<PAGE> 1
PRE-EFFECTIVE AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPLIT SECOND TRADING, INC.
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(Exact Name of Registrant as Specified in its Charter)
FLORIDA 6799 59-3615724
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(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
100 S. ASHLEY DRIVE
SUITE 2050
TAMPA, FLORIDA 33602
TELEPHONE: (813) 505-8222 - FAX: (813) 227-9490
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(Principal Executive Offices)
GEORGE CARAPELLA
CHIEF EXECUTIVE OFFICER AND
ACTING CHIEF OPERATING OFFICER
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(Address and Telephone Number of Principal Executive Offices)
COPIES TO:
DAVID M. JEFFRIES, ESQUIRE
BUSH ROSS GARDNER WARREN & RUDY, P. A.
220 S. FRANKLIN STREET
TAMPA, FLORIDA 33602
TELEPHONE: (813) 224-9255 FAX: (813) 223-9620
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(Name, Address and Telephone Number of Agent for Service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of the Registration Statement, as
determined (by market conditions and other factors. If the only securities being
registered on this Form are being offered pursuant to dividend or interest
reinvestment plans, check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [X]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=============================================================================================================================
Proposed Proposed
Dollar maximum Maximum Amount of
Title of each class of securities Amount to be offering price Aggregate Offering Registration
to be registered registered per Unit Price Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per share ............ 2,000,000 $.50 $1,000,000 $264.00
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</TABLE>
(1) Estimated for the sole purpose of computing the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its Effective Date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement will thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
<PAGE> 2
SPLIT SECOND TRADING, INC.
CROSS REFERENCE SHEET
Showing Location in Prospectus of Part I Items of Form SB-2
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<CAPTION>
Item Number and Heading
in Form SB-2 Registration Statement Location In Prospectus
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<S> <C>
1. Front of Registration Statement and
Outside Front Cover Page of Prospectus.......................................Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus..........................................................Inside Front Cover Page;
Outside Back Cover
3. Summary Information and Risk Factors.........................................Prospectus Summary; Risk Factors
4. Use of Proceeds..............................................................Prospectus Summary; Use of Proceeds.
5. Determination of Offering Price..............................................Outside Front Cover Page; Risk Factors
6. Dilution.....................................................................Risk Factors; Dilution
7. Selling Security Holders.....................................................Selling Security Holders
8. Plan of Distribution.........................................................Outside Front Cover Page
9. Legal Proceedings............................................................Not Applicable.
10. Directors, Executive Officers, Promoters
and Control Person...........................................................Management; Principal Shareholders
11. Security Ownership of Certain Beneficial
Owners and Management........................................................Management; Principal Shareholders
12. Description of Securities....................................................Risk Factors; Capitalization; Securities;
Shares Eligible for Future Sale
13. Interest of Names Experts and Counsel........................................Legal Matters
14. Disclosure of SEC Position on
Indemnification for Securities Act Liabilities...............................Management
15. Organization within Last Five Years..........................................Management; Principal Shareholders
16. Description of Business......................................................Prospectus Summary; Business
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<PAGE> 3
<TABLE>
<S> <C>
17. Management's Discussion and Analysis or
Plan of Operation............................................................Management's Discussion and Analysis
18. Description of Property......................................................Not Applicable
19. Certain Relationships and Related Transaction................................Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters..........................................................Outside Front Cover Page; Risk Factors;
Description of the Securities
21. Executive Compensation.......................................................Management; Executive Compensation
22. Financial Statements.........................................................Financial Statements
23. Change in and Disagreements with Accountants
On Accounting and Financial Disclosure.......................................Not Applicable
</TABLE>
<PAGE> 4
PROSPECTUS
SPLIT SECOND TRADING, INC.
2,000,000 SHARES OF COMMON STOCK,
OFFERING PRICE: $.50 PER SHARE MAXIMUM
This prospectus relates to 2,000,000 shares of common stock, $.001 par value, of
Split Second Trading, Inc. ("Spilt Second"), a development stage, Florida
corporation. Of this amount, 1,000,000 shares are being offered by Split Second
and 1,000,000 shares are being offered by Spit Second's founder and sole
shareholder, George Carapella. Mr. Carapella has agreed with Split Second to not
sell any of his shares offered under this prospectus prior to the sale of all
shares being offered by Split Second.
Prior to this offering, there has been no public market for Split Second's
common stock and there is no assurance that a public market will develop or
continue after the completion of this offering. The initial public offering
prices of the shares will be determined solely by Split Second and bears no
relation to Split Second's earnings, assets, book value, net worth, or any
other factor normally used to value a company. Immediately after the initiation
of sales under this prospectus, Split Second plans to pursue quotation of its
common stock on the OTC Bulletin Board(R). Prior to quotation, Split Second
must be sponsored by a market maker that will register Split Second's common
stock for quotation by submitting information on Split Second to the NASD. The
NASD usually will approve approves or deny denies the request within three
business days of the filing. Split Second does not know whether it will be able
to find a market maker willing to sponsor it for quotation on the OTCBB, or
whether the NASD will approve Split Second for quotation.
The shares being sold by Split Second will be offered on a "best efforts" basis
by Split Second through its officers and directors. Split Second will offer its
shares for a price of $.50 per share, but may accept a lesser amount if
necessary to sell the shares. There is no minimum amount of shares that must be
sold, and offering proceeds will not be placed in any escrow account. This
means that Split Second will have the ability to use the offering proceeds as
they are received, regardless of how many shares are sold. The offering will
continue for 180 days following the date of this prospectus.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS TO BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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Total
Total Proceeds to the
Underwriting Proceeds to Split Selling
Price to Public Discounts Second Shareholder
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<S> <C> <C> <C> <C>
Per Share $.50 $-0- $500,000 $500,000
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</TABLE>
THE DATE OF THIS PROSPECTUS IS ____________, 2000
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<PAGE> 5
TABLE OF CONTENTS
<TABLE>
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SECTION PAGE NUMBER
<S> <C>
GENERAL INFORMATION .................................................. 5
PROSPECTUS SUMMARY ................................................... 6
Split Second ................................................ 6
The Offering ................................................ 7
RISK FACTORS ......................................................... 8
USE OF PROCEEDS ...................................................... 17
DETERMINATION OF OFFERING PRICE ...................................... 18
Dividend Policy ............................................. 18
Dilution .................................................... 19
CAPITALIZATION ....................................................... 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION .......................... 22
BUSINESS ............................................................. 23
Split Second ................................................ 23
The Online Trading Industry ................................. 23
Online Trading Products and Services ........................ 24
Growth Strategies for Expansion ...................................... 24
Quality & Customer Support ........................................... 25
Pricing ..................................................... 25
Industry Overview ........................................... 25
Trends Within the Industry .................................. 26
</TABLE>
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<PAGE> 6
<TABLE>
SECTION PAGE NUMBER
<S> <C>
Trend Toward Discount Brokers ............................... 26
Trend Toward More Sophisticated Traders/Investors ........... 26
Discount Brokers ............................................ 27
Online Brokers .............................................. 27
Marketing Strategy .......................................... 27
Employees ................................................... 27
Legal Proceedings ........................................... 27
MANAGEMENT ........................................................... 28
Directors and Executive Officers ............................ 28
Executive Compensation ...................................... 29
Chief Operating Officer, Secretary .......................... 29
Director Compensation ....................................... 29
Employment Agreements ....................................... 29
PRINCIPAL SHAREHOLDERS ............................................... 30
SELLING SHAREHOLDERS ................................................. 30
DESCRIPTION OF SECURITIES ............................................ 30
SHARES ELIGIBLE FOR FUTURE SALE ...................................... 31
TRANSFER AND WARRANT AGENT ........................................... 32
LEGAL MATTERS ........................................................ 32
EXPERTS .............................................................. 32
ADDITIONAL INFORMATION ............................................... 32
</TABLE>
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<PAGE> 7
GENERAL INFORMATION
IN MAKING AN INVESTMENT DECISION, YOU SHOULD RELY ON THE INFORMATION CONTAINED
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH
DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT MAKING AN OFFER TO SELL THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU
SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS IS ACCURATE ONLY
AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS. OUR BUSINESS AND PROSPECTS
MAY HAVE CHANGED SINCE THAT DATE.
IF SPLIT SECOND IS ABLE TO OBTAIN MARKET MAKERS WILLING TO SPONSOR ITS STOCK FOR
QUOTATION ON THE OTC BULLETIN BOARD, THESE MARKET MAKERS MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE SHARES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. THESE TRANSACTIONS MAY BE AFFECTED ON THE OTC ELECTRONIC BULLETIN BOARD
OR OTHERWISE. THIS STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
As of the date of this prospectus, Split Second will become subject to the
reporting requirements of the Exchange Act of 1934, and accordingly will file
all reports, proxy statements and other information with the SEC. Split Second
intends to furnish its shareholders with annual reports containing audited
financial statements after the end of each fiscal year, and make available such
other periodic reports as Split Second may deem to be appropriate or as may be
required by law. Split Second's fiscal year ends on December 31 of each year.
