<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
AMENDMENT 1
GENERAL FORM FOR REGISTRATION OF SECURITIES PURSUANT TO
SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
WALL STREET WEB, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 23-3589086
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
71 Irvington Westwood, New Jersey 07675
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 594-0555
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Securities to be registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
<S> <C>
Common Stock
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
One hundred million (100,000,000) shares of common stock
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(Title of class)
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(Title of class)
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WALL STREET WEB, INC.
FORM 10 SB
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I
Item 1. Description of Business 1
Item 2. Managements Discussion and Analysis or Plan of Operations 4
Item 3. Description of Property 5
Item 4. Security Ownership of Certain Beneficial Owners and Management 5
Item 5. Directors, Executive Officers, Promoters, and Control Persons 5
Item 6. Executive Compensation 7
Item 7. Certain Relationships and Related Transactions 7
Item 8. Description of Securities 7
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters 10
Item 2. Legal Proceedings 11
Item 3. Changes In and Disagreements With Accountants 11
Item 4 Recent Sales of Unregistered Securities 11
Item 5. Indemnification of Directors and Officers 12
PART F/S FINANCIAL STATEMENTS
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
</TABLE>
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PART I
ITEM 1 - DESCRIPTION OF BUSINESS
Wall Street Web, Inc. (the "Company") and its predecessor have been providing
"rumor" information covering the day-to-day activities of "Wall Street" since
December 1997. It operated as Thomas Melillo DBA Stockrumors.com, an
unincorporated business, from December 1997 until April 1998 when it was
incorporated in New Jersey as Wall Street Web, Inc. The Company gathers and
compiles information from contacts at financial institutions and releases such
information to subscribers (generally, financial and stock market professionals)
through its web sites, www.stockrumors.com and www.brokercall.com, on a timely
basis. The Stockrumors.com web site, which is continuously updated, provides the
investing public with information concerning rumors that move stocks and the
stock market. The Brokercall.com web site allows the investing public to view
analyst upgrades and downgrades on a particular company. In addition to revenues
from subscriptions, the Company generates revenues from advertising banners and
sponsorships on its web sites.
MISSION STATEMENT
To provide active traders and investors with access to financial information,
including rumor information from a wide variety of sources. Allowing investors
of all ages and backgrounds to enhance their knowledge of what is being said on
Wall Street via the Internet, 900 numbers, email, fax and PCS pager services.
In order to achieve its mission the Company commits to the following objectives:
1. Creating and maintaining the finest financial rumors and news network based
upon credible sources that utilizes the emerging technologies of the Internet.
2. Providing attractive, interactive, and informative value-added content on
stockrumors.com and related online properties (brokercall.com) to increase user
retention.
3. Accumulating data and market research information to insure the accuracy of
advertisements and the correct placement of advertising dollars on Stockrumors.
4. Establishing and developing strong business development partnerships with
some of the top web portals to maximize the membership base and traffic volume.
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4. Establishing and developing strong business development partnerships
with some of the top web portals to maximize the membership base and
traffic volume.
INDUSTRY ANALYSIS
The management of Wall Street Web, Inc. believes that the company is positioned
in an industry that is a blending of the online brokerage industry because many
of Wall Street Web's customers are believed to be active online traders and the
financial news industry where the majority of the firms public competitors have
originated.
Since its inception the Internet has seen a very high rate of annual growth.
Robertson Stephens Securities in a research report titled "eINVESTING" published
on January 28, 2000 estimated that in early 1997 online brokerage accounts
comprised only 1.5% of all brokerage accounts. By the time their report was
published, they estimated the number of online brokerage accounts had grown to
10 million, approximately 15% of the total number of brokerage accounts. In that
same report, Robertson Stephens expects the number of online brokerage accounts
to increase to 14 million by the end of 2001 and to 30 million by the end of
2003. This report clearly indicates that the industry's potential customer base
is expected to continue to grow over the next several years.
Competition within this industry is very diverse. The majority of the companies
that compete in this industry are privately held organizations that primarily
produce newsletters with highly specific content directed towards very targeted
markets. As a result, while financial information on these privately held
companies is very sparse, it is believed that most of them are small
organizations with limited staff and revenue. Others, such as The Motely Fool
have grown into larger more successful organizations. The management of the
Company believes that its industry contains four publicly traded competitors,
The Street.com, CBS Marketwatch, JAG notes.com, and Wall Street Strategies, Inc.
A review of their public filings with the Securities and Exchange Commission
indicates that all four companies experienced an increase in sales revenue
during their latest fiscal years.
As a result of the available information, the Company believes that there will
continue to be an increasing demand for the products and services provided by
the company.
CUSTOMER PROFILE
Like any traditional media outlet, the Company serves two "customer types": its
subscribers and its advertisers. Subscribers pay a recurring membership fee
which provides the user with ever changing information and formats. The Company
will continue to deliver products and services to retain and enhance the member
base. Potential users will become familiar with Stockrumors through aggressive
affiliate marketing and advertising.
The Company expects that as it increases its own advertising spending and its
customer base grows, that this will result in an increased awareness of the
Company by its potential (subscriber) customer base and those seeking to reach
those customers. The Company believes that other advertisers seeking to reach
the demographics provided by the customers will increasingly want their products
advertised on the Company's web sites.
The Company believes that this increased presence among advertisers and growth
in subscription customers can be achieved over a period of one (1) to six (6)
months dependent on whether the company raises additional capital or if the
Company funds this expansion through internally generated funds.
ADVERTISING
The Company's short-term strategy is to work with advertisers and advertising
agencies to move a portion of their existing advertising to the Company. Long
term objectives include working with advertisers as they plan their annual
advertising budget to increase spending levels by Client companies on websites
maintained by the Company. Other advertisers include Trendtrader, IMF Corp.,
Onlinetraders.com and Mostactive.com.
The Company will also utilize other advertising resources such as banners, press
releases, and major financial outlets and news media and also expand co-branded
ventures with allied companies such as Datalink.com. Additional portions of the
budget will be used to create awareness about the membership program and create
brand name recognition of Stockrumors.
STRATEGIC ALLIANCES AND PARTNERS
The Company has developed strategic alliances with Datalink.net,
Companysleuth.com and IPO.com. The Company has a co-branding agreement with
IPO.com under which the Company's subscribers receive news information from
IPO.com at no expense to the Company. Pursuant to an agreement with
Datalink.net, the Company supplies information to Datalink which is marketed to
Datalink's customers and the resulting revenues are divided between the Company
and Datalink. The Company provides rumors to Companysleuth.com which are posted
on their database 24 hours later for which the Company is specifically credited
as the source of the information and for which the Company receives $250 per
month.
OTHER INFORMATION
Presently, no one customer provides more than 10% of the Company's revenues and
foreign sales constitutes less than 1% of the Company's revenues. Stockrumors
has no government contracts or sales from government contracts.
The Company has three full-time employees and one part-time employee.
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RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
Operating Results. The Company's short term results of operations could
be adversely affected by decisions undertaken in response to long term market
opportunities in the future. Various factors, including timing of new product
introductions, changes in customers operations and changes in consumers taste
may have an adverse affect on the Company's results of operations. There can be
no assurance that the Company will experience profitability in the future.
The Company incurred net losses of $101,207 in the fiscal year ending
April 30, 1999, $188,735 in the fiscal year ending April 30, 2000 and $263,372
in the three months ended July 31, 2000. Company management believes that the
Company will continue to incur net losses through at least July 31, 2001.
Dependence on Key Personnel. The Company is dependent on its executive
officers, the loss of any one of whom would have an adverse affect on the
Company. John Ruela and Thomas Melillo were co-founders of the Company. Mr.
Ruela serves as Chief Executive Officer and Mr. Melillo serves as President and
Chief Financial Officer of the Company and currently perform all of the
management duties.
Industry Trends. As described above, the number of on-line investors as
well as on-line stock trading firms has risen dramatically during the last two
years. However, there can be no assurance that the industry will continue to
experience such growth rates in the future. (See "Industry Analysis" above.)
As the number of online investors increase, the potential target
subscribers for the Company also increases. With a larger potential target
audience and increased advertising, the Company would expect to expand its
client base.
