of our 100% ownership of the Registrant, our Board of
Directors on February 29, 2000, by unanimous written consent, elected to merge
the Registrant into ZMRT pursuant to Nevada Revised Statutes ("NRS") Section
92A-100 and caused our officers to file the Certificate of Merger ("Merger")
dated March 1, 2000, effective March 6, 2000, and incorporated by reference
to the Registrant's Form 8-K filed March 6, 2000. As a result of the Merger,
we will continue as the surviving company.
Prior to the effectiveness of the Merger, ZMRT had an aggregate of
291,472,997 shares of common stock $.00001 par value, outstanding. Upon
effectiveness of the merger on March 6, 2000, ZMRT had an aggregate of
293,472,997 shares of common stock outstanding. On March 13, 2000, we issued
43,271,601 additional shares to acquire outstanding shares of our majority
owned subsidiary and predecessor, zebramart.com, a Georgia corporation. We
have an obligation to issue 1,985,780 shares to acquire the remaining shares
of this subsidiary. An additional 64,497,504 shares of our common stock are
subject to options granted to employees and consultants.
The officers of ZMRT will continue as the officers of the successor
issuer. See "Management" below. The officers, directors, and bylaws of ZMRT will
continue without change as the officers, directors, and bylaws of the successor
issuer.
A copy of the Certificate of Merger dated March 1, 2000, effective
March 6, 2000, was filed with the Registrant's Form 8-K filed March 6, 2000,
and is incorporated by reference herein. The foregoing description is
modified by such reference.
(b) The following table contains information regarding the
shareholdings of our current directors and executive officers and those persons
or entities who beneficially own more than 5% of our common stock as of March 6,
2000 (giving effect to the exercise of the options exercisable by such person
within sixty (60) days of the date hereof, if any):
2
<PAGE>
<TABLE>
<CAPTION>
Amount of Common % of Common Stock
Name Stock Beneficially Owned Beneficially Owned
<S> <C> <C>
David W. Kenner 400 *
CEO, COO, Chairman of the Board
Roger Haggerty 200 *
CFO, Director
William Head 129,401,342 38.66%
Director
Jimmy Carter 29,115,302 8.70%
J. Smythe Rich 56,613,074 16.91%
</TABLE>
- -------------------------------
* Represents less than 1% of the outstanding common stock.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) As a result of ZMRT's merging with Registrant, pursuant to NRS
Section 92A.250, Registrant's existence as a separate entity ceased and its
outstanding shares have been canceled with ZMRT assuming Registrant's reporting
obligations under successor issuer status as more fully detailed in Section
12(g)(3) of the Securities Exchange Act of 1934.
(b) We intend to continue developing and marketing our
membership-based, rewards-oriented, consumer website. The Company offers our
members a wide selection of lifestyle products through the Internet.
Additionally, we plan to open the first of our physical stores to capitalize
on a "click and mortar" approach to e-tailing.
BUSINESS
THE COMPANY
Zebramart.com, inc. (the "Company" or "ZMRT") is a publicly traded
(OTCBB:ZMRT) membership-based, rewards-oriented, consumer website retailer
offering a wide selection of upscale lifestyle products through the Internet
and eventually through our planned click-and-mortar stores.
The Company's business strategy is comprised of six facets:
- To focus our product selections closely on our demographic
target audience.
- To acquire and retain members without massive spending on
traditional media campaigns.
3
<PAGE>
- To make our rewards program a leader in the industry.
- To exceed customer expectations in all aspects of customer
care.
- To apply technology systems that will enhance the sales and
service aspects of zebramart.com.
- Strategic acquisitions
Our "click and mortar" approach to retailing, which incorporates the
best of traditional retail and e-commerce, has been viewed as a more successful
path for e-tailers than pure virtual presence on the Internet. Some consumers
are wary of e-tailers with no presence in the traditional retail space. The
zebramart.com website will be complimented by a physical presence. The physical
store also will enhance our branding efforts. It provides a seamless
transition of the customer experience from the Internet to our mortar
operation. Our members will enjoy top quality service plus special events
planned around their interests. Depending on Capital availability, we plan to
open additional stores in the next 6 to 24 months.
Our rewards program credits our members' zebramart accounts for every
purchase they make on our website. This program results in considerable savings
for our members and provides a compelling incentive for them to return to our
site. Currently zebrapoints can be applied toward future purchases or exchanged
for frequent flier miles on participating airlines. Future plans for additional
member benefits are being developed. Our goal is to have a best-of-class members
rewards program.
Anyone can access the zebramart.com website, but only those purchases
made by members are eligible to earn zebrapoints. We are evaluating several
types of membership levels. The current program calls for consumers to pay
$35 for an annual membership to our website shopping gallery. Other programs
under consideration include a free membership and two separate levels of
premium membership. The level of zebrapoints would be based on the membership
level.
We provide consumers with an on-line shopping experience that
incorporates traditional specialty store and mail order features into an
interactive and easy-to-use online environment. Our retailing model capitalizes
on the reach of the Internet and enables us to reach a geographically diverse
consumer base. Our current delivery capability is within North America and is
consistent with our customer-acquisition activities. Our research indicates that
our target demographic group is more focused on quality than sales price or
cost. We therefore have made a conscious decision to offer a focused and
specialized product selection to our members.
We believe that we can compete with other high-end retailers and
e-tailers by offering a targeted selection of sought after branded and unique
products through our website. Our online structure allows us to make changes and
additions to our product lines in response to changes in product availability
and customer demand.