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<PAGE> 8
PROSPECTUS SUMMARY
The following summary may not contain all of the information that may be
important to you as an investor. You should read the entire prospectus,
including the financial data and related notes, before making an investment
decision. You should carefully consider, among other things, the discussed in
"Risk Factors." Unless the context requires otherwise, all references in this
prospectus to "Split Second," "we," "our" and "us" refer to Split Second
Trading, Inc.
SPLIT SECOND
Split Second is headquartered in Tampa, Florida and was formed for the purpose
of providing online brokerage and financial services. We intend to offer a
comprehensive range of services designed to attract a diverse range of
investors, from the average investor to the sophisticated or retail and/or
institutional stock trader. We intend to offer an online trading system under
the name "Split Second Trader." We intend to actively market and brand the name
to attract stock traders with an interest in online securities trading. Split
Second does not have, and will not have following completion of this offering,
the equipment and personnel necessary to provide online securities trading. Our
plan is to enter into private label agreements with third party service
providers that will provide real time market data and order processing for our
clients. We will be totally dependent upon these service providers for the
services comprising the core of our business.
Split Second is a development stage company and as of the date of this
prospectus, has not conducted any business operations. Prior to commencing
operations, we will need to obtain both regulatory approval as a securities
broker/dealer and contractual agreements with third party service providers. We
do not know how quickly we can accomplish these objectives, if at all. We will
be totally dependent upon the proceeds from this offering to fund our
development into an operating company. However, even with the proceeds from this
offering, we cannot be certain that we can obtain the necessary regulatory
approvals or find suitable third party providers. See "Risk Factors."
As a start-up entity, Split Second has had no experience in the securities
brokerage industry. Our founder, President and sole shareholder, George
Carapella, has had only limited experience in the securities industry, and no
experience with the on-line trading segment of that business. Accordingly, Split
Second will rely heavily on personnel it will engage, either as employees or
independent contractors, and third party service providers.
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<PAGE> 9
Split Second was incorporated in Florida in January 1999 and maintains its
executive offices at 100 S. Ashley Drive, Suite 2050, Tampa Florida 33502. Split
Second's telephone number is (813) 505-8222.
THE OFFERING
Securities Offered 2,000,000 shares of common stock,
1,000,000 of which are being offered
by Split Second and 1,000,000 by
Split Second's founder and sole
shareholder, George Carapella. See
"Description of Securities."
Maximum Offering Price $.50 per share.
Use of Proceeds General corporate purposes
including, but not limited to,
organizing and registering as a
broker/dealer with the NASD,
marketing and working capital.
Risk Factors An investment in the shares involves
a high degree of risk and therefore
the shares should not be purchased
by anyone who cannot afford the loss
of their entire investment.
Prospective purchasers of the shares
should carefully review and consider
the factors set forth under "Risk
Factors" as well as other
information contained in this
prospectus, before purchasing any of
the shares. See "Risk Factors."
SUMMARY FINANCIAL DATA
The following is a summary of our Financial Statements for the year ended
December 31, 1999, and for the six-month period ended June 30, 2000. This
Summary should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Financial Statements
and attached notes included in this prospectus.
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 JUNE 30, 2000
----------------- ----------------
(AUDITED) (UNAUDITED)
<S> <C> <C>
Revenues $0 $0
Occupancy and equipment rental 0 0
Other expenses 17,485 69,366
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C> <C>
Net income (loss) per share (17,485) (69,366)
BALANCE SHEET DATA:
Working Capital 0 0
Total Assets 5,000 18,869
Total Liabilities 13,485 96,720
Stockholder's Equity (8,485) (77,851)
</TABLE>
RISK FACTORS
An investment in the shares being offered hereby involves a high degree of risk.
Prior to making any investment decision, prospective investors should carefully
consider the following risk factors, together with the other information
presented in this prospectus, including the financial statements and
accompanying notes. We have divided the risk factors into two categories, one of
which relates to risks associated with Split Second's current condition and
intended business plan, and the other with risks particular to this offering. In
both categories, the most important risk factors in the view of management have
been listed first, although investors are urged to consider all of the risk
factors listed below.
RISK FACTORS RELATED TO SPLIT SECOND AND ITS BUSINESS PLAN:
SPLIT SECOND HAS NO OPERATING HISTORY
Split Second was recently reorganized in January 1999 and we have had no
operations to date. Accordingly, Split Second has no record of an operating
history upon which investors may base an evaluation of its performance or any
assumption that Split Second will be profitable. For at least the current fiscal
year, we are likely to incur losses from startup operations as a result of,
among other things, organization expenses, registration expenses, marketing and
expansion costs. Split Second may never commence operations or if operations are
initiated, we may never achieve and/or sustain profitable operations. Therefore,
Split Second's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by a new small business operating in a
highly regulated and competitive industry. See "Business."
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<PAGE> 11
SPLIT SECOND WILL INITIALLY BE HEAVILY DEPENDENT ON FOUNDER
Split Second will initially be totally dependent upon the experience, abilities
and continued services of George Carapella, its Chief Executive Officer, acting
Chief Operating Officer, Secretary and Director. The loss of services of Mr.
Carapella could cause Split Second to completely cease operations and would at
the very least have a material adverse effect on Split Second's business,
financial condition or results of operation. Split Second has entered into a
three (3) year employment agreement with Mr. Carapella. See "Management."
SPLIT SECOND'S FOUNDER WILL BE ENGAGED IN OTHER ENTERPRISES
Mr. Carapella is engaged in management of another company and will only devote
half of his time to development of Split Second's business plan. See
"Management." Mr. Carapella's attention to another business could impact the
completion of this offering and/or delay Split Second's efforts to commence
operations.
SPLIT SECOND WILL BE HAVE IMMEDIATE NEED FOR ADDITIONAL EXECUTIVE OFFICERS AND
EMPLOYEES
Mr. Carapella is not licensed to operate a broker/dealer or sell securities, and
furthermore will be devoting only half of his time and attention to Split
Second. Mr. Carapella is also a founder, director and officer of a travel
services company which will require the remainder of his time. See "Management."
As a result, prior to commencing operations Split Second will be required to
secure the services of individuals qualified and licensed to manage and operate
a broker/dealer. We cannot be certain that Split Second will be able to identify
the proper individuals or that such individuals would be willing to be employed
by Split Second on terms acceptable to Split Second. Assuming qualified
individuals are retained, the loss of one or more of these employees could
materially impact, or even terminate, Split Second's operations.
SPLIT SECOND WILL BE HEAVILY DEPENDENT UPON THIRD PARTY SERVICE PROVIDERS
In order to provide its customers with quotation and transaction processing,
Split Second will have to contract with third parties which provide these
services. We currently do not have contractual commitments for these services
and as of the date of this prospectus, have not entered into negotiations with
any service providers. We cannot be certain that we will be successful in
obtaining contracts for the provision of our core services, or that the terms of
these contracts will allow us to operate competitively or profitably. Assuming
that satisfactory contractual commitments are obtained, we will for the
indefinite future remain heavily dependent upon third parties' performance for
the provision of our core services.
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<PAGE> 12
SPLIT SECOND'S OPERATIONS WILL BE SUBJECT TO SUBSTANTIAL REGULATION
In order to offer online trading and other investment services, Split Second
will be required to become licensed with the NASD as a broker/dealer. Split
Second's business will be subject to extensive regulation at both the federal
and state level, as well as by industry self-regulatory organizations.
The SEC is the agency primarily responsible or administration of federal
securities laws. Much of the regulation of broker/dealers, however, has been
delegated by the SEC to industry self-regulatory organizations like the NASD.
The NASD has the authority to adopt rules (which are subject to approval by the
SEC) for governing the industry and the NASD conducts periodic examinations to
ensure compliance. In the event that Split Second violates the NASD rules, its
NASD membership can be suspended or revoked and the NASD may impose fines upon
it or censure it. Broker/dealers are also subject to regulation by state
securities commissions in the states in which they are registered.
The SEC, other governmental authorities and self-regulatory organizations have
the authority to institute administrative or judicial proceedings against any
entity subject to their jurisdiction and the entity's officers and employees.
These proceedings may result in censure, fine, civil penalties (including treble
damages in the case of insider trading violations), the issuance of
cease-and-desist orders, the de-registration or suspension of a broker/dealer,
the statutory disqualification of its officers or employees or other adverse
consequences, and, even if none of such actions is taken, could have a material
adverse effect on Split Second's perceived creditworthiness, reputation and
competitiveness. Customers of Split Second or others who allege that they have
been damaged by Split Second's violation of applicable regulations also may seek
to obtain compensation from Split Second, including the unwinding of any
transactions with Split Second.