Competition.
Current successful web sites include TheStreet.com, Jagnotes.com, and
stockadvisor.com. The Company believes that the management of these web sites
realized that their online membership community desired information on Wall
Street's rumors, but soon discovered that creating a rumor segment takes
significantly more time and effort, and capital then they were willing to spend.
The basis for this belief by management is supported by the fact that some
competitors to the Company are now using Stockrumors as their source of
information, while the rumor portion of their web sites remains a minor portion
of their content. The Company believes that the decision to use Stockrumors.com
as a source of information for the rumors the competitors report indicates that
Stockrumor.com provides desired information and has a high rate of information
flow.
Many of the Company's current and potential competitors have greater
name recognition, financial, technical or marketing resources, and more
extensive customer bases. Much of the information provided by the Company
provide is publicly available and the Company does not own any patented or
otherwise protected technologies that would preclude or inhibit competitors from
entering the markets. While the Company's current target segment of the market
has been largely ignored, future competitors may decide to enter this market
segment and develop or offer services that have significant price, substantive,
creative or other advantages over the services the Company offers.
The Company's information sources are the basis for this advantageous
position. What differentiates one competitor from another is the ability to
generate information, to be "the first with the story". At any one time, stock
quotes, financial information, fundamental ratios and charts are readily
available from many different sources.
Absence of Public Market. Prior to the filing of this Registration
Statement, there has been no public market for the Company's shares of Common
Stock. There can be no assurance that a market will develop or that, if
developed, it would be sustained. Purchasers of the Company's securities may,
therefore, have difficulty in selling such securities should they desire to do
so.
Control By Existing Shareholders. The President and Chief Executive
Officer own approximately 92.6% of the outstanding Common Stock of the Company.
Accordingly, such persons will be able to control the Board of Directors of the
Company and to direct the Company's affairs. Existing Shareholders of the
Company will continue to exercise control over the Company's business and
affairs even following completion of this offering. See Part II - Item 4 --
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" below.
Future Capital Requirements. The Company's operations have generated
recurring losses and it had an accumulated deficit as of July 31, 2000. Such
matters raise substantial doubt about the Company's ability to continue as a
going concern. In order to realize its objectives, the Company will need
additional capital in the future. The Company intends to seek such capital
through public or private debt or equity financings. Any additional equity
financings may be dilutive to shareholders and debt financing, if available, may
involve restrictions on Common Stock dividends. Adequate funds, whether through
financial markets or other arrangements with corporate partners or from other
sources, may not be available when needed, or on terms acceptable to the
Company. Company management does not expect to scale back any of its current
projects if additional capital is not provided but would proceed with expansion
at a slower rate.
Government Regulation. Company management is not currently aware of any
governmental regulation which is targeted directly toward the type of websites
operated by the Company or the type of content distributed by the Company.
There have been continuing discussions of the possibility of sales taxes upon
items sold over the Internet. If such a sales tax was imposed, the tax would be
passed along to the Company's customers which might decrease sales. The Company
would also incur an additional expense to update its software in order to
collect this new sales tax. However, the Company's competitors would also be
impacted by such a tax.
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Dividend Policy. The Company has never paid dividends on its Common
Stock. It is the present policy of the Company to retain earnings and capital
for use in its business. Any payment of cash dividends in the future on the
Common Stock will be dependent on the Company's financial condition, results of
operations, current and anticipated cash requirements, plans for expansion,
restrictions, if any, under debt obligations, as well as other factors that the
Board of Directors deems relevant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion regarding Wall Street Web, Inc. and its business and
operations contains "forward-looking statements". Such statements consist of any
statement other than a recitation of historical fact and can be identified by
the use of forward-looking terminology such as "may", "expect", "anticipate",
"estimate", or "continue" or the negative thereof or other variations thereon or
comparable terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements.
Overview:
Wall Street Web, Inc. (the "Company") provides "rumor" information covering the
day-to-day activities of "Wall Street". The Company gathers and compiles
information from contacts at financial institutions and releases such
information to subscribers through its web sites, www.stockrumors.com and
www.brokercall.com, on a timely basis. The Stockrumors.com web site provides the
investing public with information concerning rumors moving stocks and the stock
market. The Brokercall.com web site allows the investing public to view analyst
upgrades on a particular company. In addition to revenues from subscriptions,
the Company generates revenues from advertising banners and sponsorships on its
web sites.
Results of operations:
Results of operations for the year ended April 30, 2000 were impacted by
limitations on resources, primarily financial, which inhibited advertising
activities. In particular, the Company was in negotiations to raise additional
capital from approximately December 1999 through May 2000. During the year ended
April 30, 2000, the Company raised $78,000 through private placements. In
addition, in May 2000, the Company raised an additional $237,500, net of
expenses, through a private placement.
Revenues:
Revenues are derived from annual, semi-annual, quarterly, and monthly
subscriptions relating to our products on the Stockrumors.com and Brokercall.com
web sites, and from the sale of advertising banners placed on these sites. For
the year ended April 30, 2000, the Company earned advertising revenues of
$27,000 and subscription revenues of $201,000. For the year ended April 30,
1999, all of the Company's revenues were comprised of subscriptions. Revenues
for the year ended April 30, 2000 of $228,000 represents a 48% increase (or
$74,000 increase) over the comparable 1999 period. $47,000 of this increase is
as a result of increased customer retention, while $27,000 of the increase is
due to the sale of banner ads. As of April 30, 2000, the Company had 919
subscribers.
Revenues decreased from $61,000 for the three months ended July 31, 1999 to
$49,000 for the three months ended July 31, 2000 as a result of a decision to
reduce the monthly subscription rates as well as a decrease in the number of
subscribers. As of July 31, 2000 and 1999, the Company had 695 and 961
subscribers, respectively. The Company earned advertising revenues of $3,000
during the three months ended July 31, 2000. No advertising revenues were earned
in the three month period ended July 31, 1999.
During 2000 and 1999, the Company charged its subscribers a monthly subscription
rate of $20. As a result of competitive pricing pressures, in June 2000, the
Company lowered its monthly subscription rate to $9.95. The lowering of the
monthly subscription rate could have a negative impact on revenues,
profitability, and cash flow unless the increase in the number of subscribers is
able to offset the lower monthly subscription rate.
Cost of revenues:
Cost of revenues includes the cost of transmitting information over the
telephone and fax lines, on-line service charges for our web site, and costs in
connection with the maintenance of the web sites. Cost of revenues increased
from $17,000 in the year ended April 30, 1999 to $32,000 in the year ended April
30, 2000. This increase is attributable to increased web site maintenance costs
and the increase in fax service expense arising from the increase in the number
of subscribers in 2000. Due to increased traffic on our web site, we have
upgraded our systems to achieve greater reliability, and in 2000 have entered
into a lease for a server dedicated solely to the Company. During 1999, our
server lease agreement provided for server space that was shared with other
companies.
Cost of revenues decreased from $8,000 for the three months ended July 31, 1999
to $4,000 for the three months ended July 31, 2000. This decrease is
attributable to various one time web site maintenance costs incurred during the
three months ended July 31, 1999.
Selling expenses:
Selling expenses consist of commissions, and advertising and other promotional
expenses. For the year ended April 30, 2000, selling expenses decreased by
$6,900. This decrease is due to a $19,600 decrease in advertising expense (fewer
advertisements placed in financial publications), offset by an increase of
$12,700 in sales commissions paid to an independent contractor on the sale of
banner ads placed on the Company's web site. The independent contractor received
commissions in an amount equal to 50% of his banner ad sales.
Selling expenses decreased from $16,000 for the three months ended July 31, 1999
to $8,000 for the three months ended July 31, 2000 due to a reduction in the
number of advertisements that were placed in financial publications.
General and administrative expenses:
General and administrative expenses consist primarily of compensation and
related expenses, occupancy costs, professional fees, and other office expenses.
