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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
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 5
Item 3. Description of Property 7
Item 4. Security Ownership of Certain Beneficial Owners and Management 7
Item 5. Directors, Executive Officers, Promoters, and Control Persons 7
Item 6. Executive Compensation 9
Item 7. Certain Relationships and Related Transactions 9
Item 8. Description of Securities
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters 12
Item 2. Legal Proceedings 13
Item 3. Changes In and Disagreements With Accountants 13
Item 4 Recent Sales of Unregistered Securities 13
Item 5. Indemnification of Directors and Officers 14
PART F/S FINANCIAL STATEMENTS
PART III
Item 1. Index to Exhibits 15
Item 2. Description of Exhibits 15
</TABLE>
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PART I
ITEM 1 - DESCRIPTION OF BUSINESS
Wall Street Web, Inc. (the "Company" or "stockrumors.com") and its predecessor
have been providing quality "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 the financial communities with access to financial rumor information
from the vast amount of sources. Allow 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. Stockrumors strives to become
the information source for arbitrageurs, traders, stockbrokers, fund managers,
institutional asset managers and curious stock market followers.
In order to achieve its mission Stockrumors 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.
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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
In 1994 only 3 million people were connected to the Internet and now the best
estimates run as high as 200 million. By mid-1999 the number of online stock
trading firms had risen to around 2,000 with over 7 million individual
investors. Interestingly enough, individuals doubled their number of monthly
trades once they began to perform online transactions (US States Bancorp Piper
Jaffey).
Online financial transactions are estimated to grow at an average of 30% to 35%
per year and online traders currently consist of 6% of the daily trading volume
in U.S. stock market. The Company believes that this market is under explored
and consists and comprises a inviting target market.
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 new and unique products and services to retain and
enhance the member base. Potential users will become familiar with Stockrumors
through aggressive affiliate marketing and advertising.
The primary target advertisers are large national and international corporations
which have a global reach -- as do the advertising agencies which represent
them. These firms are seeking specific demographics, which Stockrumors can
provide. These advertisers will become increasingly familiar with Stockrumors
with the increase of the Company's market position.
COMPETITION
Current successful web sites include TheStreet.com, Jagnotes.com, and
stockadvisor.com, which realized that their online membership community desired
information on Wall Street's rumors. However, some of these competitors have
discovered that creating a rumor segment takes significantly more time and
effort and capital then they were willing to spend. Therefore, some competitors
are now using Stockrumors as their source of information which validates the
Company's quality information and high rate of information flow.
The Company's successful network relationships 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. These web sites merely sell each
other's content which necessarily limits the necessity for their existence.
Unlike Stockrumors, those sites are nothing more than news resellers and
marketing organizations.
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<TABLE>
<CAPTION>
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How are
Services Cost Premium
Company Symbol Competitive Premium Are Geared Per Services Comments
Advantage Services Toward Month Accessed?
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<S> <C> <C> <C> <C> <C> <C> <C>
The Street.com TSCM- Provider of financial YES Primarily $9.95 On website via Provides
Nasdaq news, commentary non- password. extensive
and information professional information on
investors the day-to-day
happenings of
Wall Street
but generally
finds info out
when the rest
of the world
hears it too.
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Jagnotes.com JNOT- Consolidated reports YES Service was $9.95 Sent via fax or Strong niche
OTCbb of recent analyst primarily for email to subscriber has been
recommendations. professional prior to being developed over
investors, posted on site or many years
but the purportedly before but in general
website news is site lacks
shows their disseminated to proprietary
appetite to general public. information
attract the
masses of
non-pro
investors.
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Stockrumors.com Going Provider of up-to- YES Modular set- $9.95 Sent via email or Appears to be
public at date information of up to fax to subscriber. a small
present Wall Street rumors provide Being that the Street.com, but
on flexibility to rumors commented with the strong
Merger/Acquisition non- on are from sources rumor segment
and corporate news professional isolated, at least makes them
that can impact the and cutting- initially, from the extremely
investment edge content media, attractive
community, general for the Wall Stockrumors has an takeover
financial information Street pros. advantage over the targets.
and analyst competition. Money alone
upgrade/downgrades. cannot create a
strong "rumor
mill."