4
<PAGE>
PRODUCT OFFERING - PRODUCT OVERVIEW
Our online store provides high quality digital images and detailed
information on our selection of products, which we conveniently organize into
departments by brand and category. Our high-resolution product images are
supplemented with related textual information, including reviews,
specifications, human-interest stories and cross-promotional information
content. We believe in providing the upscale consumer with an attractive and
informative experience that encourages them to return to the site often. Major
categories of products that we currently offer or plan to provide for our online
shoppers include:
- Women's and Men's Fashion Accessories - Kids Games, Toys,
Hobbies, Limited Apparel, and Home Furnishings
- Fine Art Gallery
- China & Crystal
- Executive Gifts - Travel & Leisure
- SPA
- Home Furnishings and Accessories
- Kitchen Goods & Small Electrics
- Pet Accessories
- Gourmet Food
- Fine Cigars and Accessories
PRODUCT OFFERING - THE STRATEGY
We currently utilize the following merchandising strategies to enhance
our customers' shopping experience:
- EMPLOY EXPERIENCED BUYERS: We employ a staff of buyers
experienced with the various merchandise categories that we
offer to consumers. This allows us to enhance and build
relationships with high quality manufacturers and suppliers.
- PRODUCT SELECTION CRITERIA: Our focus is on four areas.
Products of known luxury manufacturers Handmade
products Products that are unique and stylish
Products that are artistic in nature
- OFFER PREMIUM QUALITY SPECIALTY GIFTS: We offer items, such as
fashion accessories, jewelry and specialty gifts, which have
enjoyed strong catalog and mail order sales in the past. We
believe such products are similarly suitable for Internet
retailing.
5
<PAGE>
- PROMOTE HOLIDAY THEMES: We plan to capitalize on gift-giving
occasions with a planned Holiday section offering various
items and information pertaining to a particular holiday. For
example, zebramart.com members can shop, get information and
order a Father's Day gift in a matter of minutes. Through the
zebramart.com Holiday section, members can choose gifts that
meets their needs without spending their valuable time
fighting traffic or crowds in the traditional retail
environment. Our exceptional product selection will be
enhanced by specialized gift-wrapping service and personalized
communications. In addition, our comprehensive relational
database, currently under construction, will allow us to
provide narrowly focused content and product displays based on
customer preferences, purchasing history, site behavior and
seasonal considerations.
- PROVIDE COMPELLING CONTENT: It is our intent to make the
zebramart.com site an entire experience for the upscale
consumer. This means that we must offer additional services
and experiences beyond fundamental shopping. We intend to add
value to our customer relationship by providing them with
interesting and original written content and photography about
events and issues of importance. Our roster of contributing
columnists will provide compelling literary content to
zebramart.com members.
- MINIMIZE INVENTORY OBSOLESCENCE RISK: Our strategy does not
include products that are high fashion and highly seasonal.
- CUSTOMER VALUE PROPOSITION: We have adopted a strategy of
excellent member rewards, which motivates loyal shoppers and
rewards them more than the traditional price-competition
model.
MEMBER ACQUISITION AND RETENTION
ACQUISITION STRATEGY
- UTILIZE REVENUE SHARING MODELS: We believe that we can lower
customer acquisition costs by obtaining advertising through a
revenue-sharing model rather than by purchasing advertising
with working capital. Business partners will be compensated
for sending a shopper to the site with a percentage of the
purchase price. Additionally, advertisers who send prospects
to our site that become members will be compensated with a
percentage of the membership fee. In certain instances, we may
issue equity in the Company as payment for advertising. We
believe that this cooperative strategy will enable us to
achieve national brand recognition and profitability more
quickly than our competition.
- ON-LINE PARTNERS PROGRAM: As an alternative to purchasing
portal web real estate we will aggressively market our
services online through a revenue-sharing business model.
Under this advertising model, we will compensate partner
websites that
6
<PAGE>
generate website traffic to us resulting in new memberships or
additional revenues.
- OFF-LINE PARTNERS PROGRAM. This effort is focused on
organizations with high membership numbers that fit into our
demographic target. Our efforts focus on encouraging large
organizations to provide their members with information on our
website in return for a percentage of membership sign up fees
and purchases from their members.
RETENTION STRATEGY
We believe the keys to member retention are:
1. Loyalty Rewards Programs
2. Exceptional Customer Care
3. Continual editorial content focused on issues important to our
demographic target audience
4. Revenue sharing with host organizations
5. Membership retention programs
MEMBER REWARDS PROGRAM
Member purchases earn zebrapoints on each purchase. These points can be
redeemed on future purchases, used for renewing membership and can be converted
into frequent flyer points with four major airlines. Additional plans for point
redemption include conversion to other reward programs with high-profile hotel
chains and credit card issuers. An additional offering under consideration is
the ability to convert zebrapoints to cash for donation to a favorite charity.
We intend to be a leader and to have a best-in-class members' reward program.
CUSTOMER CARE
Our overall objective is to exceed customer expectations. We work with
high quality manufacturers and suppliers who stand behind their products.
Warehousing and delivery are focused on premier levels of customer service.
Merchandise returns are easy and hassle-free. Our highest priority is protecting
the credit and personal information of our members. We employ state-of-the-art
security systems, and we have pledged to respect our members' privacy. Our
members are advised that their contact and demographic information will not be
sold or shared with another organization without their permission. Our help
desk is staffed with highly qualified customer care representatives who are
empowered to help customers.
TECHNOLOGY
The performance, reliability and availability of our Internet store,
transaction-processing systems and network infrastructure are critical to our
reputation and our ability to attract and retain customers. We are committed to
providing exceptional customer care. Our revenues depend on the
7
<PAGE>
number of members we attract and our ability to service their needs in the
manner they expect. Their level of satisfaction is directly proportional to our
success. With that in mind, we place an emphasis on utilizing the latest
technology.