General and administrative expenses aggregated $340,000 and $187,000 for the
years ended April 30, 2000 and 1999, respectively, of which $131,000 and
$117,000, respectively, represents noncash operating expenses attributable to
compensation payable to the Company's principal stockholders that was accrued
and subsequently waived. The increase of approximately $153,000 in the year
ended April 30, 2000 is attributable to the following:
(i) Professional fees increased $49,800 for the year ended April 30, 2000
from approximately $1,300 to $51,100. This increase results from legal
fees incurred in connection with various filings with the Securities
and Exchange Commission, and an increase in outside accounting fees due
to the occurrence of the 2000 audit.
(ii) Payroll and payroll related expenses increased approximately $50,000 in
the year ended April 30, 2000 from approximately $149,000 to $199,000.
$20,000 of this increase is attributable to an increase in officers'
salaries. The remaining increase in payroll expense results from the
hiring of additional staff needed in order to properly support the
expansion of the business.
(iii) The remainder of the increase is attributable to general office
expenditures as a result of the Company's growth.
General and administrative expenses aggregated $300,000 and $62,000 for the
three months ended July 31, 2000 and 1999, respectively, of which $24,000 and
$33,000, respectively, represents noncash operating expenses. The increase of
approximately $238,000 in the three months ended July 31, 2000 as compared to
the three months ended July 31, 1999 is attributable to the following:
(i) During the three months ended July 31, 2000, the Company wrote-off
deferred offering costs approximating $188,000 as it was determined
that it was no longer probable that the Company would be able to obtain
benefits from these costs.
(ii) Professional fees increased $35,000 during the three months ended July
31, 2000 from approximately $1,000 to $36,000. This increase results
from accounting fees incurred in connection with various filings with
the Securities and Exchange Commission.
(iii) Payroll and payroll related expenses increased approximately $12,000
during the three months ended July 31, 2000 from approximately $53,000
to $65,000. $60,000 of this increase is attributable to an increase in
officers' salaries. The remaining increase in payroll expense results
from the hiring of additional staff needed in order to properly support
the expansion of the business.
(iv) The remainder of the increase is attributable to general office
expenditures as a result of the Company's growth.
LIQUIDITY AND CAPITAL RESOURCES
As indicated in the accompanying financial statements as of and for the year
ended April 30, 2000, and as of and for the three months ended July 31, 2000,
the Company incurred net losses of $188,735 and $263,372, respectively, and it
had accumulated a deficit from its inception through July 31, 2000 of $558,649.
Management believes that the Company will continue to incur net losses through
at least July 31, 2001 and that, although a substantial portion of the Company's
historical net losses have been attributable to noncash operating expenses, it
will need additional equity or debt financing to be able to sustain its
operations until it can achieve profitability.
Management also believes that the commercial success and profitability of the
Company will depend significantly on its ability to (i) expand the subscriber
base for its current web sites in the United States and abroad; (ii) launch new
web sites in the United States and abroad that will be of interest to the
financial community; (iii) increase web site advertising revenues derived from
current sources and through the development of new sources; and (iv) expand the
range of services offered to subscribers and other users.
From its inception through July 1, 2000, the Company obtained a portion of its
financing through private placements of common stock pursuant to offerings
intended to be exempt from registration under the Securities Act of 1933 (the
"Act"). Management anticipates that the Company will need additional aggregate
proceeds from equity or debt financing of approximately $650,000 to satisfy its
cash requirements through the 12 month period ending July 31, 2001. In addition,
management believes that the Company may need additional financing beyond this
period to fund its operations should the Company be unable to generate cash flow
from operations. Although, the Company and an investment banking firm have a
signed a "Letter of Intent" whereby, subject to the satisfaction of various
conditions, that firm will enter into an underwriting agreement to underwrite
the Company's initial public offering of Units on a "best efforts" basis. The
Company cannot assure that any of the Units will be sold, that if sales of Units
are consummated the proceeds will be sufficient to enable the Company to
continue to operate as a going concern through at least July 31, 2001 or that
there will be alternative sources of equity or debt financing if the proceeds
from any sales of Units are insufficient.
The Company does not believe that its business is subject to seasonal trends or
inflation. On an ongoing basis, the Company will attempt to minimize any effect
of inflation on operating results by controlling operating costs and whenever
possible, seeking to insure that subscription rates reflect increases in costs
due to inflation.
YEAR 2000 DISCLOSURE
During the year ended April 30, 2000, we completed our Year 2000 assessment. The
costs of such assessment were not significant. In addition, we have experienced
no problems in the operations of our business as a result of anticipated Year
2000 effects on computer systems. We do not have a contingency plan in place to
deal with year 2000 problems that may occur in the future, nor do we intend to
implement such a plan. If year 2000 problems do arise, our business and our
financial condition could be adversely affected.
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ITEM 3 - DESCRIPTION OF PROPERTY
The Company currently rents office space on a month-to-month basis which will be
expanded as revenues increase. The Company owns no properties at present and has
no intent or agreement to acquire any properties.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth each person known by the Company to be the
beneficial owner of 5% or more of the Company's common stocks, all directors
individually and all directors and officers of the Company as approved. Except
as noted, each person has sole voting and investment power with respect to the
shares shown
<TABLE>
<CAPTION>
Percentage of Class
Name and Address of Owner Amount of Ownership (Common Stock)
------------------------- ------------------- --------------
<S> <C> <C>
John A. Ruela 4,548,000 Shares 44.5%
70 Pasadena Avenue
Lodi, New Jersey 07644
Thomas Melillo 4,865,000 Shares 48.1%
2 Johnsvale Road
Park Ridge, New Jersey 07656
All executive officers
as a group 9,413,000 Shares 92.6%
</TABLE>
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Company has the following Directors and Officers who have served in these
capacities since April 1998. Directors and officers are elected on an annual
basis.
<TABLE>
<CAPTION>
Name Age Positions and Offices Held
---- --- --------------------------
<S> <C> <C>
John Ruela 32 Chief Executive Officer,
Chief Operating Officer,
Vice President and Chairman
of the Board of Directors
Thomas Melillo 57 President, Chief Financial Officer
and Director
</TABLE>
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JOAO (JOHN) A. RUELA 32 years old. Vice President, CEO and Founder of Wall
Street Web, Inc. Prior to founding Wall Street Web, Inc. Mr. Ruela was a
Registered Representative with Westfalia Investments from 1993 to 1997. Mr.
Ruela attended Bergen College from 1988-1990 study business administration and
computer science.
THOMAS MELILLO, 57 years old. President, CFO and founder of Wall Street Web,
Inc. Prior to founding Wall Street Web, Inc., Mr. Mellillo was self employed as
a Day Trader from 1992 to 1997. Mr. Mellillo attended Saint Peters College
University and received a degree in Business Administration.
JOSE URQUIJO, 23 years old. Sales Manager, Customer Service and PC Technician.
Mr. Urquijo received his education and training at Bergen College, Paramus, New
Jersey (Commercial Art and Business Administration) as well as the Plaza School
of Technology in the same city.
JEFF SHELLY, 33 years old. Web Master. Prior to joining Wall Street Web, Inc.
Mr. Shelly was the Webmaster for Megasoft Online, Inc. from 1996-1997. From
1995-1996 Mr. Shelly was a Webmaster for Incyte Media. Mr. Shelly received his
BS in Business Administration from New York University.
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ITEM 6 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- --------------------------------------------------
AWARDS PAYOUTS
------------------------ -------
SECURITIES
NAME RESTRICTED UNDERLYING ALL
AND OTHER ANNUAL STOCK OPTIONS/ LTIP OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS(S) SARs PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Ruela .......... 2000 $43,000 0 0 0 0 0 0
Chief Executive
Officer
Thomas Melillo ...... 2000 $13,000 0 0 0 0 0 0
Chief Financial
Officer
</TABLE>
No retirement, pension, profit sharing or stock option programs have been
adopted by the Company for the benefit of its employees.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of October 1, 2000, the Company has issued a total of 9,413,000 shares of
common stock to the following persons:
John Ruela 4,548,000
Thomas Melillo 4,865,000
During January 2000, the Principal Stockholders transferred a total of 200,000
shares of the Company's common stock directly to certain financial consultants
and a total of 25,000 shares to employees of the Company as consideration for
services the consultants and employees provided to the Company. The Company
recorded charges to deferred offering costs of $136,000 and compensation
expense of $17,000 and contributions to capital of $153,000 based on the
estimated fair value of the shares transferred. The Principal Stockholders also
agreed to make contributions to the Company's capital by waiving the Company's
obligation to pay them accrued compensation aggregating $114,434 and $113,367
during 2000 and 1999, respectively, and accrued expenses of $4,100 during 2000.