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</TABLE>
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RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
Operating Results. Results of operations may fluctuate significantly
from year to year. 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.
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.
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.)
Competition. See Section entitled "COMPETITION" above.
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 April 30, 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. Insufficient funds may require the Company to delay, scale back or
eliminate some or all of its product development, market development and
corporate development programs with an adverse effect on the Company's future
performance, or the Company may have to discontinue its operations entirely.
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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 OPERATION
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THIS REPORT AND THE
FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANINGS OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. SUCH STATEMENTS INVOLVE RISKS AND UNCERTAINTIES AND THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED BELOW IN FACTORS THAT MAY AFFECT FUTURE RESULTS.
OVERVIEW
Wall Street Web, Inc. (the "Company") provides quality "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 $230,000, 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. Revenues for the year ended April 30, 2000 of $228,000 reflect a
48% increase (or $74,000 increase) over the comparable 1999 period. This
increase is as a result of increased customer retention and the increased sale
of banner ads. The average number of subscribers increased from 640 during the
year ended April 30, 1999 to 795 for the year ended April 30, 2000.
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.
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 on the sale of banner ads.
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. 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.
LIQUIDITY AND CAPITAL RESOURCES
As indicated in the accompanying financial statements for the year ended April
30, 2000, the Company incurred a net loss of $188,735, 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 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 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 $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. 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 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 Unit offering price 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 effective date of the offering.
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
has entered into an underwriting agreement with an investment banking firm that
has agreed to underwrite the Company's initial public offering of Units 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.
We do not believe that our business is subject to seasonal trends or inflation.
On an ongoing basis, we will attempt to minimize any effect of inflation on our
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 effected.
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ADVERTISING
Stockrumors' short-term strategy is to work with advertisers and advertising
agencies to move a portion of their existing investment to the Company.
Long-term objectives including working with advertisers as they plan their
annual budget to include full sponsorship of the Company's programs at higher
spending levels.
Stockrumors 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
Stockrumors has developed strategic alliances with Datalink.net,
Companysleuth.com, Onlinetraders.com, Trendtrader.com and INF Corp.
The following major organizations will participate as partners:
<TABLE>
<S> <C> <C>
AOL Market Mavens Astrologers Fund
Microsoft CBS Marketwatch Day Traders
Yahoo CNNfn.com MR Stock
Lycos TheStreet.com DaytraderPro
Go Network WallStreet Strategies Daily Trader
Looksmart Market News Online Pristine Day Trader
Stock Online Power Net Volume Reversal Survey
Market Line Option Strategist FXC Investors Corp
MicroBros.Software Stockpickers.net Tulips and Bears
Walt Raby Report Seidner's Market Wisdom
Kelly Capital CommandoTrader Smartportfolio.com
</TABLE>
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.
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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:
<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 Vice President, CEO and Founder of Stockrumors. His
role consists of developing and maintaining the vision of the Company. Mr.
Ruela's extensive background in the financial community makes him aware of the
needs of both the day-trader and the Wall Street professional. Mr. Ruela's
experience as an OTC-Trader and Registered Representative of a first tier Wall
Street firm makes him uniquely qualified for his position. Mr. Ruela's clients
spanned a broad cross section of the investment community including: hedge
funds, retail daytraders and standard retail investors, all of which required
Mr. Ruela to provide them with research and investment ideas. It was at this
time Mr. Ruela realized that event driven trading was a highly profitable yet,
without accurate information, extremely risky. Information on the rumors was
typically inaccurate and untimely, but when it was fresh, the trades did prove
to be highly profitable. More and more, Mr. Ruela chased leads on new stories
and was quickly becoming a source of information to a growing number of clients
wanting to access the latest rumors on the street. This is where Mr. Ruela
identified the need for a quality information source on the rumors of Wall
Street and found himself as being that source. So began Stockrumors. Upon
leaving his position from the Wall Street firm, Mr. Ruela while developing the
infrastructure for Stockrumors, concurrently was assisting in the startup and
running of what is a competing enterprise, a successful website for an existing
wall Street Fax Newsletter.