- NETWORK INFRASTRUCTURE: Our server and network architecture
are designed to do the following:
a. Provide high-speed, reliable access 24 hours
a day, 365 days a year
b. Accommodate several thousand simultaneous
visitors concurrently
c. Allow for rapid scaling of hardware and
bandwidth to accommodate rapid growth
and changes in site traffic.
- SYSTEMS: We are currently upgrading our site management,
search, customer interaction, transaction-processing and
fulfillment services and systems with the top market
performers in those categories. Our internal creative group
and software engineers will enhance these advanced systems.
Our enhanced information systems consist of the following four
integrated systems which will be supported by a unified
relational database:
- e-commerce store
- brick and mortar stores
- call center / customer care system
- accounting / general ledger / merchandise planning system.
Our e-commerce systems have advanced data mining capabilities that
allow us to provide up-sales and cross sales of products to our customers. Our
e-commerce store system contains information about all items in our on-line
stores, including retail price, cost, color and size characteristics, group
information and all manufacturer related information. Once the manufacturers
offer their products to us, the data sets are published (downloaded) to our
site.
Our main sales venue is our Internet store, which is designed to give
customers a convenient and safe environment to conduct their purchases. All
transactions are secured by using Secure Sockets Layer ("SSL") encryption that
protects the information as it is transmitted between the customer/browser and
our Internet site.
Our ordering system is designed to retrieve ordering information from
the selling system, validate credit cards, process orders, create and issue
purchase orders to our distribution points and handle all post-sale marketing
efforts. The ordering system software is designed to give both us and our
customers' instant access to all of the member's individual information, to
automatically update all changes to a member's order and inform the member of
order status by automated e-mail communications. We can access the customer
profile information to search and analyze the member's demographics and buying
patterns in order to suggest new products and offers that may appeal to the
member. The system also rapidly communicates with the distribution point
facilities
8
<PAGE>
for updates on order shipments and stock status positions.
- WEBSITe: Our site is located at www.zebramart.com. With a
simple graphical interface and sophisticated functionality,
our website is designed to be quick and easy to use. Our home
page contains direct links, both in graphic and text formats,
to shopping, special events, coming soon, zebrapoints, join
and members lounge. By clicking on a shopping category, users
are presented with detailed product information, and in most
cases, a quality photo image of the product. Our home page
also serves as a familiar base to which shoppers can return to
find key destinations within the store.
SECURITY GUARANTEE
The issue of security is one of the largest barriers to a potential
customer's willingness to conduct commerce over the Internet. Many computer
users have concerns about the safety of their personal information, such as
credit card account numbers, social security numbers and bank account
information. Concerns about the security of the Internet include the
authenticity of the user, verification and certification methods of who these
users are, and privacy protection for access to private information transmitted
over the Internet. However, recent advances in this area have greatly reduced
the possibility of such unauthorized access or use. We employ a number of
security measures to ensure safe, secure electronic commerce for our customers.
Additionally, we provide a money-back security guarantee to protect members
against fraud. If a member's credit card number is stolen while making a
purchase, we will reimburse all of the charges not covered by his or her credit
card issuer. For shoppers making online credit card transactions, we use Secure
Socket Layer ("SSL").
EMPLOYEE RETENTION STRATEGIES
We operate in a competitive environment for qualified employees. In
addition to competitive salaries, we offer medical and dental insurance, life
insurance, and disability insurance coverage. We also have a 401-K savings plan.
Every full time employee is eligible to participate in our stock option program.
The size of stock option grants typically are correlated to either a
percentage of the participating employee's salary or the achievement of
pre-established performance goals.
COMPETITION
It is our intent to provide more to our customers than our competitors
are able to provide in today's e-commerce space. We intend to provide our
members with an experience that surpasses what is available among those sites
currently involved in the retail marketplace. We believe our combination of
customer service, content and information exceeds what is available from our
competitors at this time.
However, we keep a close watch on these sites, since their strategy of marketing
to an upscale
9
<PAGE>
demographic audience has things in common with ours. Direct or indirect
competitors include:
RedEnvelope.com
Luxuryfinder.com
Bocado.com
Ashford.com
Send.com
Camdens.com
Additionally, we also watch successful brick-and-mortal retail operations to
learn from them. These include:
Neiman-Marcus
Gumps
Horchow
Tiffany & Co.
BUSINESS PARTNERS AND VENDORS
Marketing and Customer Acquisition
US Web/CKS
Road Runner
Promotions.com
Motley Fool
ebrick.com
Sweepclub.com
Technology Partners and Vendors
Blue Martini
Sun Microsystems
Oracle
SAP
FINANCIAL RESULTS
We launched our initial web site on December 1, 1999. This "soft
launch" has been accompanied by an in-depth analysis of products, web site
presentation, underlying web site software, branding efforts and fulfillment
strategy.
Consequently, we have postponed building the full business development
and marketing teams. We have also re-focused our web site presentation and
marketing efforts on our demographic target. More resources have been allocated
to the product area and we are moving from a direct ship approach to having our
own fulfillment center. We believe a fulfillment center
10
<PAGE>
is mandatory in order to achieve high customer satisfaction. As a result of
our soft launch strategy, product and membership revenue has not been
significant. They are not expected to materially increase prior to the summer
of 2000 at which time we expect our business development team to be fully
staffed and our national branding effort to have begun. We believe our
deliberate approach to measured growth should result in attracting and
retaining higher caliber members.
For the first 6 weeks of business, we averaged 1,100 unique visitors
per week. With no advertising and limited business partners, unique visitors for
the most recent 6 weeks have climbed to an average of 6,200. Visitors now spend
an average of 7 minutes on our web site, which is an increase of 25% from our
inception. There can be no assurances that increased page views and time on the
site will translate into revenue.