The Company accounted for the waiver by recording reductions in the related
accrued liabilities and increasing common stock and additional paid-in capital.
ITEM 8 - DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of One hundred million
(100,000,000) shares of Common Stock, with a stated value of $.001. The
following statements relating to the capital stock set forth in material terms
of the Company's securities; however, reference is made to the more detailed
provisions of, and such statements are qualified in their entirety by reference
to, the Certificate of Incorporation, Certificate of Amendment to the
Certificate of Incorporation, and the By-Laws, copies of which are filed as
Exhibits to this Registration Statement.
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COMMON STOCK
Holders of shares of Common Stock are entitled to one vote for each share in all
matters to be voted upon by the Stockholders. Holders of Common Stock are
entitled to share ratably in dividends, if any, as may be declared from time to
time by the Board of Directors in its discretion from funds legally available
therefor. In the event of a Liquidation, Dissolution or Winding Up of the
Company, the holders of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. All of the outstanding
shares of Common Stock are fully paid and non-assessable.
The holders of Common Stock have no preemptive rights to purchase the Company's
Common Stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the Common Stock. In December 1999, Mr. Melillo and
Mr. Ruela each gifted certain shares of the Company's common stock to certain of
their family members and friends.
DIVIDENDS
Dividends, if any, will be contingent upon the Company's revenues and earnings,
if any, capital requirements and financial conditions. The payment of dividends,
if any, will be within the discretion of
-8-
<PAGE> 11
the Company's Board of Directors. The Company presently intends to retain all
earnings, if any, for use in its business operations and accordingly, the Board
of Directors does not anticipate declaring any dividends prior to a business
combination.
TRADING OF SECURITIES IN SECONDARY MARKET
The National Securities Market Improvement Act of 1996 limited the authority of
states to impose restrictions upon sales of securities made pursuant to Sections
4(1) and 4(3) of the Securities Act of companies which file reports under
Sections 13 or 15(d) of the Exchange Act. Upon effectiveness of this
Registration Statement, the Company will be required to, and will, file reports
under Section 13 of the Exchange Act. As a result, sales of the Company's Common
Stock in the secondary market by the holders thereof may then be made pursuant
to Section 4(1) of the Securities Act (sales other than by an issuer,
underwriter or broker).
In order to qualify for listing on the Nasdaq SmallCap Market, a company must
have at least (i) net tangible assets of $4,000,000 or market capitalization of
$50,000,000 or net income for two of the last three years of $750,000; (ii)
public float of 1,000,000 shares with a market value of $5,000,000; (iii) a bid
price of $4.00; (iv) three market makers; (v) 300 shareholders and (vi) an
operating history of one year or, if less than one year, $50,000,000 in market
capitalization. For continued listing on the NASDAQ SmallCap Market, a company
must have at least (i) net tangible assets of $2,000,000 or market
capitalization of $35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value of
$1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300
shareholders.
The Company plans to apply for trading on the OTC Bulletin Board and when the
Company meets the listing requirements, then application will be submitted for
the NASDAQ Small Cap Market.
POSSIBLE CLASSIFICATION OF REGISTRANT'S SECURITIES AS A "PENNY STOCK"
By virtue of Rule 3a51-1 of the Securities Act of 1934 (the "Act"), if the
Registrant's common stock has a price of less than $5.00 per share, it will be
considered a "penny stock". The prerequisites required of broker-dealers
engaging in transactions involving "penny stocks" have discouraged, or even
barred many brokerage firms from soliciting orders for certain low priced
stocks.
Still further, with respect to the trading of penny stocks, broker-dealers have
an obligation to satisfy certain special sales practice requirements pursuant to
Rule 15g-9 of the Act, including a requirement that they make an individualized
written suitability determination for the purchase and receive the purchaser's
written consent prior to the transaction.
Still even further, such broker-dealers have additional disclosure requirements
as set forth in the Securities Enforcement Act Remedies and Penny Stock Reform
Act of 1990. These disclosure requirements include the requirement for a
broker-dealer, prior to a transaction in a penny stock, to
-9-
<PAGE> 12
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks of the penny stock market.
Still even further, a broker-dealer must provide the customer with current 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.
Accordingly, the above penny stock regulations and the associated broker-dealer
requirements will have an adverse effect on the market liquidity of the
Registrant's common stock and the ability of any present and prospective
shareholder investors to sell their securities in the secondary market.
However, regardless of the price of the Registrant's stock, in the event the
Registrant has net tangible assets in excess of $2,000,000 and if the Registrant
has been in continuous operation for less than three (3) years, Rule 3a51-1(g)
of the Act will preclude the Registrant's common stock from being classified as
a "penny stock".
TRANSFER AGENT
Jersey Transfer of Verona, New Jersey is the transfer agent for the Common Stock
of the Company.
GLOSSARY
The Company. The corporation whose common stock is the subject of this
Registration Statement.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Securities Act. The Securities Act of 1933, as amended.
PART II
ITEM 1 - MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
There is no public trading market for the Company's common stock. As of
October 1, 2000, there were 10,664,000 shares of the Company's common stock
issued and outstanding. As of the date of this filing, there were no un-issued
shares of Company's common stock available for sale pursuant to Rule 144
under The Securities Act.
HOLDERS
The Company has approximately 55 common stock shareholders.
-10-
<PAGE> 13
ITEM 2 - LEGAL PROCEEDINGS
The Company's officers and directors are aware of no threatened or pending
litigation which would have a material, adverse affect on the Company.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
(a) RECENT SALES: The Company has the following stock issuances
as described below. All such shares were sold to individuals by
the officers and directors of the Registrant and no underwriters
were utilized.
1. On December 14, 1999, 5,000 shares of common stock were
issued for a total offering of $5,000.00 cash.
2. On December 15, 1999, 5,000 shares of common stock were
issued for a total offering of $5,000.00 cash.
3. On December 20, 1999, 10,000 shares of common stock were
issued for a total offering of $10,000.00 cash.
4. On December 22, 1999, 10,000 shares of common stock were
issued for a total offering of $10,000.00 cash.
5. On January 31, 2000, 5,000 shares of common stock were issued
for a total offering of $5,000.00 cash.
6. On February 29, 2000, 20,000 shares of common stock were
issued for a total offering of $10,000 cash.
7. On March 4, 2000, 20,000 shares of common stock were issued
for a total offering of $10,000 cash.
8. On March 7, 2000, 2,500 shares of common stock were issued
for a total offering of $2,500 cash.
9. On March 9, 2000, 6,500 shares of common stock were issued
for a total offering of $6,500 cash.
10. On March 23, 2000, 20,000 shares of common stock were issued
for a total offering of $10,000 cash.
11. On May 26, 2000, 540,000 shares of common stock were issued
for a total offering of $250,000 cash.
(b) EXEMPTIONS FROM REGISTRATION: With respect to the issuance of
the 604,000 shares listed in Item 4 (a) 1 thruough 11, such issuances were made
in reliance on the private placement exemptions provided by Section 4 (2) of the
Securities Act of 1933 as amended, (the "Act"), SEC Regulation D and Rule 504 of
the Act.
In each instance, each of the share purchasers had access to sufficient
information regarding the Registrant so as to make an informed investment
decision. More specifically, each purchaser signed a written Subscription
Agreement with respect to their financial status and investment sophistication
wherein they warranted and represented, among other things, the following:
(a) That they had the ability to bear the economic risks of
investing in the shares of the Registrant.
(b) That they had sufficient knowledge in financial, business or
investment matters to evaluate the merits and risks of the
investment.
-11-
<PAGE> 14
(c) That they had a certain net worth sufficient to meet the
suitability standards of the Registrant.