In addition to the existing laws and regulations affecting Split Second,
additional legislation and regulations, amendments to existing laws and
regulations may be adopted in the future, or changes in interpretations or
enforcement of existing laws and regulations may be adopted in the future. Any
such event could directly affect the manner and operation and profitability of
Split Second.
SPLIT SECOND WILL HAVE POTENTIAL SECURITIES LAWS LIABILITY EXPOSURE IN
CONNECTION WITH ITS BUSINESS.
Many aspects of our business involve substantial risks of liability. In recent
years, litigation involving the securities industry has increased, including
class actions that generally seek substantial damages. Companies engaged in the
underwriting and distribution of securities are exposed to substantial liability
under applicable securities laws.
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<PAGE> 13
FAILURE TO COMPLY WITH NET CAPITAL REQUIREMENTS COULD SUBJECT US TO SUSPENSION
OR REVOCATION BY THE SEC OR EXPULSION BY THE NASD
The SEC, the NASD and various other regulatory agencies have stringent rules
with respect to the maintenance of specific levels of net capital by securities
brokers. Failure to maintain the required net capital may subject a firm to
suspension or revocation of registration by the SEC and suspension or expulsion
by the NASD and other regulatory bodies and ultimately could require our
liquidation. In addition, a change in the net capital rules, the imposition of
new rules or any unusually large charge against net capital could limit our
operations that require the use of capital. A significant operating loss or any
unusually large charge against net capital could adversely affect our ability to
expand or even maintain our present levels of business, which could harm our
business.
WE MAY EXTEND CREDIT TO OUR CLIENTS AND WILL BE SUBJECT TO RISKS AS A RESULT
We are subject to the risks inherent in extending credit to the extent that we
permit our clients to purchase securities on a "margin" basis. A portion of our
clients' securities activities may be transacted on a margin basis pursuant to
which credit will be extended to the client and secured by cash and securities
in the client's account, or through "short sales" (i.e., the sale of securities
not yet purchased). These risks are exacerbated during periods of volatile
markets in which the value of the collateral held by us could fall below the
amount borrowed by the client. If margin requirements are not sufficient to
cover losses, we may be required to sell or buy securities at prevailing market
prices and incur losses to satisfy client obligations.
OUR SUCCESS WILL DEPEND HEAVILY ON THE ACCEPTANCE OF ONLINE COMMERCE AND THE
INTERNET
Commercial exploitation of the Internet is still in the development stage and
investor use of Internet based securities trading will depend upon the continued
adoption of the Internet as a widely used medium for commerce and communication.
The Internet may not prove to be a viable commercial marketplace because of
inadequate development of the necessary infrastructure, such as a reliable
network backbone, or timely development of complementary services and products,
such as high speed modems and high speed communication lines. The Internet
infrastructure may not be able to support the demands placed on it by rapid
growth or could be negatively impacted by delays in the development or adoption
of new standards and protocols to handle increased levels of Internet activity,
or increased governmental regulation. Moreover, critical issues concerning the
commercial use of the Internet, including security, reliability, cost, ease of
use, accessibility and quality of service, remain in a state of constant change.
These issues may negatively affect the growth of Internet use or the
attractiveness of commerce and communication on the Internet. Our business will
be materially harmed if critical issues concerning the commercial use of the
Internet are not favorably resolved, the necessary infrastructure is not
developed, or the Internet does not become a viable commercial marketplace.
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<PAGE> 14
SPLIT SECOND WILL OPERATE IN A VERY COMPETITIVE INDUSTRY
The online financial services industry is highly competitive. Split Second will
compete with numerous companies such as E*Trade Group, Inc., AmeriTrade Holding
Corp., Charles Schwab & Co., Inc., TD Waterhouse, Discover Brokerage Direct, PC
Financial Network, Datek Securities Corp. Most of Split Second's competition are
larger and have greater financial and other resources than Split Second.
Increased competition could result in price reductions which could materially
adversely affect Split Second's business prospects. Further, there can be no
assurance that Split Second will be able to compete successfully against current
and future competitors or that competitive pressures faced by Split Second will
not have a material adverse effect on its business, prospects, financial
condition and results of operations. See "Business - Competition."
EMPLOYEE MISCONDUCT IS DIFFICULT TO DETECT AND COULD HARM OUR BUSINESS.
There have been a number of highly publicized cases involving fraud or other
misconduct by employees in the financial services industry in recent years, and
we run the risk that employee misconduct could occur. Misconduct by employees
could include binding us to transactions that exceed authorized limits or
present unacceptable risks, or hiding from us unauthorized or unsuccessful
activities. In either case, this type of misconduct could result in unknown and
unmanaged risks or losses. Employee misconduct could also involve the improper
use of confidential information, which could result in regulatory sanctions and
serious harm to our reputation. It is not always possible to deter employee
misconduct, and the precautions we will take to prevent and detect this activity
may not be effective in all cases.
THERE MAY NOT BE A PUBLIC MARKET FOR SPLIT SECOND'S COMMON STOCK
Prior to this offering, there has been no public market for Split Second's
common stock. We anticipate that if the offering is successful, Split Second's
common stock will be listed for quotation on the OTC Bulletin Board, but we
cannot be certain that any active trading market for the shares will develop. If
any market for the shares does develop, we cannot be
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<PAGE> 15
certain that it will continue. Accordingly, unless and until a public market
develops, purchasers of the shares may experience difficulty selling or
otherwise disposing of their shares.
OUR STOCK PRICE MAY TRADE BELOW THE OFFERING PRICE
If a trading market does develop for Split Second's common stock, the initial
trading price of the common stock will be determined by the broker filing the
Form 211 with the NASD to initiate trading on the OTC Bulletin Board. This price
may not reflect the actual value of the common stock and may bear no
relationship to the price at which the common stock will trade after it
initially commences trading. Furthermore, the initial or any subsequent trading
price may be below the price paid by investors in this offering.
OUR STOCK PRICE MAY BE VOLATILE
From time to time after this offering, there may be significant volatility in
the market price of the shares. Our quarterly operating results or other
developments, such as announcements by Split Second or our competitors regarding
acquisitions or dispositions, new procedures or technology, changes in general
conditions in the economy, and general market conditions could cause the market
price of our common stock to fluctuate substantially. The equity markets have,
on occasion, experienced significant price and volume fluctuations that have
affected the market prices for many companies' securities and have often been
unrelated to the operating performance of these companies.
SPLIT SECOND MAY NOT BE ABLE TO OBTAIN NEEDED FINANCING
Split Second anticipates that if all shares offered by it are sold, the proceeds
will be sufficient to fund its operation for a maximum of three to six months.
Management believes that this would include the initial formation of a
broker/dealer and implementation of Split Second's marketing program.
Thereafter, Split Second will likely need to raise additional funds to continue
to implement its expansion strategy. We cannot be certain that additional
financing will be available, or if available, will be on favorable terms.
SPLIT SECOND WILL CONTINUE TO BE CONTROLLED BY ITS FOUNDER
Upon the sale of all 1,000,000 shares offered by Split Second, Mr. Carapella
will beneficially own 80% of its outstanding common stock. If all the shares
offered by Mr. Carapella are sold, he will still own 60% of Split Second's
outstanding common stock. Split Second's stockholders do not have the right to
cumulative voting in the election of directors. Accordingly, Mr. Carapella will
be in a position to exert control over the business and operations of Split
Second, including the election of all directors of Split Second and approval of
all corporate transactions. See "Principal Stockholders."
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<PAGE> 16
WE HAVE SUFFERED OPERATING LOSSES AND CANNOT PREDICT WHETHER OUR FUTURE
OPERATIONS WILL BE PROFITABLE.
Since the formation of Split Second in January 1999, we have had no operations
or income. Accordingly, Split Second has experienced accumulated losses equal to
the expenses it has incurred which, as of June 30, 2000, equaled $86,851. As of
June 30, 2000, Split Second had an accumulated deficit in shareholders equity of
$77,851.