PROPERTY
We maintain our headquarters in leased offices at 10 Piedmont
Center, Suite 900, Atlanta, GA 30305 under a lease that runs through July 31,
2004. Our phone number is (404) 467-6955.
Our other property consists of general office equipment, telephone
equipment, computer hardware and software systems and office furniture. Such
other property is periodically updated, replaced or repaired.
LITIGATION
A former employee has filed suit against us for specific performance of
an employment agreement and deliverance of stock options related to employment.
The maximum liability under this action is estimated at no more than $50,000. We
believe that we have adequate defenses to prevail in this matter.
MARKET FOR ZMRT SECURITIES
We have been a non-reporting publicly traded company with certain of
our securities issued pursuant to exemptions from registration under the
Securities Act of 1933 pursuant to Rule 504 of Regulation D and Rule 701 of
the General Rules and Regulations of the Securities and Exchange Commission.
Our common stock is traded on the OTC Bulletin Board operated by Nasdaq under
the symbol ZMRT. We have not filed a registration statement with the
Securities and Exchange Commission and have not been a reporting company
under the Securities Exchange Act of 1934. The Nasdaq Stock Market has
implemented a change in its rules requiring all companies trading securities
on the OTC Bulletin Board to become reporting companies under the Securities
Exchange Act of 1934.
We are required to become a reporting company by the close of business
on March 23, 2000 or no longer be listed on the OTC Bulletin Board. We have
effected the merger with Royal Acquisitions, Inc. and have become a successor
issuer thereto in order to comply with the reporting company requirements for
listing on the OTC Bulletin Board.
11
<PAGE>
The following table represents the average prices for our common stock
through March 6, 2000:
<TABLE>
<CAPTION>
Opening High Low Closing
Price Bid Bid Bid
<S> <C> <C> <C> <C>
Jan., 2000 .7656 .8125 .5000 .6562
Feb., 2000 .6875 2.2969 .4531 1.2500
Mar., 2000 1.2969 1.5469 1.1250 N/A
</TABLE>
MANAGEMENT
The Company's executive officers, directors, key employees and advisors
are as follows:
<TABLE>
<CAPTION>
NAME TITLE AGE
<S> <C> <C>
David W. Kenner CEO, COO and Chairman of the Board 42
Roger E. Haggerty Chief Financial Officer and Director 58
William G. Head Director 40
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
G. Simms Jenkins IV Director of Business Development 26
Angela Ocheltree Director of Merchandising 41
Alex Armstrong Creative Director 31
Suzanne Brownlow Managing Editor 39
Steve Aufderheide Director of Software Development 33
</TABLE>
BIOGRAPHICAL INFORMATION
Biographical information concerning all of the directors and executive
officers is set forth below:
David W. Kenner
CEO, COO and Chairman of the Board
Mr. Kenner has been in the software development and telecommunications
industries for 18 years. He has spent the last 15 years specializing in building
software development organizations and world-class development teams. Mr. Kenner
has successfully built large software development organizations for companies
such as IBM, Checkfree Corporation, and SunTrust Banks. Mr. Kenner has been
widely praised in the software industry for his foresight and vision. Prior to
joining zebramart, Mr. Kenner was the president and founder of CYLABS. CYLABS
was founded in 1994, and quickly became one of the top Internet design and
system integration firms in the Southeast. CYLABS specialized in integrating
interactive web sites with client's in-house systems and call centers. In
1999, Mr. Kenner and his business partners sold CYLABS. Mr. Kenner's
responsibilities at zebramart include coordinating the daily operations of
the company, building an online strategy for the future, and building
relationships with our business partners. Mr. Kenner joined zebramart.com in
October 1999, initially as our Chief Operating Officer.
Roger Haggerty
Executive Vice President and Chief Financial Officer,
Mr. Haggerty is responsible for financial systems, internal controls, financial
reporting, budgeting, forecasting and investor relations. Mr. Haggerty is a
veteran of both public and private sector accounting. He has spent the last 25
years specializing in the specific role of helping growing national and
international companies succeed through the implementation of rigid financial
systems, proper staffing and careful financial and strategic planning. Prior to
this, Mr. Haggerty spent 7 years working for KPMG Peat Marwick. Companies he has
worked as controller, treasurer and CFO for start-ups, technology companies, and
multi-location distribution and manufacturing concerns with up to $500 million
of revenue. Mr. Haggerty was part of the turnaround team at Solomon Bros. LTD in
Nassau, Bahamas in 1994 and 1995. Mr. Haggerty moved to Atlanta in 1996 and
started a CFO services business that has merged with Renaissance Partners, LLC.
On January 31, 2000, Mr. Haggerty joined zebramart.com on a permanent basis.
13
<PAGE>
William G. Head
Director
Mr. Head is the founder and a director of zebramart.com. A lifelong
entrepreneur, Mr. Head has significant experience in merchandising, marketing
and retailing. He pioneered coupon calendar programs for RJR-Nabisco and
Domino's Pizza, and he holds several patents, including one for manufacturing a
biodegradable replacement for polystyrene. He previously served as the President
and Founder of Oops, a retail chain specializing in off-price goods manufactured
for upscale brands such as Brooks Brothers, Lands' End, J. Crew and L.L. Bean.
He also co-founded Links Direct, Inc. a mail-order catalog specializing in golf
products, apparel, equipment and lifestyle items.
G. Simms Jenkins
Director of Business Development
Mr. Jenkins implements alliances with strategic partners in a variety of
different industries. These include e-commerce, internet service providers,
large media organizations and financial services companies. Before joining
zebramart.com, Mr. Jenkins served as Marketing Director for the Georgia State
Games Commission, the state sports marketing agency. In this capacity, he was
responsible for research, sponsorship sales and account management for clients
such as CITGO Petroleum, Days Inn and Powertel. He also served as an Account
Executive for Lang and Associates, a sports marketing and consulting firm, on
the Coca-Cola account. Mr. Jenkins also worked for the Atlanta Committee on the
Olympic Games (ACOG) during the Centennial Olympic Games.