(d) That the Registrant has made available to them, his counsel and
his advisors, the opportunity to ask questions and that they
have been given access to any information, documents, financial
statements, books and records relative to the Registrant and an
investment in the shares of the Registrant.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws limit the liability of its directors to the fullest
extent permitted by New Jersey corporate securities law. Specifically, directors
of the Company will not be personally liable for the monetary damages for breach
of fiduciary duty as directors, except liability for (i) any breach of the duty
of loyalty to the Company or its shareholders, (ii) acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
(iii) dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions, (iv) violations
of certain securities laws, or (v) any transaction from which the director
derives an improper personal benefit. Liability under federal securities law is
not limited by the Articles.
PART F/S
Financial statements required by Item 310 of Regulation S-B begin on Page F-1.
-12-
<PAGE> 15
WALL STREET WEB, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
BALANCE SHEET
APRIL 30, 2000 F-3
STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 2000 AND 1999 (Unaudited) F-4
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED APRIL 30, 2000 AND 1999 (Unaudited) F-5
STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 2000 AND 1999 (Unaudited) F-6
NOTES TO FINANCIAL STATEMENTS F-7/15
CONDENSED BALANCE SHEET
JULY 31, 2000 (Unaudited) F-16
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited) F-17
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED JULY 31, 2000 (Unaudited) F-18
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited) F-19
NOTES TO CONDENSED FINANCIAL STATEMENTS F-20/23
</TABLE>
* * *
F-1
<PAGE> 16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders
Wall Street Web, Inc
We have audited the accompanying balance sheet of WALL STREET WEB, INC. as of
April 30, 2000, and the related statements of operations, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wall Street Web, Inc. as of
April 30, 2000, and its results of operations and cash flows for the year then
ended, in conformity with generally accepted accounting principles.
The financial statements referred to in the first paragraph have been prepared
assuming that the Company will continue as a going concern. As further discussed
in Note 3 to the financial statements, the Company's operations have generated
recurring losses and it had an accumulated deficit as of April 30, 2000. Such
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
The accompanying statements of operations, changes in stockholders' equity and
cash flows for the year ended April 30, 1999 were not audited by us and,
accordingly, we do not express an opinion on them.
J.H. Cohn LLP
Roseland, New Jersey
August 31, 2000
F-2
<PAGE> 17
WALL STREET WEB, INC.
BALANCE SHEET
APRIL 30, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 52,055
Accounts receivable 3,894
---------
Total current assets 55,949
Equipment, furniture and fixtures, net 11,174
Deferred offering costs 182,060
---------
Total $ 249,183
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 48,903
Deferred revenues 30,727
---------
Total liabilities 79,630
---------
Commitments and contingencies
Stockholders' equity:
Common stock, no par value; stated value $.001 per share;
100,000,000 shares authorized; 10,124,000 shares issued
and outstanding 10,124
Additional paid-in capital 454,706
Accumulated deficit (295,277)
---------
Total stockholders' equity 169,553
---------
Total $ 249,183
=========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 18
WALL STREET WEB, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
(Audited) (Unaudited)
<S> <C> <C>
Revenues $ 227,765 $ 153,921
------------ ------------
Operating expenses:
Cost of revenues 31,685 17,282
Selling 44,414 51,342
General and administrative 340,401 186,504
------------ ------------
Totals 416,500 255,128
------------ ------------
Net loss $ (188,735) $ (101,207)
============ ============
Basic loss per common share $ (.02) $ (.01)
============ ============
Weighted average number of common shares outstanding 10,021,474 10,000,000
============ ============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 19
WALL STREET WEB, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED APRIL 30, 2000 AND 1999
<TABLE>
<CAPTION>
Common Stock Additional Total
---------------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
----------- ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, May 1, 1998 (Unaudited) 10,000,000 $ 10,000 $ (8,500) $ (5,335) $ (3,835)
Contributions to capital by prin-
cipal stockholders through
waiver of accrued salaries
and expenses 117,467 117,467
Net loss (101,207) (101,207)
----------- ----------- --------- ----------- ---------
Balance, April 30, 1999 (Unaudited) 10,000,000 10,000 108,967 (106,542) 12,425
Proceeds from sales of shares
at $.50 and $1.00 per share
through private placements 124,000 124 83,876 84,000
Expenses related to private
placements (5,571) (5,571)
Contributions to capital by principal
stockholders through:
Waiver of accrued salaries 114,434 114,434
Transfer of 200,000 shares
directly to consultants
and employees of the
Company for services
they provided to the
Company 153,000 153,000
Net loss (188,735) (188,735)
----------- ----------- --------- ----------- ---------
Balance, April 30, 2000 10,124,000 $ 10,124 $ 454,706 $ (295,277) $ 169,553
=========== =========== ========= =========== =========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 20
WALL STREET WEB, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
--------- ---------
(Audited) (Unaudited)
<S> <C> <C>
Operating activities:
Net loss $(188,735) $(101,207)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Noncash operating expenses 131,434 117,467
Depreciation 6,791 5,014
Forgiveness of receivables from stockholders 12,842
Changes in operating assets and liabilities:
Accounts receivable 1,421 (1,205)
Accounts payable and accrued expenses 40,755 (6,992)
Deferred revenues (782) 8,418
--------- ---------
Net cash provided by operating activities 3,726 21,495
--------- ---------
Investing activities:
Purchases of equipment (4,667) (10,427)
Advances to stockholders (5,963) (6,879)
--------- ---------
Net cash used in investing activities (10,630) (17,306)
--------- ---------
Financing activities:
Proceeds from private placements 78,429
Deferred offering costs (46,060)
---------
Net cash provided by financing activities 32,369
--------- ---------
Net increase in cash and cash equivalents 25,465 4,189
Cash and cash equivalents, beginning of year 26,590 22,401
--------- ---------
Cash and cash equivalents, end of year $ 52,055 $ 26,590
========= =========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE> 21
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Nature of operations and business:
Wall Street Web, Inc. (the "Company") and its predecessor have
been providing new and unique "rumor" information covering the
day-to-day activities of "Wall Street" since December 1997. It
operated as Thomas Melillo DBA Stockrumors.com, an unincorporated
business, from December 1997 until April 1998 when it was
incorporated in New Jersey as Wall Street Web, Inc. The Company
gathers and compiles information from contacts at financial
institutions and releases such information to subscribers
(generally, financial and stock market professionals) through its
web sites, www.stockrumors.com and www.brokercall.com, on a timely
basis. The Stockrumors.com web site, which is continuously
updated, provides the investing public with information concerning
rumors that move stocks and the stock market. The Brokercall.com
web site allows the investing public to view analyst upgrades and
downgrades on a particular company. In addition to revenues from
subscriptions, the Company generates revenues from advertising
banners and sponsorships on its web sites.
As of April 30, 2000, Thomas Melillo and Joao (John) Ruela (the
"Principal Stockholders") owned 48.1% and 44.5% of the outstanding
shares of the Company's common stock, respectively.
Note 2 - Summary of significant accounting policies:
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ
from those estimates.
Cash and cash equivalents:
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. The Company had no cash equivalents at April 30, 2000
or 1999.
Concentrations of credit risk:
The Company maintains its cash in bank deposit accounts the
balances of which, at times, may exceed Federal insurance limits.
Exposure to credit risk is reduced by placing such deposits with
major financial institutions and monitoring their credit ratings.
F-7
<PAGE> 22
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies (continued):
Revenue recognition:
Revenues are generated through the sales of subscriptions and
advertising banners and sponsorships on the Company's web sites.
Subscription revenues are generally collected in advance on a
monthly, quarterly, semi-annual or annual basis. Advertising
revenues are generally derived from agreements that provide for
monthly fees and guarantee advertisers a specified monthly
utilization rate for the Company's web sites and additional
advertising time if there is a utilization shortfall. Subscription
and advertising revenues are recognized ratably over the
respective periods of the related subscription and advertising
agreements. Unearned fees (including fees related to utilization
shortfalls) are included in deferred revenues in the accompanying
balance sheet.
Web site development costs:
The Company accounts for costs incurred in connection with the
development of a web site in accordance with Statement of Position
98-1, "Accounting for Costs of Computer Software Developed or
Obtained for Internal Use" and Emerging Issues Task Force Issue
No. 00-2, "Accounting for Web Site Development Costs."