THOMAS MELILLO, President, CFO and founder of Stockrumors.com. His role consists
of developing and maintaining the vision of the Company. Mr. Melillo's extensive
25-year background in corporate management makes him aware of the needs of both
the customer and the employee. Mr. Melillo also worked several years as an
OTC-Trader, which lends further credibility and makes him uniquely qualified for
his position. His contacts span a broad cross section of the investment
community. These contacts include: brokers, day-traders and retail investors. At
this time, Mr. Melillo was operating a stock market information service in which
he had contact with such clients on a day-to-day basis. He also provided
objective commentary through message boards and direct phone contact for
investment ideas. It was at this time that Mr. Melillo realized that his event
driven service was a very valuable tool, especially for trading, and was highly
profitable. It was apparent that information was critical and he was the conduit
for it. Information on rumors was typically inaccurate and untimely, but when it
was fresh, the trades did prove to be highly profitable. More and more, Mr.
Melillo realized both professional traders and retail investors did not have
access to rumor or event information in a timely fashion. This created the
opportunity for him to act as the finder and distributor of information that
could be profitable for trading. Mr. Melillo has ten years experience in
computer technical software and hardware setup, trouble shooting, and five years
in HTML and Internet related equipment and applications. In addition, he has
five years experience as a consultant, assisting small Internet startups with
day-to-day operations and problem solving.
JOSE URQUIJO, Sales Manager, Customer Service and PC Troubleshooter, he is
responsible for interaction with each advertisement representative firm as well
as creating new business directly with agencies and advertisers. Mr. Urquijo
also manages the sales staff, as well as the creation of and maintenance of
current clients representing advertisers of the financial community, public
corporations, ad agencies and subscribers. His customer service role shall be to
create a rapid response to client inquiries and requests. His support duties
include working with Jeff Shelly in the maintenance of Website,
Internet/Intranet, PC troubleshooting and PC upgrades. Mr. Urquijo received his
education and training at Bergen College, Paramus, New Jersey (Commercial Art
and Business Administration) as
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well as the Plaza School of Technology in the same city. His work experience
includes service with Price Waterhouse, Coopers Lybrand; Better Computer, the
Watts Room and Source Consulting.
JEFF SHELLY, Web Content Designer/Developer, is responsible for managing the
ever expanding web content, communicating with the major writers for proper
delivery to electronic form. Mr. Shelly is responsible for the development,
design, content and navigation for three corporate websites. He has also
developed and maintained the e-commerce web application for on-line purchases of
Company software. He has designed and developed the corporate Intranet project.
Mr. Shelly received his BS in Business Administration from New York University
and his work experience includes service at Metrocall, Incyte Media and Megasoft
On-Linc, Inc. At the Spring Internet World Expo `97 held at the Los Angeles
Convention Center, Mr. Shelly developed, designed and tracked on-line customer
satisfaction surveys for two product lines.
ITEM 6 - EXECUTIVE COMPENSATION
During the fiscal year 2000, John Ruela received compensation in the amount of
$43,000. During the previous fiscal year, 1999, Mr. Ruela received compensation
of $37,000.
During the fiscal year 2000, Thomas Melillo received compensation in the amount
of $13,000. Mr. Melillo received no compensation in 1999.
In addition, in 2000, Mr. Ruela and Mr. Melillo agreed to make capital
contributions to the Company's capital by waiving the Company's obligations
to pay each of them accrued compensation in the amount of $42,000 and $72,000,
respectively, in 2000, and $38,000 and $75,000, respectively, in 1999.
Both officers and directors of the Company anticipate receiving benefits as
beneficial shareholders of the Company and, possibly, in other ways. See "Item 5
- DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS".
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
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
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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.
If the Company does not meet the qualifications for listing on the NASDAQ
SmallCap Market, the Company may apply for quotation of its securities on the
NASD OTC Bulletin Board. In certain cases, the Company may elect to have its
securities initially quoted in the "pink sheets" published by the National
Quotation Bureau, Inc.
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
-11
<PAGE> 14
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 Registrant's common stock. As of
October 1, 2000, there were 10,664,000 shares of the Registrant's common stock
issued and outstanding. As of the date of this filing, there were no un-issued
shares of Registrant's common stock available for sale pursuant to Rule 144
under The Securities Act.