SHARES ELIGIBLE FOR FUTURE SALE MAY DEPRESS STOCK PRICE
Split Second has issued and outstanding 4,000,000 shares of common stock which
were issued to Mr. Carapella by Split Second in a private transaction in
reliance upon exemptions from registration under the Securities Act. These
shares may be sold only pursuant to an effective registration statement or an
applicable exemption, including the exemption contained in Rule 144 promulgated
under the Securities Act. Mr. Carapella has registered 1,000,000 of his shares
for sale in this offering, leaving 3,000,000 shares that may be sold at some
point under Rule 144. In general, under Rule 144 as currently in effect, a
shareholder, including an affiliate of Split Second, may sell shares of common
stock after at least one year has elapsed since such shares were acquired from
Split Second or an affiliate of Split Second. The number of shares of common
stock which may be sold within any three-month period is limited to the greater
of one percent of the then outstanding common stock or the average weekly
trading volume in the common stock during the four calendar weeks preceding the
date on which notice of such sale was filed under Rule 144. Certain other
requirements of Rule 144 concerning availability of public information, manner
of sale and notice of sale must also be satisfied. In addition, a shareholder
who is not an affiliate of Split Second, and who has not been an affiliate of
Split Second for 90 days prior to the sale and who has beneficially owned shares
acquired from Split Second or an affiliate of Split Second for over two years
may resell the shares without compliance with the foregoing requirements under
Rule 144.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of Split Second's common stock prevailing from time to time. Nevertheless,
sales of substantial amounts of common stock, or the perception that such sales
may occur, could have a material adverse effect on prevailing market prices. See
"Description of Securities - Shares Eligible for Future Sale."
-14-
<PAGE> 17
Split Second does not anticipate paying dividends in the foreseeable future.
Split Second is a development stage company and has never declared or paid any
cash dividends on its common stock. Split Second intends to retain its earnings,
if any, to finance the growth and development of its business and therefore does
not anticipate paying any cash dividends on its common stock in the foreseeable
future. Although dividends are not limited currently by any agreements, it is
anticipated that future agreements, if any, with institutional lenders or others
may limit Split Second's ability to pay dividends on the common stock. Any
future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon Split Second's financial
condition, results of operations, capital and legal requirements and such other
factors as the Board of Directors deems relevant. See "Dividend Policy."
SPLIT SECOND'S SECURITIES WILL BE SUBJECT TO THE PENNY STOCK RULES WHICH COULD
AFFECT THE LIQUIDITY OF THE SECURITIES.
Split Second intends to seek quotation of its common stock on the OTC Bulletin
Board. In the absence of the common stock being quoted at a market price of at
least $5.00 per share or certain other exemptions, trading of the common stock
would be covered by Rule 15g-9 promulgated under the Exchange Act of 1934 for
non-NASDAQ and non-exchange listed securities. The rule requires that
broker-dealers who recommend securities covered by the rule to persons other
than established customers and accredited investors make a special written
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to sale. Furthermore, broker/dealer's must
disclose 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. If the broker/dealer is the sole
market maker for the security, the monthly account statements must also disclose
this fact and the broker/dealer's presumed control over the market for the
security.
Split Second will initially be subject to the regulations applicable to penny
stocks. Accordingly, the level of trading activity in Split Second's common
stock will likely be reduced, limiting the ability of broker/dealers to sell the
securities and the ability of purchasers in this offering to sell their shares
in the secondary market.
RISK FACTORS RELATED TO THIS OFFERING:
THERE IS NO MINIMUM NUMBER OF SHARES THAT MUST BE SOLD PRIOR TO USE OF OFFERING
PROCEEDS
This offering is being conducted on a best efforts basis, with no minimum amount
of shares that must be sold prior to management's use of the proceeds. This type
of offering is especially risky because investors will have no assurance that
Split Second will be able to sell enough shares to commence
-15-
<PAGE> 18
operations. If we are unable to sell enough shares to activate our business
plan, the investors that did purchase shares will likely lose their entire
investment. Investors in this offering will suffer immediate substantial
dilution.
DILUTION
If all shares are sold at $.50 per share, the investors in this offering will
suffer immediate dilution of $.41 per Share. If shares are sold at amounts less
than $.50 per shares, some investors could experience even greater dilution. See
"Dilution."
THE SHARES MAY BE SOLD TO INVESTORS AT DIFFERENT PRICES
Split Second has established a maximum offering price for its shares of $.50 per
share. To complete the offering, we may need to sell shares at prices below $.50
per share. If we sell shares at prices below the price you paid, your investment
in Split Second will be further diluted.
MANAGEMENT HAS BROAD DISCRETION IN APPLICATION OF PROCEEDS.
We intend to use the net proceeds of this offering to register Split Second as a
broker/dealer, net capital requirements and general working capital. Within
these parameters, our management will have significant flexibility in the use of
the proceeds and the failure our management to apply the funds effectively could
harm our business. See "Use of Proceeds."
THE OFFERING PRICE OF THE SHARES HAS BEEN ARBITRARILY DETERMINED
The offering price of the shares has been determined solely by Split Second and
is not necessarily related to Split Second's assets, earnings, book value or any
other objective standard of value.
USE OF FORWARD LOOKING STATEMENTS
Split Second has not had any operations which means that all descriptions of its
business contained in this prospectus are based not on historical operations,
but upon plans and assumptions made by Split Second's management. These
"forward-looking statements" are typically phrased using words such as "may,"
"will," "expect," "believe," "anticipate," "intend," "could," "estimate" or
"continue" and similar expressions or variations. As these plans are activated,
the results may differ significantly from the results anticipated by management
due to unanticipated events, many of which are discussed in this "Risk Factors"
section.
-16-
<PAGE> 19
USE OF PROCEEDS
Assuming the sale of all shares being offered by Split Second at a price of $.50
per share, the net proceeds to Split Second, after deducting estimated expenses
payable by Split Second in connection with the offering, are estimated to be
approximately $475,000. Split Second expects to use the net proceeds as follows:
PERCENTAGE OF
PURPOSE AMOUNT NET PROCEEDS
------- -------- -------------
Organizational and Broker
Registration Expenses $375,000 79%
Working Capital $100,000 21%
-------- ---
Total $475,000 100%
---------------
Pending application of the proceeds of this offering, we intend to invest the
net proceeds in certificates of deposit, money market accounts, United States
government obligations or other short-term interest bearing obligations of
investment grade.
The table above represents Split Second's best estimate of its allocation of the
net proceeds of the sale of the shares based upon Split Second's business plan
and current economic and industry conditions. If unanticipated events occur
which increase Split Second's organizational and broker registration expenses,
amounts allocated to working capital will be used to fund any shortfall. Other
than expenses associated with becoming organized and registered as a
broker/dealer, the allocations in the table above are only general, and
management will have complete discretion over the use of proceeds. See "Risk
Factors- Management Has Broad Discretion in Application of Proceeds."
Split Second believes that if all shares offered by it are sold, the net
proceeds of this offering will be sufficient to organize a broker/dealer and to
satisfy its capital needs for a period of three to six months. This belief is
based upon assumptions made by management as to anticipated operating and
overhead expenses, the most significant of which are anticipated to be salary
expenses, office and equipment lease expenses and net capital requirements. We
cannot be certain that assumptions we have made
-17-
<PAGE> 20
regarding the number and salary of necessary employees, or the required office
space and equipment, will prove accurate. If our estimated expenses exceed our
expectations, or if there is some unforseen delay in our generation of sales
revenue, we could be forced to attempt to raise additional capital immediately
upon completion of this offering. See "Risk Factors Split Second May Not Be Able
to Obtain needed Financing."
After this three to six-month period, or sooner if our assumptions prove to be
incorrect, we may require additional capital in order to meet our then current
plans for expansion and capital requirements. This additional financing may take
the form of common or preferred stock or debt securities, or may involve bank
financing. We cannot be certain that Split Second will be able to obtain
additional capital on a timely basis, on favorable terms, or at all. If
additional capital cannot be obtained, Split Second may be unable to implement
its current plans for expansion. See "Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
DETERMINATION OF OFFERING PRICE
There is currently no public market for Split Second's common stock. Management
plans to offer the shares at prices determined from time to time by management,
up to a maximum of $.50 per share. Management may sell shares for less than $.50
per share in the event a purchaser purchases a significant number of shares or
Split Second has limited success in selling its shares for $.50 per share.
DIVIDEND POLICY
Split Second has never paid dividends on its common stock and does not
anticipate paying such dividends in the foreseeable future. The payment of
future cash dividends by Split Second on its common stock will be at the
discretion of the Board of Directors and will depend on its earnings, financial
condition, cash flows, capital requirements and other considerations as the
Board of Directors may consider relevant. Although dividends are not limited
currently by any agreements, it is anticipated that future agreements, if any,
with institutional lenders or others may limit Split Second's ability to pay
dividends on its common stock.
-18-
<PAGE> 21
DILUTION(1)
As of December 31, 1999, the net tangible book value of Split Second's common
stock was $ (13,485) or $(.0034) per share of the common stock. The net tangible
book value of Split Second's common stock is the tangible assets less total
liabilities. Dilution per share represents the difference between the amount
paid per share by purchasers in this Offering and the net tangible book value
per share after the Offering.