Accordingly, all costs incurred in planning the development of a
web site are expensed as incurred. Costs, other than general and
administrative and overhead costs, incurred in the web site
application and infrastructure development stage, which involves
acquiring or developing hardware and software to operate the web
site, are capitalized. Fees paid to an Internet service provider
for hosting a web site on its server(s) connected to the Internet
are expensed over the estimated period of benefit. Other costs
incurred during the operating stage, such as training,
administration and maintenance costs, are expensed as incurred.
Costs incurred during the operating stage for upgrades and
enhancements of a web site are capitalized if it is probable that
they will result in added functionality. Capitalized web site
development costs are amortized on a straight-line basis over
their estimated useful life.
The Company did not incur any material costs in the application
and infrastructure development stage of its web sites, other than
the costs of hardware which were capitalized.
Deferred offering costs:
Deferred offering costs represent costs incurred by the Company in
connection with a proposed initial public offering of the
Company's securities (see Note 10). Such costs will be offset
against the proceeds received from the public offering, if any, or
expensed in the period in which the offering is terminated.
Equipment, furniture and fixtures:
Equipment, furniture and fixtures are recorded at cost.
Depreciation is provided using the straight-line method over the
estimated useful lives of the assets which range from three to
seven years.
F-8
<PAGE> 23
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies (continued):
Advertising costs:
Advertising costs are expensed when incurred. Advertising costs
were approximately $32,000 and $51,000 in 2000 and 1999,
respectively.
Income taxes:
The Company accounts for income taxes pursuant to the asset and
liability method which requires deferred income tax assets and
liabilities to be computed annually for temporary differences
between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
Income tax expense is the tax payable or refundable for the period
plus or minus the change during the period in deferred tax assets
and liabilities.
Net earnings (loss) per share:
The Company presents basic earnings (loss) per share and, if
appropriate, diluted earnings per share in accordance with the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings per Share." Basic earnings (loss) per common share is
calculated by dividing net income or loss by the weighted average
number of common shares outstanding during the period. The
calculation of diluted earnings per common share is similar to
that of basic earnings per common share, except that the
denominator is increased to include the number of additional
common shares that would have been outstanding if all potentially
dilutive common shares, such as those issuable upon the exercise
of stock options, were issued during the period. Diluted per share
amounts have not been presented in the accompanying statements of
operations because the Company did not have any potentially
dilutive common shares outstanding during 2000 and 1999.
The number of common shares outstanding and the weighted average
number of common shares outstanding have been retroactively
adjusted in the accompanying financial statements and these notes
as if the issuance of an additional 9,997,500 shares to the
Principal Stockholders of the Company in November 1999 resulting
from a 4,000 for 1 stock split had occurred in April 1998 when the
Company was incorporated.
F-9
<PAGE> 24
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies (concluded):
Recent accounting pronouncements:
The Financial Accounting Standards Board and the Accounting
Standards Executive Committee of the American Institute of
Certified Public Accountants has issued certain accounting
pronouncements as of April 30, 2000 that will become effective in
subsequent periods. In December 1999, the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"). SAB 101
summarizes certain staff views in applying generally accepted
accounting principles to revenue recognition in financial
statements. The Company will be required to implement SAB 101 no
later than the fourth quarter of its fiscal year ending April 30,
2001. However, management of the Company does not believe that any
of those pronouncements would have significantly affected the
Company's financial accounting measurements or disclosures had
they been in effect during the years ended April 30, 2000 and 1999
or that they will have a significant affect at the time they
become effective.
Note 3 - Basis of presentation:
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. However, as
shown in the accompanying financial statements, the Company
incurred net losses of $188,735 and $101,207 in 2000 and 1999,
respectively, and it had accumulated a deficit from its inception
through April 30, 2000 of $295,277. Management believes that the
Company will continue to incur net losses through at least April
30, 2001. Although a substantial portion of the Company's
historical net losses have been attributable to compensation
payable to the Company's Principal Stockholders that was accrued
and subsequently waived and other noncash operating expenses (see
Note 10), it will need additional equity or debt financing to be
able to sustain its operations until it can achieve profitability.
These matters raise substantial doubt about the Company's ability
to continue as a going concern.
Management also believes that the commercial success and
profitability of the Company will depend significantly on its
ability to (i) expand the subscriber base for its current web
sites in the United States and abroad; (ii) launch new web sites
in the United States and abroad that will be of interest to the
financial community; (iii) increase web site advertising revenues
derived from current sources and through the development of new
sources; and (iv) expand the range of services offered to
subscribers and other users.
F-10
<PAGE> 25
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 3 - Basis of presentation (concluded):
From its inception through April 30, 2000, the Company obtained a
portion of its financing through private placements of common
stock pursuant to offerings intended to be exempt from
registration under the Securities Act of 1933 (the "Act"). On May
26, 2000, the Company received proceeds of approximately $230,000,
net of related offering costs, from the sale of 500,000 shares of
common stock at $.50 per share through a private placement (see
Note 11). Management anticipates that the Company will need
additional aggregate proceeds from equity or debt financing of
approximately $650,000 to satisfy its cash requirements from
May 1, 2000 through April 30, 2001. The Company will attempt to
obtain all or a substantial portion of such financing through a
proposed initial public offering of up to 300,000 units (the
"Units"), with each Unit comprised of one share of common stock
and three common stock purchase warrants (see Note 10). The
offering price for each Unit will be calculated based on a moving
average of the closing price of the Company's common stock for a
specified period prior to the date the offering commences.
However, the Company's common stock was not publicly traded as of
August 31, 2000 and will not become publicly traded until the
Company files the appropriate information with the Securities and
Exchange Commission. Although the Company and an investment
banking firm signed a "Letter of Intent" whereby, subject to the
satisfaction of various conditions, they will enter into an
underwriting agreement related to the sale of the Units by the
underwriter on a "best efforts" basis, management cannot assure
that any of the Units will be sold, that if sales of Units are
consummated, the proceeds will be sufficient to enable the Company
to continue to operate as a going concern through at least April
30, 2001 or that there will be alternative sources of equity or
debt financing if the proceeds from any sales of Units are
insufficient.
The accompanying financial statements do not include any
adjustments related to the recoverability and classification of
assets or the amounts and classification of liabilities that might
be necessary should the Company be unable to continue its
operations as a going concern.
Note 4 - Equipment, furniture and fixtures:
Equipment, furniture and fixtures consist of the following at April 30,
2000:
<TABLE>
<S> <C>
Computers and related equipment $19,409
Equipment 2,291
Furniture and fixtures 1,940
-------
23,640
Less accumulated depreciation 12,466
-------
Total $11,174
=======
</TABLE>
F-11
<PAGE> 26
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 5 - Income taxes:
As of April 30, 2000, the Company had net operating loss
carryforwards of approximately $226,000 available to reduce future
Federal and state taxable income which will expire in 2019 and 2020.
The Company's deferred tax assets and liabilities as of April 30,
2000 consisted of the effects of temporary differences attributable
to the following:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 116,000
Deferred revenues 12,300
Depreciation (4,500)
---------
123,800
Less valuation allowance (123,800)
---------
Total $ --
=========
</TABLE>
Due to the uncertainties related to, among other things, the extent
and timing of its future taxable income, the Company offset its net
deferred tax assets by an equivalent valuation allowance as of April
30, 2000. The Company had also offset the potential benefits of
$47,800 from net deferred tax assets by an equivalent valuation
allowance as of April 30, 1999. It did not have any material
temporary differences as of April 30, 1998. As a result of the
increases in the valuation allowance of $76,000 and $47,800 during
2000 and 1999, respectively, there are no credits for income taxes
reflected in the accompanying statements of operations to offset
pre-tax losses.
Note 6 - Deferred offering costs:
As of April 30, 2000, the Company had incurred and deferred costs
totaling $182,060 in connection with its proposed initial public
offering (see Notes 8 and 10).
Note 7 - Common stock:
At the time the Company was incorporated, it was authorized to issue
up to 2,500 shares of common stock with no par value. As a result of
amendments to the Company's Certificate of Incorporation, it was
authorized to issue up to 100,000,000 shares of common stock with no
par value as of April 30, 2000.