HOLDERS
The Registrant has approximately 55 common stock shareholders.
-12-
<PAGE> 15
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 Registrant has the following stock issuances
as described below. All such shares were sold 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.
2. On December 15, 1999, 5,000 shares of common stock were
issued for a total offering of $5,000.00.
3. On December 20, 1999, 10,000 shares of common stock were
issued for a total offering of $10,000.00.
4. On December 22, 1999, 10,000 shares of common stock were
issued for a total offering of $10,000.00.
5. On January 31, 2000, 5,000 shares of common stock were issued
for a total offering of $5,000.00.
6. On February 29, 2000, 20,000 shares of common stock were
issued for a total offering of $10,000.
7. On March 4, 2000, 20,000 shares of common stock were issued
for a total offering of $10,000.
8. On March 7, 2000, 2,500 shares of common stock were issued
for a total offering of $2,500.
9. On March 9, 2000, 6,500 shares of common stock were issued
for a total offering of $6,500.
10. On March 23, 2000, 20,000 shares of common stock were issued
for a total offering of $10,000.
11. On May 26, 2000, 540,000 shares of common stock were issued
for a total offering of $250,000.
(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.
-13-
<PAGE> 16
(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 Registrant'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.
-14-
<PAGE> 17
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.
</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: October 18, 2000 By /s/ JOHN RUELA
------------------------------
John Ruela, President
-15-
<PAGE> 18
WALL STREET WEB, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
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-7/14
F-1
<PAGE> 19
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> 20
WALL STREET WEB, INC.
BALANCE SHEET
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 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> 21
WALL STREET WEB, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
(Audited) (Unaudited)
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> 22
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 shares to
compensate con-
sultants and
employees of
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> 23
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 25,465 4,189
Cash, beginning of year 26,590 22,401
--------- ---------
Cash, end of year $ 52,055 $ 26,590
========= =========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE> 24
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 quality "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.
Revenue recognition:
Revenues are generated through the sales of subscriptions
and advertising banners and sponsorships on the Company's
web sites. Revenues are generally collected in advance on a
monthly, quarterly, semi-annual or annual basis and
recognized ratably over the respective periods of the
related contracts. Unearned fees are included in deferred
revenues in the accompanying balance sheet.
F-7
<PAGE> 25
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies (continued):
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.
Advertising costs:
Advertising costs are expensed when incurred. Advertising
costs were approximately $32,000 and $51,000 in 2000 and
1999, respectively.
F-8
<PAGE> 26
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies (concluded):
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 9,997,000 shares to the Principal Stockholders of
the Company in November 1999 had occurred in April 1998 when
the Company was incorporated (see Note 10).
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; 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.
F-9
<PAGE> 27
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
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 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. 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.
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 $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 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.
F-10
<PAGE> 28
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 3 - Basis of presentation (concluded):
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:
Computers and related equipment $19,409
Equipment 2,291
Furniture and fixtures 1,940
-------
23,640
Less accumulated depreciation 12,466
-------
Total $11,174
=======
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:
Net operating loss carryforwards $ 116,000
Deferred revenues 12,300
Depreciation (4,500)
---------
123,800
Less valuation allowance (123,800)
---------
Total $ --
=========
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.
F-11
<PAGE> 29
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
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.
Note 8 - Related party transactions:
During January 2000, the Principal Stockholders transferred a
total of 200,000 shares of the Company's common stock 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.
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.
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<PAGE> 30
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
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.
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, 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 nonaccountable expense allowance
and underwriter's warrants that will be subject to "demand"
and "piggy back" registration rights.
F-13
<PAGE> 31
WALL STREET WEB, INC.
NOTES TO FINANCIAL STATEMENTS
Note 10 - Commitments and contingencies (concluded):
Proposed public offering (concluded):
Among other requirements and restrictions, the Letter of
Intent will require the Company to file the appropriate
registration statement for the offering of the Units under
the Act and restrict the number of shares of common stock
issued by the Company as of the filing date for the
registration statement and the initial date of the public
offering to 11,000,000 shares.
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
$230,000, net of related offering costs of approximately
$20,000. It also issued 40,000 shares of common stock to a
consultant for services in connection with the sale of the
shares.
* * *
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