Angela Ocheltree
Director of Merchandising
Ms. Ocheltree brings years of experience searching the world for unusual and
rare finds. She has spent much of her career creating unique and memorable
experiences for customers, with clients such as Discovery Channel, Reebok and
GNC Live Well. Ms. Ocheltree brings a national scope to zebramart.com and
focuses her experience on finding exceptional merchandise for the Internet's
premier luxury shopping club.
Alex Armstrong
Creative Director
Mr. Armstrong brings a wealth of experience to his position. Prior to joining
zebramart.com, Mr. Armstrong served as Senior Web Developer/Technical Lead at
SunTrust Bank. Previously, he was the Co-owner/Lead Developer of the Web startup
company Interlinx, which built the initial interface to the web world for
Century Telephone, the 8th largest local telephone provider and 10th largest
cellular provider in the country. His goals at zebramart.com include supporting
the market direction of the company. Mr. Armstrong heads up the design team and
oversees all creative aspects of the zebramart.com site.
Suzanne Brownlow
Managing Editor
14
<PAGE>
Ms. Brownlow is responsible for developing and implementing the creative voice
of the site. She has many years of experience in the publishing industry as a
writer and editor, including seven years on the editorial staff of the
WINSTON-SALEM JOURNAL, an award-winning daily newspaper. Her work has been
featured in a variety of publications, and she has received awards for poetry,
editorials and feature writing. Ms. Brownlow works with the design team to
ensure compelling and interesting literary content for the Internet's premier
luxury shopping club.
Steve Aufderheide
Director of Software Development
Mr. Aufderheide has many years' experience in the computer industry. Prior to
joining zebramart.com, Mr. Aufderheide was the Senior Development Manager with a
Georgia-based consulting firm. There he headed major development efforts for
many of the State Government offices for the state of Georgia. Previously, Mr.
Aufderheide was the Director of IS/IT for one of the top money management firms
in the country. There he was instrumental in the integration of internal systems
with various trading platforms and the many stock exchanges.
RELATED TRANSACTIONS
We paid the Avenel Financial Group ("Avenel") a ten (10%) percent fee
for the equity funds raised by Avenel for us in 1999. The fee paid to Avenel was
$154,636.
ITEM 5. FINANCIAL STATEMENTS
We are not filing any financial statements with this Form 8-K. We
will file financial statements as part of an amendment to this Form 8-K no
later than sixty (60) days from the date of this filing.
<TABLE>
EXHIBITS
<S> <C>
99.1 List of Cautionary Statements and Risk Factors
99.2 Certificate of Merger, dated March 1, 2000, effective March 6, 2000,
merging zebramart.com, inc. into Royal Acquisitions, Inc.
(incorporated by reference to the Registrant's Form 8-K filed
March 6, 2000)
</TABLE>
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
zebramart.com, inc.
Date: March 21, 2000 By: /s/ Roger E. Haggerty
--------------------------------
Roger E. Haggerty
(Principal Financial and
Accounting Officer)
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
99.1 List of Cautionary Statements and Risk Factors
99.2 Certificate of Merger, dated March 1, 2000,
effective March 6, 2000, merging zebramart.com,
inc. and Royal Acquisitions, Inc. (incorporated
by reference to the Registrant's Form 8-K filed
March 6, 2000).
</TABLE>
17
<PAGE>
Exhibit 99.1
CAUTIONARY STATEMENTS AND RISK FACTORS
The following discussion of aspects of the Company's business also
constitutes a cautionary statement for purposes of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995.
The Company wishes to caution readers that the following important
factors, among others, in some cases have affected, and in the future could
affect, the Company's actual results and could cause the Company's actual
quarterly and annual consolidated results for 2000, and beyond, to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company.
In addition to the investment considerations listed herein, the effect
of economic conditions, product demand, competitive products, and other risks
should be considered carefully in evaluating the Company and our business. This
report contains certain forward-looking statements. The Company wants to advise
readers that actual results may differ substantially from such forward looking
statements.
Forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from those expressed in or implied by
the statements, including, but not limited to, the following: the ability of the
Company to meet our cash and working capital needs, the ability of the Company
to successfully market our products, and other risks unforeseen by us at the
time.
WE HAVE A LIMITED OPERATING HISTORY, FEW TANGIBLE ASSETS, LIMITED REVENUES, AN
ACCUMULATED DEFICIT AND ANTICIPATE FUTURE LOSSES
Our business is still in the early stages of development. Accordingly,
we have a limited operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in the early
stages of development, particularly companies in new and rapidly evolving
markets such as on-line commerce. To address these risks, we must, among other
things:
continue to expand our manufacturer channels and buyer resources
manage pricing risks
maintain our customer base and attract significant numbers of
new customers
respond to competitive developments
implement and successfully execute our business and marketing
strategy
continue to develop and upgrade our technologies and
retailing services and
commercialize products and services incorporating such technologies
continue to develop and upgrade our transaction-processing systems
improve our website
provide superior customer service and order fulfillment
18
<PAGE>
and attract, retain and motivate qualified personnel
There can be no assurance that we will be successful in addressing such
risks, and the failure to do so could have a material adverse effect on the
Company. Since inception of our predecessor LLC, we have incurred losses, and as
of December 31, 1998 and December 31, 1999, respectively, we had an accumulated
deficit of $224,754 and $2,104,971, respectively. Our ability to achieve
profitability depends primarily upon our ability to generate and sustain
substantially increased revenue levels. Our current and future expense levels
are based largely on our planned operations and estimates of future revenues.