On various dates between December 14, 1999 and March 23, 2000, the
Company sold a total of 124,000 shares of common stock through
private placements intended to be exempt from registration under the
Act for aggregate gross proceeds of $84,000, of which $40,000 was
attributable to the sale of 80,000 shares of common stock at $.50
per share and $44,000 was attributable to the sale of 44,000 shares
of common stock at $1.00 per share. The Company incurred aggregate
expenses of $5,571 in connection with the private placements.
F-12
<PAGE> 27
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 8 - Related party transactions:
During January 2000, the Principal Stockholders transferred a total
of 200,000 shares of the Company's common stock directly to certain
financial consultants and a total of 25,000 shares to employees of
the Company as consideration for services the consultants and
employees provided to the Company. The Company recorded charges to
deferred offering costs of $136,000 and compensation expense of
$17,000 and contributions to capital of $153,000 based on the
estimated fair value of the shares transferred. The Principal
Stockholders also agreed to make contributions to the Company's
capital by waiving the Company's obligation to pay them accrued
compensation aggregating $114,434 and $113,367 during 2000 and 1999,
respectively, and accrued expenses of $4,100 during 2000. The
Company accounted for the waivers by recording reductions in the
related accrued liabilities and increasing common stock and
additional paid-in capital. These were noncash transactions and,
accordingly, they are not reflected in the accompanying statements
of cash flows.
Note 9 - Fair value of financial instruments:
The Company's material financial instruments as of April 30, 2000
and 1999 for which disclosure of estimated fair value is required
consisted of trade receivables and payables and accrued expenses. In
the opinion of management, the carrying value of these financial
instruments approximated their fair values as of those dates because
of their short maturities.
Note 10- Commitments and contingencies:
Operating lease:
The Company rents office space on a month-to-month basis.
Related rent expense was $6,000 for both 2000 and 1999.
Stockholder agreement:
Under the terms of an agreement among the Company and the
Principal Stockholders, each Principal Stockholder has a right
of first refusal with respect to the purchase of any shares of
the Company's common stock offered for sale by the other
Principal Stockholder at a purchase price equal to the market
value of the shares. If the right of first refusal is not
exercised, the Company has the right to purchase the shares at
their market value. This agreement will terminate if and when
the Company completes an initial public offering of its common
stock.
F-13
<PAGE> 28
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 10- Commitments and contingencies (concluded):
Proposed public offering:
As explained in Note 3, the Company intends to obtain
financing needed for the continuation of its operations
through an initial public offering of its equity securities.
On March 30, 2000, the Company and an investment banking firm
signed a "Letter of Intent" whereby, subject to the
satisfaction of various conditions further described below,
they will enter into an underwriting agreement related to the
sale of up to 300,000 Units by the underwriter on a "best
efforts" basis. Each Unit will consist of one share of the
Company's common stock and three common stock purchase
warrants. It is proposed that the offering price for each Unit
will be calculated based on the 14 day moving average of the
closing price of the Company's common stock immediately prior
to the date the initial public offering commences, less a 15%
discount. However, the Company's common stock was not publicly
traded as of August 31, 2000 and will not become publicly
traded until the Company files the appropriate information
with the Securities and Exchange Commission. Each warrant will
entitle the holder thereof to purchase one share of common
stock at any time commencing from the closing date of the
proposed initial public offering until three years subsequent
to the date the proposed initial public offering commences at
$.50 above the offering price for each Unit. The Company may,
at its sole discretion, extend the period of exercise of the
warrants. The warrants will be callable by the Company during
a specified period at $.001 per warrant, provided that the bid
price for the common stock reaches a specified level for a
specified period prior to redemption. The Letter of Intent
also specifies that the underwriter will receive commissions
equal to 10% of the public offering price, a 3% nonaccountable
expense allowance (of which $25,000 was prepaid on a
nonrefundable basis in April 2000) and underwriter's warrants
that will be subject to "demand" and "piggy back" registration
rights.
The Letter of Intent also imposes certain other requirements
and restrictions on the Company. Among other things, the
Company will be required to: authorize the issuance and sale
of the 3,000,000 Units; file the appropriate registration
statement for the offering of the Units under the Act; be
capitalized on the basis of 100,000,000 authorized shares of
common stock with no par value; restrict the number of shares
of common stock authorized and issued as of the filing date
for the registration statement and the initial date of the
public offering to a maximum of 11,000,000 shares; refrain
from granting preemptive rights to any stockholder or issuing
any other securities; enter into an underwriting agreement
with the investment banking firm; grant the underwriter a
right of first refusal to act as the underwriter with respect
to certain offerings of securities made by the Company during
the three year period subsequent to the completion of the
offering of the Units; and provide the underwriter with the
right to designate a member of the Company's board of
directors or a nonvoting advisor thereto during the five year
period subsequent to the completion of the offering of the
Units.
F-14
<PAGE> 29
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 11- Subsequent events:
On May 26, 2000, the Company sold 500,000 shares of common stock at
$.50 per share through a private placement intended to be exempt
from registration under the Act and received proceeds of
approximately $230,000, net of related offering costs of
approximately $20,000. It also issued 40,000 shares of common stock
to a financial consultant that assisted the Company in finding
investors and provided other financial advisory services in
connection with the sale of the shares.
* * *
F-15
<PAGE> 30
WALL STREET WEB, INC.
CONDENSED BALANCE SHEET
JULY 31, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 252,864
Accounts receivable 4,365
---------
Total current assets 257,229
Equipment, furniture and fixtures, net 14,558
---------
Total $ 271,787
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 88,730
Deferred revenues 15,876
---------
Total liabilities 104,606
---------
Commitments and contingencies
Stockholders' equity:
Common stock, no par value; stated value $.001 per share;
100,000,000 shares authorized; 10,664,000 shares issued
and outstanding 10,664
Additional paid-in capital 715,166
Accumulated deficit (558,649)
---------
Total stockholders' equity 167,181
---------
Total $ 271,787
=========
</TABLE>
See Notes to Condensed Financial Statements.
F-16
<PAGE> 31
WALL STREET WEB, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Revenues $ 48,543 $ 61,296
------------ ------------
Operating expenses:
Cost of revenues 4,061 7,997
Selling 8,154 16,075
General and administrative 299,700 62,398
------------ ------------
Totals 311,915 86,470
------------ ------------
Net loss $ (263,372) $ (25,174)
============ ============
Basic loss per common share $ (.03) $ ( -- )
============ ============
Weighted average number of common shares outstanding 10,517,261 10,000,000
============ ============
</TABLE>
See Notes to Condensed Financial Statements.
F-17
<PAGE> 32
WALL STREET WEB, INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED JULY 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Total
----------------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, May 1, 2000 10,124,000 $ 10,124 $ 454,706 $ (295,277) $ 169,553
Proceeds from sale of shares
at $.50 per share through
private placement 500,000 500 249,500 250,000
Effects of issuance of shares in
exchange for professional
services related to private
placement 40,000 40 (40)
Other expenses related to private
placement (12,500) (12,500)
Contributions to capital by prin-
cipal stockholders through
waiver of accrued salaries 23,500 23,500
Net loss (263,372) (263,372)
----------- ----------- ----------- ----------- -----------
Balance, July 31, 2000 10,664,000 $ 10,664 $ 715,166 $ (558,649) $ 167,181
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Condensed Financial Statements.
F-18
<PAGE> 33
WALL STREET WEB, INC.
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JULY 31, 2000 AND 1999 (Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Operating activities:
Net loss $(263,372) $ (25,174)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Noncash operating expenses 23,500 32,725
Depreciation 1,945 1,600
Write-off of deferred offering costs 187,976
Changes in operating assets and liabilities:
Accounts receivable (471) 1,611
Accounts payable and accrued expenses 39,827 1,831
Deferred revenues (14,851) (8,102)
--------- ---------
Net cash provided by (used in) operating activities (25,446) 4,491
--------- ---------
Investing activities:
Purchases of equipment (5,329) (1,881)
Advances to stockholders (6,463)
--------- ---------
Net cash used in investing activities (5,329) (8,344)
--------- ---------
Financing activities:
Proceeds from private placements 237,500
Deferred offering costs (5,916) (3,500)
--------- ---------
Net cash provided by (used in) financing activities 231,584 (3,500)
--------- ---------
Net increase (decrease) in cash and cash equivalents 200,809 (7,353)
Cash and cash equivalents, beginning of period 52,055 26,590
--------- ---------
Cash and cash equivalents, end of period $ 252,864 $ 19,237
========= =========
</TABLE>
See Notes to Condensed Financial Statements.