After giving effect to the sale by Split Second of 1,000,000 shares of common
stock offered hereby and the application of the net proceeds thereof, the net
tangible book value of Split Second's common stock as of December 31, 1999 would
have been approximately $461,515 or $.0923 per share. This represents an
increase in the net tangible book value per share of $.0957 to Split Second's
existing shareholders and an immediate dilution of $.41 per share to new
stockholders purchasing common stock in this Offering.
The following table illustrates this dilution on a per share basis:
Assumed public offering price per share ......................... $ .50
Net tangible book value per share before Offering ............... $(.0034)
Increase per share attributable to payments by new stockholders . $ .0957
-------
Net tangible book value per share after Offering ................ $ .0923
-------
Dilution per share .............................................. $ .41
=======
The following table summarizes the differences between the existing
stockholders and new investors with respect to the number of shares of common
stock purchased from Split Second, and the total consideration and the average
price per share paid:
---------------
(1) Assumes that Split Second sells the shares for $.50 per Share maximum
offering price.
-19-
<PAGE> 22
<TABLE>
<CAPTION>
Percentage of
Outstanding Percent of Average
Shares of Total Total Price
Shares of Common Consideration Consideration Per
Common Stock Stock Paid Paid Share
------------ ------------- ------------- ------------- -------
<S> <C> <C> <C> <C> <C>
Existing Stockholder 4,000,000 80% $9,000(2) 1.8% $.0023
New Investors 1,000,000 20% $500,000 98.2% $ .50
TOTAL 5,000,000 100.0% $509,000 100% $ .10
</TABLE>
---------------
(2) Consisting of $5,000 in cash and $4,000 in services.
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<PAGE> 23
CAPITALIZATION
The following table sets forth the capitalization of Split Second as of December
31, 1999, and as adjusted to give effect to the possible sale by Split Second of
up to 1,000,000 shares. There is no minimum number of shares that must be
purchased in this offering so there can be no certainty that Split Second will
be able to sell all 1,000,000 shares offered. Furthermore, shares may be sold
for less than $.50 per share. The table has been prepared for illustrative
purposes to show the capitalization if all 1,000,000 shares are in fact sold and
are sold for a price of $.50 per share. The adjusted capitalization will be
different if less than 1,000,000 shares are sold or if shares are sold for less
than $.50 per share. The table should be read in conjunction with the financial
statements and attached notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
December 31, 1999 December 31, 1999
Actual As Adjusted(3)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total assets: $ 5,000 $500,000
------------------------------------------------------------------------------------------------------------
Total current liabilities: 13,485 13,485
------------------------------------------------------------------------------------------------------------
Long-term debt: 0 0
------------------------------------------------------------------------------------------------------------
Stockholder's equity: Common stock $.001 par value, 4,000 5,000
50,000,000 shares authorized; 4,000,000 shares outstanding;
5,000,000 shares outstanding as adjusted
------------------------------------------------------------------------------------------------------------
Additional paid-in capital 5,000 499,000
------------------------------------------------------------------------------------------------------------
Total Stockholders Equity (8,485) 486,515
------------------------------------------------------------------------------------------------------------
Total Liability and Stockholders Equity $ 5,000 $500,000
------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
(3) Assumes sale of 1,000,000 shares of common stock at $.50 per share, less
expenses estimated to aggregate $25,000.
-21-
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Split Second is a development stage company that was organized by Mr. George
Carapella as a Florida corporation on January 6, 1999. Since its inception,
Split Second's activities have been limited to developing its business plan,
issuing common stock to Mr. Carapella, preparing initial financial statements
and preparing for this offering.
On January 6, 1999, Split Second issued 4,000,000 shares of common stock to Mr.
Carapella in exchange for his efforts in organizing Split Second. Mr. Carapella
made a payment of $5,000 to an attorney engaged to prepare this prospectus,
considered capital contribution.
COMPARISONS OF OPERATIONS SINCE INCEPTION TO JANUARY 6, 2000 TO DECEMBER 31,
1999
For the period ended December 31, 1999, Split Second did not have any revenues
as it is in the development stage. For the period ended December 31, 1999
salaries were $10,000, reflecting one month expense under the employment
agreement to its Chief Executive Officer. During the same period, legal expenses
were $2,830 reflecting normal legal expenses in connection with Split Second's
efforts to raise capital. Additionally, for the same period, organization
expenses were $4,255.
COMPARISONS OF OPERATIONS FROM JANUARY 1, TO JUNE 30, 2000
For the period from January 1, to June 30, 2000, the Company did not have any
revenues as it is in the development stage. For this period salaries increased
by $60,000 reflecting salary under the employment agreement to its chief
executive officer. During the same period, legal expenses increase by $4,991
reflecting normal legal expenses in connection with the Company's general
corporate matters. Additionally, for the same period, public company expense
increase by $1,914 reflecting filing fees and expenses in connection with Split
Second's filing of its registration statement, and other expenses increased
$2,461 reflecting normal administrative costs.
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<PAGE> 25
LIQUIDITY AND CAPITAL RESOURCES
Split Second is in the development stage and its operations to date have been
funded by Mr. Carapella. In order to commence operations, Split Second will need
to hire key employees, secure and equip an office facility, secure a
broker/dealer license and contract with third party service providers for the
provision of Split Second's core services. Because the third party service
providers do not require substantial deposits, the largest funding requirements
will be for employment and office related expenses and net capital requirements.
Without the funding provided by this offering, Split Second will not have
sufficient capital to implement its business plan to become a registered
broker/dealer offering online securities trading services. See "Use of Proceeds
and "Risk Factors."
As of the date of this prospectus, Split Second had no material commitments for
capital expenditures.
BUSINESS
SPLIT SECOND
Headquartered in Tampa, Florida, Split Second plans to seek registration as a
Securities Broker/Dealer with the NASD. Split Second plans to offer
comprehensive range of services but will focus on on-line trading. Split Second
will contract with existing service providers to offer its financial products
for the trading community. Split Second's executive offices are located at 100
S. Ashley Drive, Suite 2050, Tampa, Florida 33602 and its telephone number is
(813) 505-8222.
THE ONLINE TRADING INDUSTRY
The online trading sector is one of the fastest growing segments in the
brokerage industry, fueled by the following trends:
The explosion of personal computers and use of the Internet;
Low cost, widespread Internet access;
Free or low cost, high quality market related information online;
-23-
<PAGE> 26
Lower transaction costs online; and
Market reform on NASDAQ, resulting in full disclosure of bid
prices and market makers to the general public.
These factors have combined to create greater access to market information and
the ability to offer faster execution of trades, further stimulating demand in
the online arena.
ONLINE TRADING PRODUCTS AND SERVICES
Split Second plans to contract with third party service providers to offer an
electronic trading system which will employ cutting edge computer hardware and
software to instantly deliver real-time market data and process customer orders.
The system will be named and branded by Split Second as the "Split Second
Trader." As a supplement to electronic trading, Split Second intends to offer
quality quote, trading and research services, which we will provide by
contracting with a clearing house that provides these services to broker/dealer
operating companies. As of the date of this prospectus, we have had only
preliminary discussions with companies that can provide Split Second with the
services it will require. Based on these discussions, management is confident
that required contracts can be negotiated, provided that there can be no
certainty regarding the terms and conditions of these contracts until a
definitive agreement is executed. See "Risk Factors - Split Second Will Be
Heavily Dependent Upon Third Party Service Providers."
GROWTH STRATEGIES FOR EXPANSION
Split Second's goal is to become a technological, service oriented leader in the
securities trading field, with operating systems and concepts to empower clients
with real time information flow and quality execution systems. Our strategy to
accomplish this goal is to initially private label trading and information
services offered by third parties so that we can focus on marketing Split
Second's services. This strategy will allow management to concentrate on
marketing, but will cause Split Second to be heavily dependent upon the
performance of third party service providers. See "Risk Factors." Management
will attempt to minimize this risk to the extent possible by contracting with
service providers that have a reputation for quality and reliability. As Split
Second has not begun implementation of its business plan, there can be no
certainty that we will be able to achieve our goal.
-24-
<PAGE> 27
QUALITY & CUSTOMER SUPPORT
Customer support for all levels of service (trading, administrative, and
technical) will be among Split Second's highest priorities. Management realizes
that quality customer support is paramount to building a good reputation and to
establishing satisfied customers over the long term. Because many online trading
firms are offering low pricing, we believe that developing an excellent customer
support team is vital to our efforts to differentiate our services from the
competition. We believe that as the online trading industry matures, customers
will become increasingly sensitive to service issues like efficient execution of
orders, hold time on telephone inquiries and accurate and easily accessible
statements. To accomplish our goal of providing a high level of customer
service, we will strive to hire individuals with significant experience in
retail and discount brokerage industries, and we plan on utilizing licensed
brokers in customer support roles to the extent possible. We cannot be certain
that our efforts will result in Split Second developing a reputation for
superior customer service, or that if this reputation does develop, we will be
able to use that reputation to obtain additional customers.