Sales and operating results generally depend on the volume of, timing of and
ability to fulfill orders received, which are difficult to forecast.
Accordingly, any significant shortfall in revenues in relation to our planned
expenditures would have an adverse effect upon the Company.
WE OPERATE IN A HIGHLY COMPETITIVE MARKET
The on-line commerce market is new, rapidly evolving and intensely
competitive. We expect competition in the on-line commerce market to intensify
even more in the future. Barriers to entry are minimal, and current and new
competitors can launch new sites at a relatively low cost. In addition, the
retail shopping industry is intensely competitive. We compete with a variety of
other companies, including traditional stores, non-traditional retailers, mail
order catalogs and other on-line retailers. Competitive pressures created by any
one of our competitors, or by our competitors collectively, could cause a
material adverse effect on us. We believe that the principal competitive factors
in our market are:
company name/brand recognition
selection
brand recognition of our products
personalized services convenience
price
accessibility
customer service
quality of search tools
quality of site content
reliability
speed and ease of order fulfillment
Many of our current and potential competitors have longer operating
histories, larger customer bases, greater company name/brand recognition and
significantly greater financial, marketing and other resources than us. In
addition, on-line retailers may be acquired by, receive investments from or
enter into other commercial relationships with larger, well-established and
well-financed companies as use of the Internet and other on-line based services
increases. Certain of our competitors may be able to secure merchandise from
manufacturers on more favorable terms, devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing
19
<PAGE>
or inventory availability policies and devote substantially more resources to
website and systems development than us. Increased competition may result in
reduced operating margins, loss of market share and a diminished brand
franchise. There can be no assurance that we will be able to compete
successfully against current and future competitors. Further, as a strategic
response to changes in the competitive environment, we may from time to time
make certain pricing, service or marketing decisions or acquisitions that could
have a material adverse effect on us. New technologies and the expansion of
existing technologies also may increase the competitive pressures on us.
Additionally, we may face periods of intense price and marketing competition in
the future.
WE ARE DEPENDENT ON STRATEGIC ALLIANCES TO HELP MARKET OUR BUSINESS
We currently rely on and can be expected in the foreseeable future to
rely on certain strategic alliances to attract shoppers to purchase our
products. Our ability to generate revenues from on-line commerce depends, among
other things, upon the increased traffic, purchases, advertising and
sponsorships that we expect to generate through our strategic alliances with
these and other companies. We are seeking to enter into long-term marketing
agreements with several large Internet search engines, guides and on-line
communities, as well as other strategic alliances, there also can be no
assurance that additional third-party alliances will be available to us on
acceptable commercial terms. Our inability to enter into new strategic alliances
or to maintain our existing strategic alliances could have a material adverse
effect on the Company.
WE RELY ON CERTAIN SUPPLIERS
Our relationships with merchandise manufacturers are important to our
business. Suppliers for our on-line store include manufacturers and a limited
number of distributors. Since we do not currently carry inventory, we rely on
rapid fulfillment of orders by our suppliers. There can be no assurance that our
current suppliers will continue to sell merchandise to us on current terms or
that we will be able to establish new or extend current supplier relationships
to ensure acquisition of merchandise in a timely and efficient manner and on
acceptable commercial terms. We rely on our suppliers to process and ship
merchandise directly to customers. We have limited control over the shipping
procedures of our suppliers, and shipments by these suppliers have at times been
subject to delays. Although most of the merchandise we sell carries a warranty
supplied by the manufacturer, we also provide a 30-day money back guarantee. If
the quality of service provided by such suppliers falls below a satisfactory
standard or if our level of returns exceeds our expectations, we will be
materially adversely affected.
OUR CONTINUED SUCCESS WILL BE DEPENDENT, IN PART, ON OUR ABILITY TO ANTICIPATE
AND RESPOND TO MERCHANDISE TRENDS.
Our sales are dependent, in part, on the popularity of our merchandise.
Should consumer demand for the products of any key vendors decline, our
operating results could be adversely affected.
20
<PAGE>
Our success depends, in part, on our ability to anticipate and respond
to changing merchandise trends, and consumer demands in a timely manner. For
example, if we miscalculate either the market for the merchandise offered on our
site or the purchasing habits of our customers, we may not generate the volume
of sales that we anticipate. Due to consumer ability to readily compare prices
between on-line retailers, the manufacturers of certain premium brand products
have chosen not to market these products over the Internet. Should we be unable
to obtain a variety of premium products or be limited in our ability to utilize
such products in our zebrapoints program, our business could be adversely
affected.
WE WILL NEED SIGNIFICANT ADDITIONAL FINANCING
In order to expand and develop our current business, we will need to
make significant capital expenditures. We expect to fund these expenditures
through further debt or equity financing and, to a lesser extent, through
internally generated funds. We cannot assure you, however, that we will succeed
in raising sufficient debt or equity financing on acceptable terms or in
generating sufficient funds. In addition, we expect to require additional funds
to sustain and expand our sales and marketing activities and our strategic
alliances, particularly if there is a shift in the type of Internet services
that are developed and ultimately receive customer acceptance. Adequate funds
for these and other purposes on terms acceptable to the us, whether through
additional equity financing, debt financing or other sources, may not be
available when needed or may result in significant dilution to existing
stockholders. Furthermore, our lack of tangible assets to pledge could prevent
us from establishing a source for additional financing. There is no assurance
that such financing will be available in amounts or on terms acceptable to us.