F-19
<PAGE> 34
WALL STREET WEB, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Unaudited interim financial statements:
In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial
position of Wall Street Web, Inc. (the "Company") as of July 31,
2000, its results of operations and cash flows for the three months
ended July 31, 2000 and 1999 and its changes in stockholders' equity
for the three months ended July 31, 2000. Certain terms used herein
are defined in the audited financial statements of the Company as of
April 30, 2000 (the "Audited Financial Statements") included
elsewhere herein. Pursuant to rules and regulations of the
Securities and Exchange Commission (the "SEC"), certain information
and disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have
been condensed or omitted from these financial statements unless
significant changes have taken place since the end of the most
recent fiscal year. Accordingly, the accompanying unaudited
condensed financial statements should be read in conjunction with
the Audited Financial Statements and the other information included
elsewhere herein.
The results of operations for the three months ended July 31, 2000
are not necessarily indicative of the results of operations for the
full year ending April 30, 2001.
Note 2 - Basis of presentation:
The accompanying condensed financial statements have been prepared
assuming that the Company will continue as a going concern. However,
as shown in the accompanying condensed financial statements, the
Company incurred a net loss of $263,372 in the three months ended
July 31, 2000, and it had accumulated a deficit from its inception
through July 31, 2000 of $558,649. Management believes that the
Company will continue to incur net losses through at least July 31,
2001. Although a substantial portion of the Company's historical net
losses have been attributable to compensation payable to the
Company's Principal Stockholders that was accrued and subsequently
waived and other noncash operating expenses (see Note 4 below and
Note 8 of the notes to the Audited Financial Statements elsewhere
herein), it will need additional equity or debt financing to be able
to sustain its operations until it can achieve profitability. These
matters raise substantial doubt about the Company's ability to
continue as a going concern.
Management also believes that the commercial success and
profitability of the Company will depend significantly on its
ability to (i) expand the subscriber base for its current web sites
in the United States and abroad; (ii) launch new web sites in the
United States and abroad that will be of interest to the financial
community; (iii) increase web site advertising revenues derived from
current sources and through the development of new sources; and (iv)
expand the range of services offered to subscribers and other users.
F-20
<PAGE> 35
WALL STREET WEB, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 2 - Basis of presentation (concluded):
From its inception through July 31, 2000, the Company obtained a
portion of its financing through private placements of common stock
pursuant to offerings intended to be exempt from registration under
the Securities Act of 1933 (the "Act"). On May 26, 2000, the Company
received proceeds of $237,500, net of related offering costs, from
the sale of 500,000 shares of common stock at $.50 per share through
a private placement (see Note 4 below). Management anticipates that
the Company will need additional aggregate proceeds from equity or
debt financing of approximately $650,000 to satisfy its cash
requirements from April 1, 2000 through July 31, 2001. The Company
will attempt to obtain all or a substantial portion of such
financing through a proposed initial public offering of up to
300,000 units (the "Units"), with each Unit comprised of one share
of common stock and three common stock purchase warrants (see Note
10 of the notes to the Audited Financial Statements elsewhere
herein). The offering price for each Unit will be calculated based
on a moving average of the closing price of the Company's common
stock for a specified period prior to the date the offering
commences. However, the Company's common stock was not publicly
traded as of December 13, 2000 and will not become publicly traded
until the Company files the appropriate information with the SEC.
Although the Company and an investment banking firm signed a "Letter
of Intent" whereby, subject to the satisfaction of various
conditions, they will enter into an underwriting agreement related
to the sale of the Units by the underwriter on a "best efforts"
basis, management cannot assure that any of the Units will be sold,
that if sales of Units are consummated, the proceeds will be
sufficient to enable the Company to continue to operate as a going
concern through at least July 31, 2001 or that there will be
alternative sources of equity or debt financing if the proceeds from
any sales of Units are insufficient.
The accompanying condensed financial statements do not include any
adjustments related to the recoverability and classification of
assets or the amounts and classification of liabilities that might
be necessary should the Company be unable to continue its operations
as a going concern.
F-21
<PAGE> 36
WALL STREET WEB, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 3 - Income taxes:
As of July 31, 2000, the Company had net operating loss
carryforwards of approximately $256,000 available to reduce future
Federal and state taxable income which will expire from 2019 through
2021.
The Company's deferred tax assets and liabilities as of July 31,
2000 consisted of the effects of temporary differences attributable
to the following:
<TABLE>
<S> <C>
Net operating loss carryforwards $ 221,300
Deferred revenues 6,400
Depreciation (5,800)
---------
221,900
Less valuation allowance (221,900)
---------
Total $ --
=========
</TABLE>
Due to the uncertainties related to, among other things, the extent
and timing of its future taxable income, the Company offset its net
deferred tax assets by an equivalent valuation allowance as of July
31, 2000. The Company had also offset the potential benefits of
$54,500 from net deferred tax assets by an equivalent valuation
allowance as of July 31, 1999. It did not have any material
temporary differences as of July 31, 1998. As a result of the
increases in the valuation allowance of $98,100 and $6,700 during
the three months ended July 31, 2000 and 1999, respectively, there
are no credits for income taxes reflected in the accompanying
statements of operations to offset pre-tax losses.
Note 4 - Stockholders' equity:
On May 26, 2000, the Company sold 500,000 shares of common stock at
$.50 per share through a private placement intended to be exempt
from registration under the Securities Act of 1933 and received
proceeds of $237,500, net of related offering costs of $12,500. It
also issued 40,000 shares of common stock to a financial consultant
that assisted the Company in finding investors and provided other
financial advisory services in connection with the sale of the
shares.
During the three months ended July 31, 2000, the Company's Principal
Stockholders agreed to make contributions to the Company's capital
by waiving the Company's obligation to pay them accrued compensation
aggregating $23,500. The Company accounted for the waivers by
recording reductions in the related accrued liabilities and
increasing common stock and additional paid-in capital. These were
noncash transactions and, accordingly, they are not reflected in the
accompanying condensed statements of cash flows.
F-22
<PAGE> 37
WALL STREET WEB, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 5 - Write-off of deferred offering costs:
As of April 30, 2000, the Company had deferred costs related to its
proposed initial public offering totaling $182,060 (see Notes 2 and
8 of the notes to the Audited Financial Statements elsewhere
herein). The Company incurred additional costs during the three
months ended July 31, 2000. Based on the decline in the market
prices of equity securities in general and Internet technology
stocks in particular during the period from April 2000 through
November 2000, management determined that it was no longer probable
that the Company would be able to obtain benefits from the deferred
offering costs. Accordingly, deferred offering costs totaling
$187,976 were written off during the three months ended July 31,
2000.
* * *
F-23
<PAGE> 38
PART III
ITEM 1 - INDEX TO EXHIBITS
The exhibits listed and described below in Item 2 are filed herein as the part
of this Registration Statement.
ITEM 2 - DESCRIPTION OF EXHIBITS
The following documents are filed herein as required by Part II of Form 1-A:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1 Certification of Incorporation of Wall Street Web,
Inc.
3.2 Certificate of Amendment to the Certificate of
Incorporation of Wall Street Web, Inc.
3.3 Certificate of Amendment to the Certificate of
Incorporation of Wall Street Web, Inc.
3.4 By-Laws of Wall Street Web, Inc.
27 Financial Data Schedule
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
WALL STREET WEB, INC.
Dated: December 15, 2000 By /s/ JOHN RUELA
------------------------------
John Ruela, President
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1 Certification of Incorporation of Wall Street Web,
Inc.
3.2 Certificate of Amendment to the Certificate of
Incorporation of Wall Street Web, Inc.
3.3 Certificate of Amendment to the Certificate of
Incorporation of Wall Street Web, Inc.
3.4 By-Laws of Wall Street Web, Inc.
27 Financial Data Schedule
</TABLE>