PRICING
We plan to initially price our services at a level close to the prices offered
by other small firms offering online trading. We will be securing most of our
core services from third parties and as a result, do not believe that we will be
in a position to underprice our competitors. As stated above, our goal is to
distinguish our services by offering a high level of customer service. In order
to accomplish this goal, we may need to price our services above the prices
generally available to online traders. This could have a negative impact on our
marketing efforts.
INDUSTRY OVERVIEW
The retail brokerage industry provides an array of financial services, including
the trading of stocks and bonds; investing in mutual funds, IRAs and money
market accounts and providing investment
-25-
<PAGE> 28
research. The industry is currently divided into three different segments: full
service brokers, discount brokers and online brokers. Full service brokers
command the highest commission rates typically between 3% and 10%, and provide
advice on which stocks, bonds, commodities and mutual funds to buy or sell. A
full-service broker may also offer an asset management account and advise of
financial planning, tax shelters, income limited partnerships and new issues of
stock.
In contrast, discount brokers and online brokers, charge commissions that range
anywhere between 10% and 90% lower than full service brokers for similar
services. Discount brokers emerged in the mid 1970's with the advent of
negotiated commissions and the unbundling of investment services. These brokers
did not provide advice, but rather executed orders to buy and sell securities at
discounted commission rates. Since the 1970's, there has been an explosion of
over 100 discount brokers nationwide to fill the increasing demand for low cost
trading. By the 1990's, with the blossoming of the Internet, discount brokers
began offering their customers an alternative way - trading online to buy and
sell securities.
Evolving from the discount brokerage segment of the retail brokerage industry,
online brokers most of whom were discount brokers began offering online trading
over the Internet during this period. Online trading further reduces the cost
involved in executing a trade by elimination the human interaction required by
traditional discount brokers. In return, online brokers pass those savings
through to their customers, making these brokers the least expensive way to
trade securities. Source: Forrester Research.
TRENDS WITHIN THE INDUSTRY
With the information age upon us, the retail brokerage industry has been
undergoing dynamic changes. These have been primarily driven by the changing
demographics of traders/investors and the methods by which to access
information. As individuals become more sophisticated, they are demanding faster
execution of trades and lower commission rates on transactions. Further, with
advanced trading technologies, individuals are now able to obtain immediate
access to real time information. As a result of these trends, discount and
online brokers have flourished in recent years.
TREND TOWARD DISCOUNT BROKERS
In recent years, individuals have become much more pro-active in managing their
own investments. In addition, since the deregulation of brokerage commissions in
1975 and the resulting unbundling of brokerage services, investors have been
moving toward discount brokers for their trading activities.
TREND TOWARD MORE SOPHISTICATED TRADERS/INVESTORS
With the explosion of the Internet over the last few years, individual traders
and investors now have access to volumes of market information (such as research
reports, new releases and earnings releases). This has enabled individuals to
bypass the traditional stockbroker and make more informed decisions on their
own. As individuals become more sophisticated, the methods by which they are
-26-
<PAGE> 29
trading are also changing. Increasingly, individuals are placing orders via the
Internet and trading online, versus directly placing an order with their broker
via the telephone. These factors, in turn, have caused an increased demand for
online brokerage services.
DISCOUNT BROKERS
With the trend in the industry moving towards providing discount and online
brokerage services, competition between discount brokers will increase over the
next few years. To offer a greater range of services, many discount brokers are
now offering online trading to their customers. As online brokers continue to
enjoy the fastest growth rates in the industry, more discount brokers will offer
online services to accommodate their customers and capture a greater market
share. This facet of discount brokers represents the biggest competition to the
online category. Charles Schwab & Co., Inc. is the leader in this segment. In
addition, there are about 100 other national firms that compete with Schwab for
discount broker clients, including E-Trade, AmeriTrade, Quick & Reily, Datek and
most recently, Merrill Lynch & Co.
ONLINE BROKERS
There are approximately 30 online brokerage firms nationwide and this number is
growing quickly. As this segment further matures, the companies that provide the
highest quality customer service, the most state-of-the-art technology and the
most competitive fee structures will be the leaders in the market.
MARKETING STRATEGY
Split Second's management understands that targeted advertising will play a
critical role in gaining market share and a strong presence in Split Second
online industry. With this in mind, Split Second intends to develop an
aggressive, comprehensive marketing plan to build its market and educate
customers as well as developing brand name recognition and loyalty. Split
Second's advertising programs will be designed to capture market shares and
provide "brand name" recognition.
EMPLOYEES
As of February 1, 2000, Split Second had one part-time employee.
LEGAL PROCEEDINGS
Split Second is not currently subject to any legal proceedings.
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<PAGE> 30
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the directors
and executive officers of Split Second:
George Carapella 49 Chief Executive Officer and Chief
Operating Officer, Secretary and
Director
A director is elected for a period of one year at Split Second's annual meeting
of shareholders and serves until the next such meeting and until his or her
successor is duly elected and qualified. Directors may be re-elected annually
without limitation. Officers are appointed by, and serve at the discretion of,
the Board of Directors. Split Second's director does not presently receive any
compensation his services as director.
Set forth below is a biographical description of Split Second's director and
executive officer.
GEORGE CARAPELLA has served as Chief Executive Officer, Chief Operating Officer
and director of Split Second since its formation in January 1999. Mr. Carapella
is presently also the Chief Executive Officer, President and Director of
TravelLink Services, Inc., a Tampa, Florida based company formed in April 1999
that provides a travel referral program for the benefit of travel agents. Mr.
Carapella's responsibilities at TravelLink include marketing, development and
strategic planning. In May, 2000, TravelLink acquired Bay Area Travel, Inc., a
Tampa based provider of travel services. On August 12, 2000, Bay Area Travel
filed for protection under Chapter 11 of the United States Bankruptcy Code. From
1995 to 1998, Mr. Carapella was the Director of Footcare Centers of America,
Inc, a Florida corporation developed to consolidate the podiatric industry. He
assisted Footcare Centers in developing its marketing program and choosing
strategic management partners to evolve Footcare Centers to the point where
underwriters and investment bankers would consider financing Footcare Centers.
From 1990 to 1995, Mr. Carapella founded and served as the Chief Executive
Officer and a Director of 1-800-Low Airfare. This company was formed to provide
air travel programs for the consumer's benefit at cost effective rates by
implementing a marketing program through the use of vanity numbers, which are
used to market travel such as 1-800-fly-wings and # Fly,
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<PAGE> 31
and then negotiating rates with the airlines to provide the most cost effective
fares available in the market. Mr. Carapella sold his remaining interest in
1-800 Low Airfare in 1995.
EXECUTIVE COMPENSATION
The following table sets forth the compensation payable to Split Second's
management:
<TABLE>
<CAPTION>
Name and Principal Position Year Salary Other Compensation
--------------------------- ---- -------- ------------------------
<S> <C> <C> <C>
GEORGE CARAPELLA 1999 $ 10,000
EXECUTIVE OFFICER, 2000(4) $120,000(4) $400/MONTH CAR ALLOWANCE
CHIEF OPERATING OFFICER, SECRETARY
</TABLE>
---------------
(4) Based upon part-time employment of approximately 20 hours per week. See
"Employment Agreements."
Split Second has no retirement, pension or profit sharing program for the
benefit of its directors, officers or other employees but the Board of Directors
may recommend one or more such programs for adoption in the future.
DIRECTOR COMPENSATION
Directors of Split Second who are not salaried officers will receive no fee for
attending each Board meeting or meeting of a committee of the Board. All
directors will be reimbursed for their reasonable out-of-pocket expenses
incurred in connection with attending Board and committee meetings. In the
future, Split Second reserves the right to issue shares of Split Second's common
stock to non-officer Board members for their agreement to become a Board member.
EMPLOYMENT AGREEMENTS
In December 1999, Mr. Carapella entered into a three year Employment Agreement
at a base salary of $120,000 per year, with cost of living increases for years 2
and 3. Mr. Carapella's salary is based upon his devoting approximately half his
time to Split Second and half to his other employer, Travel Link Services, Inc.
Mr. Carapella also receives an auto allowance of $400 per month, medical
insurance coverage and inclusion in a 401K plan if Split Second implements such
a program.
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<PAGE> 32
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of Split Second's common stock as of the date of this Prospectus by
(a) each person known by Split Second to be the beneficial owner of more than 5%
of the outstanding Common Stock, (b) by each officer and director of Split
Second, and (c) by all officers and directors of Split Second as a group. Unless
otherwise indicated, each of the following persons has sole voting and
investment power with respect to the shares of common stock set forth opposite
his, her or its name.