WE MAY BE UNABLE TO MANAGE OUR GROWTH
To manage the expected growth of our operations and personnel, we will
be required to improve existing and implement new transaction-processing,
operational and financial systems, procedures and controls, and to expand, train
and manage our already growing employee base. While we continually evaluate the
adequacy of our systems and controls, there can be no assurance that our
accounting systems, purchasing systems, internal controls and management
information systems will continue to be adequate or that we will be able to
upgrade or reconfigure our systems and controls to respond to our growth. Should
sales continue to increase, we will have to find and train even more personnel
to staff our store operations and provide back office support. There is no
assurance that we will be able to hire or train the personnel we will need to
meet increased demand should it develop. Further, we will be required to
maintain and expand our relationships with various merchandise manufacturers,
distributors, Internet and other on-line service providers and other third
parties necessary to our business.
WE ARE DEPENDENT ON KEY PERSONNEL AND WILL NEED TO HIRE ADDITIONAL PERSONNEL
Our performance is substantially dependent on the continued services
and on the performance of our senior management and other key personnel. We have
not sought nor do we have in force
21
<PAGE>
"key man" life insurance on any employees. Our performance also depends on our
ability to retain and motivate our officers and key employees. Competition for
such personnel is intense. The loss of the services of any of our executive
officers or other key employees could have a material adverse effect on the
Company.
OUR OPERATING RESULTS ARE AFFECTED BY GENERAL ECONOMIC CONDITIONS AND ARE
SUBJECT TO QUARTERLY AND SEASONAL FLUCTUATIONS.
We expect to experience significant fluctuations in our future
quarterly operating results due to a variety of factors, many of which are
outside of our control. Factors that may adversely affect our quarterly
operating results include, without limitation,
our ability to retain existing customers, attract new
customers at a steady rate and maintain customer satisfaction
the mix of products we will sell and offer for sale
the announcement or introduction of new sites, services and
products by either us or our competitors
price competition in the industry
the level of use of the Internet and on-line services and rate
of consumer
acceptance of the Internet and other on-line services for the
purchase of consumer products such as those offered by us
our ability to upgrade and develop our systems and
infrastructure and attract new personnel in a timely and
effective manner
the level of traffic on our website
technical difficulties, system downtime or Internet blackouts
or brownouts
the amount and timing of operating costs and capital
expenditures relating to expansion of our business, operations
and infrastructure
the implementation of strategic alliances
the level of merchandise returns we experience
governmental regulation
general economic conditions and economic conditions specific
to the Internet and
22
<PAGE>
on-line commerce
We expect to experience seasonality in our business, reflecting a
combination of seasonal fluctuations in Internet usage and traditional retail
seasonality patterns. Internet usage and the rate of Internet growth may be
expected to decline during the summer. Further, sales in the traditional retail
industry are significantly higher in the fourth calendar quarter of each year
than in the preceding three quarters.
WE MAY BECOME SUBJECT TO SALES, USE AND OTHER TAXES
Except in certain limited cases, we do not currently collect sales, use
or other similar taxes for shipments of goods into states other than Georgia.
However, the Federal government or one or more states may seek to impose sales
tax collection obligations on out-of-state companies, which engage in on-line
commerce. Additionally, any new operation in states outside of Georgia could
subject shipments into such states to state sales taxes under current or future
laws.
WE ARE DEPENDENT ON THE CONTINUED GROWTH OF ON-LINE COMMERCE.
Our future revenues and future profits are substantially dependent upon
the widespread acceptance and use of the Internet and on-line services as an
effective medium of commerce by consumers. Rapid growth in the use of and
interest in the Internet is a recent phenomenon, and demand and market
acceptance for recently introduced services and products over the Internet are
subject to a high level of uncertainty. We rely on consumers who have
historically used traditional means of commerce to purchase merchandise. For us
to be successful, these consumers must accept and utilize new ways of conducting
business and exchanging information. Moreover, critical issues concerning the
commercial use of the Internet, such as ease of access, security, reliability,
cost and quality of service, remain unresolved and may affect the growth of
Internet use or the attractiveness of conducting commerce on-line. In addition,
the Internet and on-line services may not be accepted as a viable commercial
marketplace by many consumers for a number of reasons, including potentially
inadequate development of the necessary network infrastructure or delayed
development of enabling technologies and performance improvements. To the extent
that the Internet and on-line services continue to experience significant
growth, there can be no assurance that the infrastructure of the Internet and
on-line services will prove adequate to support increased user demands. In
addition, the Internet or on-line services could lose their viability or
attractiveness due to delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet or on-line service
activity or changes in tax policy. Changes in or insufficient availability of
telecommunications services to support the Internet or on-line services also
could result in slower response times and adversely affect usage of the Internet
and on-line services generally and us in particular.
WE ARE SUBJECT TO POSSIBLE ON-LINE COMMERCE SECURITY RISKS
We rely on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure
transmission of confidential information,
23
<PAGE>
such as customer credit card numbers. Future advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
could possibly result in a compromise or breach of the algorithms we use to
protect customer transaction data. A party who is able to circumvent our
security measures could misappropriate proprietary information or cause
interruptions in our operations. We may be required to expend significant
capital and other resources in the future to protect against such security
breaches or to alleviate problems caused by such breaches. To the extent our
activities or the activities of third-party contractors involve the storage and
transmission of proprietary information, such as credit card numbers, security
breaches could damage our reputation and expose us to a risk of loss or
litigation or other possible liability which could have a material adverse
effect on us.
WE MAY BE SUBJECT TO GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES
We are not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, and laws or regulations directly applicable to the access of on-line
commerce. However, due to the increasing popularity and use of the Internet and
other on-line services, it is possible that a number of laws and regulations may
be adopted with respect to the Internet or other on-line services covering
issues such as user privacy, pricing, content, copyrights, distribution, and
characteristics and quality of products and services. Furthermore, the growth
and development of the market for on-line commerce may prompt more stringent
consumer protection laws that may impose additional burdens on those companies
conducting business on-line. The adoption of any additional laws or regulations
may decrease the growth of the Internet or other on-line services, which could,
in turn, decrease the demand for our products and services and increase our cost
of doing business. Moreover, the applicability to the Internet and other on-line
services of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes and personal privacy is uncertain and
may take years to resolve.