<TABLE>
<CAPTION>
Percent of Percent of
Amount and Nature of Class Before Class After
Name of Beneficial Owner Beneficial Ownership(5) Offering Offering
------------------------ -------------------- ------------ -----------
<S> <C> <C> <C>
George Carapella 4,000,000 100% 80%
3818 S. Nine Drive,
Valrico, Florida 33594.
All Officers and
Directors as a Group (one person) 4,000,000 100% 80%
</TABLE>
---------------
(5) The persons named in the table have sole voting and investment power with
respect to all shares of common stock
SELLING SHAREHOLDERS
Mr. Carapella, Split Second's founder, sole Board member and Chief Executive
Officer, is registering for sale 1,000,000 of his 4,000,000 shares. Mr.
Carapella has agreed with Split Second that he will not sell any of his Shares
until Split Second has sold all 1,000,000 Shares offered by Split Second.
Assuming Split Second sells all 1,000,000 Shares and Mr. Carapella sells all
1,000,000 Shares he is registering, Mr. Carapella will still own 60% of Split
Second's then issued and outstanding common stock. Split Second is paying all
costs and expenses associated with registering for sale Mr. Carapella's Shares.
DESCRIPTION OF SECURITIES
The following description contains the material terms of Split Second's Articles
of Incorporation and By-laws relating to Split Second's capital stock. The
summary is qualified in its entirety by reference to Split Second's Articles of
Incorporation and By-laws, copies of which have been filed as Exhibits to the
Registration Statement of which this prospectus is a part.
-30-
<PAGE> 33
COMMON STOCK
Split Second is authorized to issue 50,000,000 shares of common stock, $.001 par
value per share. No preferred stock or other security is authorized. As of the
date of this prospectus, prior to giving effect to the securities to be issued
in this offering, there are 4,000,000 shares of common stock issued and
outstanding, all of which are held by Mr. Carapella. Holders of shares of common
stock are entitled to one vote per share of common stock on all matters
submitted to a vote of the stockholders, and to receive dividends when declared
by our Board of Directors. Upon the liquidation, dissolution or winding up of
Split Second, holders of shares of common stock are entitled to share ratably in
any assets available for distribution to stockholders after payment of all
obligations of Split Second and after provision has been made with respect to
each class of stock, if any, having preference over the common stock. Holders of
shares of common stock do not have cumulative voting rights or preemptive,
subscription or conversion rights. See "Risk Factors" and "Dividend Policy."
SHARES ELIGIBLE FOR FUTURE SALE
All shares of common stock being offered hereby will be immediately tradable
without restriction or further registration under the Securities Act of 1933.
The outstanding shares of common stock include 4,000,000 shares of common stock
outstanding deemed to be "restricted securities," as that term is defined under
Rule 144 promulgated under the Securities Act of 1933, in that those shares were
purchased or acquired by such stockholders of Split Second in transactions not
involving a public offering, and, as such, may only be sold pursuant to a
registration statement under the Securities Act, in compliance with the
exemption provisions of Rule 144, or pursuant to another exemption under the
Securities Act. All of such restricted Shares of common stock are eligible for
sale under Rule 144, subject to the volume limitations prescribed by the Rule.
In general, under Rule 144 as currently in effect, a shareholder, including an
affiliate of Split Second, may sell shares of common stock after at least one
year has elapsed since such shares were acquired from Split Second or an
affiliate of Split Second. The number of shares of common stock which may be
sold within any three-month period is limited to the greater of one percent of
the then outstanding common stock or the average weekly trading volume in the
common stock during the four calendar weeks preceding the date on which notice
of such sale was filed under Rule 144. Certain other requirements of Rule 144
concerning availability of public information, manner of sale and notice of sale
must also be satisfied. In addition, a shareholder who is not an affiliate of
Split Second (and who has not been an affiliate of Split Second for 90 days
prior to the sale) and who has beneficially owned shares acquired from Split
Second or an affiliate of Split Second for over two
-31-
<PAGE> 34
years may resell the shares of common stock without compliance with the
foregoing requirements under Rule 144.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of Split Second's common stock prevailing from time to time. Nevertheless,
sales of substantial amounts of common stock, or the perception that such sales
may occur, could have a material adverse effect on prevailing market prices and
could impair Split Second's ability to raise capital through the sale of its
equity securities.
TRANSFER AND WARRANT AGENT
Corporate Stock Transfer, Inc. a Colorado based transfer agent will provide
services to Split Second. Corporate Stock Transfer is located at 3200 Cherry
creek Drive South, Suite 430, Denver, Colorado 80209 and their telephone number
is (303) 282-4800 with a contact person of Carylyn Bell or Sally Rogers.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for Split Second
by David M. Jeffries, an attorney with the law firm of Bush Ross Gardner Warren
& Rudy, P.A., 220 S. Franklin Street, Tampa, Florida 33602.
EXPERTS
The audited balance sheets of Split Second were prepared by Baumann Stahl &
Raymondo & Company, P.A., 11210 N. Dale Mabry, Tampa, Florida 33618 and the
related Statements of Operations, Statements of Stockholder's Equity and
Statements of Cash Flows have been included herein and in the Registration
Statement in reliance upon the report, appearing elsewhere herein, of
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
Split Second has filed with the SEC a Registration Statement under the
Securities Act with respect to the shares it is offering to sell. This
prospectus omits certain information contained in the Registration Statement and
the attached exhibits, and references are made to the Registration Statement and
the attached exhibits for further information with respect to Split Second and
the shares it is offering to sell. Statements contained herein concerning the
provisions of any documents are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by such
reference. The Registration Statement, including exhibits and schedules filed
therewith, may be
-32-
<PAGE> 35
inspected without charge at the public reference facilities maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549 and at the regional offices of the SEC located at 7 World Trade Center,
Suite 1300, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
may be obtained from the Public Reference Section of the SEC, Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois upon payment of
the prescribed fees. Electronic registration statements (as well as proxy
reports and other information when filed) filed through the Electronic Data
Gathering, Analysis, and Retrieval System are publicly available through the
SEC's Website (http://www.sec.gov). At the date hereof, Split Second was not a
reporting company under the Exchange Act.
-33-
<PAGE> 36
SPLIT SECOND TRADING, INC.
(A DEVELOPMENT STAGE COMPANY)
-------------
FINANCIAL STATEMENTS
TOGETHER WITH
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
DECEMBER 31, 1999
<PAGE> 37
CONTENTS
PAGE
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
FINANCIAL STATEMENTS -
BALANCE SHEET F-2
STATEMENT OF OPERATIONS F-3
STATEMENT OF CASH FLOWS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
NOTES TO FINANCIAL STATEMENTS F-6
<PAGE> 38
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Split Second Trading, Inc.
Tampa, Florida
We have audited the accompanying balance sheet of Split Second Trading, Inc. (a
development stage company) as of December 31, 1999, and the related statements
of operations, cash flows and stockholder's equity for the period from January
6, 1999 (inception) to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Split Second Trading, Inc. at
December 31, 1999 and the result of its operations, and its cash flows in
conformity with generally accepted accounting principles.
/s/ Baumann, Stahl, Raymondo & Company, P.A.
--------------------------------------------
BAUMANN, STAHL, RAYMONDO & COMPANY, P.A.
Tampa, Florida
January 6, 2000
F-1
<PAGE> 39
SPLIT SECOND TRADING, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
(UNAUDITED)
DECEMBER 31, JUNE 30,
1999 2000
------------ -----------
<S> <C> <C>
CURRENT ASSETS
Deferred offering costs $ 5,000 $ 18,869
-------- --------
Total current assets 5,000 18,869
-------- --------
TOTAL ASSETS $ 5,000 $ 18,869
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,085 $ 13,508
Accrued salaries 10,000 70,000
Loan payable - related party -- 10,412
Other accrued expenses 400 2,800
-------- --------
Total current liabilities 13,485 96,720
-------- --------
STOCKHOLDER'S EQUITY
Common stock, $.001 par value, 50,000,000 shares
authorized, 4,000,000 shares issued and outstanding 4,000 4,000
Additional paid-in capital 5,000 5,000
Accumulated deficit during development stage (17,485) (86,851)
-------- --------
Total stockholder's equity (8,485) (77,851)
-------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY $ 5,000 $ 18,869
======== ========
</TABLE>
Read report of independent certified public accountants.
The accompanying notes are an integral part
of this financial statement.
F-2
<PAGE> 40
SPLIT SECOND TRADING, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
JANUARY 6, 1999 (Inception) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
JAN. 6, 1999
(UNAUDITED) (INCEPTION) TO
DECEMBER 31, JUNE 30, JUNE 30,
1999 2000 2000
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE $ -- $ -- $ --
----------- ----------- -----------
OPERATING EXPENSES
Salaries and benefits 10,000 60,000 70,000
Legal and accounting 2,830 4,991 7,821
Organization costs 4,255 -- 4,255
Public company expenses -- 1,914 1,914
Other expenses 400 2,461 2,861
----------- ----------- -----------
TOTAL OPERATING EXPENSES 17,485 69,366 86,851
----------- ----------- -----------
NET (LOSS) $ (17,485) $ (69,366) $ (86,851)
=========== =========== ===========
EARNINGS PER COMMON SHARE $ NIL $ (0.02) $ (0.02)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,000,000 4,000,000 4,000,000
=========== =========== ===========
</TABLE>
Read report of independent certified public accountants.
The accompanying notes are an integral part
of this financial statement.
F-3
<PAGE> 41
SPLIT SECOND TRADING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
JANUARY 6, 1999 (Inception) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
JAN. 6, 1999
(UNAUDITED) (INCEPTION) TO
DECEMBER 31, JUNE 30, JUNE 30,
1999 2000 2000
------------ ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(17,485) $(69,366) $(86,851)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Stock issued in exchange for services 4,000 -- 4,000
(Increase) decrease in current assets:
Deferred offering costs (5,000) (13,869) (18,869)
Increase (decrease) in current liabilities
Accounts payable 3,085 10,423 13,508
Accrued salaries 10,000 60,000 70,000
Other accrued expenses 400 2,400 2,800
-------- -------- --------
Total adjustments 12,485 58,954 71,439
-------- -------- --------
Net cash flows (used) by operating activities (5,000) (10,412) (15,412)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan from related party -- 10,412 10,412
Contributed capital 5,000 -- 5,000
-------- -------- --------
Net cash flows from investing activities 5,000 10,412 15,412
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES -- -- --
-------- -------- --------
NET INCREASE IN CASH $ -- $ -- $ --
======== ======== ========
</TABLE>
Read report of independent certified public accountants.
The accompanying notes are an integral part
of this financial statement.
F-4
<PAGE> 42
SPLIT SECOND TRADING, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
FROM JANUARY 6, 1999 (Inception) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
ACCUMULATED
LOSS DURING
COMMON PAID-IN DEVELOPMENT
SHARES CAPITAL CAPITAL STAGE
--------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
STOCK ISSUANCES:
Issuance of common stock to
George Carapella in exchange
for organization efforts 4,000,000 $ 4,000 $ -- $ --
Cash payment for expenses paid
by George Carapella -- -- 5,000 --
Loss during development stage -- -- -- (17,485)
--------- ----------- ------------ --------------
DECEMBER 31, 1999 4,000,000 4,000 5,000 (17,485)
Loss during the period (unaudited) (69,366)
--------- ----------- ------------ --------------
JUNE 30, 2000 (UNAUDITED) 4,000,000 $ 4,000 $ 5,020 $ (86,851)
========= =========== ============ ==============
</TABLE>
Read report of independent certified public accountants.
The accompanying notes are an integral part
of these financial statements.
F-5
<PAGE> 43
SPLIT SECOND TRADING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Split Second Trading, Inc., a Florida corporation organized January 6, 1999,
("Split Second"), is a development stage company, and as such has devoted most
of its efforts since its inception in developing its business plan, issuing
common stock, raising capital and obtaining financing, establishing its
accounting systems, and other administrative functions.
Cash and Cash Equivalents
For purposes of the statement of cash flows, Split Second considers amounts held
by financial institutions and short term investments with an original maturity
of 90 days or less to be cash and cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
The Split Second records its federal and state tax liability in accordance with
Financial Accounting Standards Board Statement No. 109 "Accounting for Income
Taxes". The deferred taxes payable are recorded for temporary differences
between the recognition of income and expenses for tax and financial reporting
purposes, using current tax rates. Deferred assets and liabilities represent the
future tax consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled.
As of December 31, 1999 no deferred taxes were recorded in the accompanying
financial statements.
NOTE C - RELATED PARTY TRANSACTIONS
On January 6, 1999, the Split Second issued 4,000,000 shares of its $.001 par
value common stock to George Carapella, its chief executive officer, and acting
chief operating officer in exchange for organization efforts of the Split
Second.
In October 1999, Mr. Carapella paid a $5,000 retainer the one of Split Second's
attorneys in behalf of Split Second, which Mr. Carapella considers an additional
capital contribution to Split Second.
Read report of independent certified public accountants.
F-6
<PAGE> 44
SPLIT SECOND TRADING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1999
NOTE C - RELATED PARTY TRANSACTIONS (CONTINUED)
In December 1999, the Split Second has established a 3-year employment agreement
with Mr. Carapella with a base salary of $120,000, which includes cost of living
increases, auto allowance, medical insurance coverage and inclusion in a future
401K plan.
NOTE D - STOCK OPTION PLAN
In December 1999, the Split Second established a 10-year stock option plan,
whereby up to 1,000,000 shares of the Split Second's $.001 par value common
stock may be granted to officers, directors, consultants, key employees,
advisors and similar parties who provide their skills and expertise to Split
Second. No options have been granted under this plan.
F-7
<PAGE> 45
PART II
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 607.0850(1) of the Florida Business Corporation Act (the
"Corporation Act") provides that a Florida corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no cause to believe his conduct was unlawful.
Section 607.0850(2) provides that a Delaware Florida corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine that despite the adjudication of liability, such person
is fairly and reasonably entitled to be indemnified for such expenses which the
court shall deem proper.
Section 607.085 further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) above or in the defense of
any claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 607.085 shall not be deemed exclusive
of any other rights to which the indemnified party may be entitled. with the
action.
Split Second's Certificate of Incorporation and By-laws provide that
Split Second shall indemnify certain persons, including officers, directors,
employees and agents, to the fullest extent permitted by Section 607.085 of the
Corporation Act. Reference is made to the Certificate of Incorporation and
By-laws filed as Exhibits 3.1 and 3.2, respectively.
II-1
<PAGE> 46
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses to be borne by Split Second in
connection with the issuance and distribution of the Shares pursuant to the
Offering. Split Second will pay all costs and expenses associated with
registering Mr. Carapella's shares.
SEC registration fee $264.00
NASD filing fee $
NASDAQ SmallCap Market fee $
Estimated Legal fees and expenses $15,000
Estimated Accounting fees $ 2,000
Estimated Blue Sky fees and expenses $ 1,000
Estimated Printing and engraving expenses $ 2,000
Estimated Miscellaneous $ 4,736
Total fees and expenses $25,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On January 6, 1999, Split Second issued 4,000,000 Shares of its Common Stock to
George Carapella in exchange for services to be rendered to Split Second.
ITEM 27. EXHIBITS
3(i) Article of Incorporation
(ii) By-Laws
5 Opinion on Legality
10 Employment Agreement with George Carapella
23 Accountant's Consent
27.1 Financial Statements, December 31, 1999
27.2 Financial Statements, June 30, 2000 (Unaudited)
II-2
<PAGE> 47
ITEM 28. UNDERTAKINGS
1. The Registrant will, during any period in which it offers or
sells securities, a post-effective amendment to this registration statement to:
(a) Include any prospectus required by Section 10(a) (3)
of the Securities Act;
(b) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(c) Include any additional or changed material
information on the plan of distribution.
2. The Registrant will, for determining liability under the
Securities Act, treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
3. The Registrant will file a post-effective amendment to remove
from registration any of the securities that remain unsold at the end of the
offering.
4. The Registrant will provide to the Underwriter at the closing
certificates in such denominations and registered in such names as required by
the Underwriter to permit prompt delivery to each purchaser.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
6. For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1) or (4) or 497(h) under
the Act shall be deemed to be part of this registration statement as of the
time the SEC declared it effective.
II-3
<PAGE> 48
SIGNATURES
Pursuant to the requirements of the Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements of
filing on Form SB-2 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, there unto duly authorized, in the
City of Tampa, State of Florida on the 25th day of August, 2000.
SPLIT SECOND TRADING, INC.
By: /s/ George Carapella
--------------------------------------
George Carapella, Chief Executive Officer
Chief Operating Officer,
Secretary and Director
<PAGE> 49
------------------ COMPARISON OF FOOTNOTES ------------------
-FOOTNOTE 1-
Assumes that Split Second sells the shares for $.50 per Share maximum offering
price.
-FOOTNOTE 2-
Consisting of $5,000 in cash and $4,000 in services.
-FOOTNOTE 3-
Assumes sale of 1,000,000 shares of common stock at $.50 per share, less
expenses estimated to aggregate $25,000.
-FOOTNOTE 4-
Based upon part-time employment of approximately 20 hours per week. See
"Employment Agreements."
-FOOTNOTE 5-
The persons named in the table have sole voting and investment power with
respect to all shares of common stock