WE ARE SUBJECT TO THE RISK OF CAPACITY CONSTRAINTS AND RELY ON
TRANSACTION-PROCESSING SYSTEMS DEVELOPED BY THIRD PARTIES
The satisfactory performance, reliability and availability of our store
on the Internet, including our transaction-processing systems and network
infrastructure are critical to our reputation and our ability to attract and
retain customers and maintain adequate customer service levels. Our revenues
depend on the number of visitors who shop at our store on the Internet and the
volume of orders we fulfill. Any system interruption that results in the
unavailability of our store on the Internet or reduced order fulfillment
performance would reduce the volume of goods sold and the attractiveness of our
product offerings. As our sales volume grows, we can be expected to need to make
significant upgrades to the capacity of our Internet store in order to handle
thousands of simultaneous shoppers. Our inability to procure additional software
and hardware or to further develop and upgrade our existing technology,
transaction-processing systems or network infrastructure to accommodate
increased traffic on our Internet site or increased sales volume through our
transaction-processing systems may cause unanticipated system disruptions,
slower response times, degradation in levels of customer service and impaired
quality and speed of order
24
<PAGE>
fulfillment.
WE ARE SUBJECT TO THE RISK OF SYSTEM FAILURES
Our ability to successfully receive and fulfill orders and provide
high-quality customer service largely depends on the efficient and uninterrupted
operation of our computer and communications hardware systems. Our systems and
operations may be vulnerable to damage or interruption from fire, flood, power
loss, telecommunications failure, break-ins, earthquake and similar events. We
presently have very limited redundant systems. We also do not have a formal
disaster recovery plan and do not carry any business interruption insurance.
Despite the implementation of network security measures, our servers are
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptions, which could lead to interruptions, delays, loss of data or the
inability to accept and fulfill customer orders.
OUR SUCCESS WILL DEPEND ON OUR ABILITY TO ADAPT TO RAPID TECHNOLOGICAL CHANGE
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our on-line store. The Internet
and the on-line commerce industry are characterized by rapid technological
change, changes in user and customer requirements and preferences, frequent new
product and service introductions embodying new technologies and the emergence
of new industry standards and practices that could render our existing Internet
store and our proprietary technology and systems obsolete. Accordingly, our
success will depend, in part, on our ability to license leading technologies
necessary or useful in our business, enhance our existing services, develop new
services and technology that address the increasingly sophisticated and varied
needs of our prospective customers, and respond to technological advances and
emerging industry standards and practices on a cost-effective and timely basis.
The development of a store on the Internet and other proprietary technology
entails significant technical and business risks. There can be no assurance that
we will be able to successfully use new technologies effectively or adapt our
site, proprietary technology and transaction-processing systems to customer
requirements or emerging industry standards.
THE COMPANY IS CONTROLLED BY ITS PRINCIPAL STOCKHOLDERS
The current principal stockholders of the Company hold substantial
amounts of the Company's common stock. Mr. William G. Head, a director, owns
approximately 38.66% of the Company's outstanding common stock. Under Nevada
law, owners of a majority of the outstanding common stock are able to elect all
of the Company's directors, and approve significant corporate transactions
without approval or consent of other stockholders. Accordingly, Mr. Head along
with the other principal stockholders (listed in the Beneficial Ownership table)
will continue to have the ability to control the Company.
WE WILL HAVE SUBSTANTIAL SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE RESALE
The sale or availability for sale of substantial amounts of our common
stock could adversely
25
<PAGE>
affect any market for the common stock and the price for such stock, and could
impair our ability to raise additional capital through the sale of our
securities.
In addition to the number of shares of common stock currently
outstanding, which may be available for future resale, the existence of a
substantial number of derivative securities, such as options or warrants, may
also adversely affect any market for the common stock, the price for such stock,
and could impair the Company's ability to raise additional capital through the
sale of our equity securities. Additionally, we expect to adopt equity based
incentive compensation plans for our employees.
THERE IS A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK AND THE TRADING PRICES FOR
OUR COMMON STOCK MAY BE VOLATILE.
ZMRT's common stock is traded on the NASDAQ Over-the-Counter Bulletin
Board ("OTCBB") under the symbol ZMRT.
ZMRT has not filed a registration statement with the Securities and
Exchange Commission and has not been a reporting company under the Securities
Exchange Act of 1934. The Nasdaq Stock Market has implemented a change in its
rules requiring all companies trading securities on the OTCBB to be registered
as reporting companies. The Company is required to become a reporting company by
the close of business on March 23, 2000 or no longer be listed on the OTCBB.
ZMRT has effected the merger with Royal Acquisitions, Inc. and has become a
successor issuer thereto in order to comply with the reporting company
requirements implemented by the Nasdaq Stock Market. No assurance can be given
that an active trading market in the Company's securities will be sustained if
it is able to retain its listed status.
PENNY STOCK REGULATION
The Company's common stock may be deemed a penny stock. Penny stocks
generally are equity securities with a price of less than $5.00 per share other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. The Company's securities may be subject to "penny stock rules" that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may
26
<PAGE>
restrict the ability of broker-dealers to sell the Company's securities. The
foregoing required penny stock restrictions will not apply to the Company's
securities if such securities maintain a market price of $5.00 or greater. There
can be no assurance that the price of the Company's securities will reach or
maintain such a level.
27
