U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
CEO-Channel.net, Inc.
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(Name of Small Business Registrant in its charter)
Florida 65-0904572
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 160-417
West Palm Beach, Florida 33401
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (561) 832-5696
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class to be registered
None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value
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(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire, Esq.
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
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TABLE OF CONTENTS
PART I
Item 1 Description of Business.
Item 2 Management's Discussion and Analysis or Plan of Operation.
Item 3 Description of Property.
Item 4 Security Ownership of Certain Beneficial Owners and Management.
Item 5 Directors, Executive Officers, Promoters and Control Persons.
Family Relationships
Business Experience
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Item 6 Executive Compensation.
Compensation of Directors
Item 7 Certain Relationships and Related Transactions.
Item 8 Description of Securities.
Preferred Stock
PART II
Item 1 Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
Item 2 Legal Proceedings.
Item 3 Changes In and Disagreements With Accountants.
Item 4 Recent Sales of Unregistered Securities.
Item 5 Indemnification of Directors and Officers.
PART F/S Financial Statements.
PART III
Item 1 Index to Exhibits.
Item 2 Description of Exhibits.
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PART I
Item 1. Description of Business
(a) Development
CEO-Channel.net, Inc., (the "Company" or "CEON") was organized as a
Florida corporation on February 8, 1999. The original purpose of the Company was
to develop an interactive financial information services web site. On March 1,
1999, the Company changed its name to CEO- Channel.com, Inc. to directly reflect
the nature of the Company's business of developing a multimedia interactive
financial services web site designed to provide unique company specific
information by broadcasting CEO infomercials over the Internet. On April 4,
2000, the Company changed its name to CEO-Channel.net, Inc. to conform to its
domain site on which it intends to develop its multimedia interactive financial
services web site. The United States Company's executive offices are presently
located at 222 Lakeview Avenue, Suite 160-417, West Palm Beach, Florida 33401
and its telephone number is (561) 832-5696.
The Company is filing this Form 10-SB on a voluntary basis so that the
public will have access to the required periodic reports on the Company's
current status and financial condition. The Company will continue to voluntarily
file periodic reports in the Event its obligation to file such reports is not
required under the Securities and Exchange Act of 1934 (the "Exchange Act").
In March 1999, the Company authorized the issuance of 200,000 shares of
Common Stock, $0.0001 par value per share as founders shares to its sole officer
and director. For such issuance, the Company relied upon Section 4(2) of the
Securities Act of 1933, as amended (the "Act") and Rule 506 of Regulations D
promulgated thereunder ("Rule 506") and Section 517.061(11) of the Florida Code.
See Part I, Item 7. "Certain Relationships and Related Transactions" and Part
II, Item 4.
"Recent Sales of Unregistered Securities."
In February and March 1999, the Company sold 2,000,000 shares of common
stock, $.0001 par value per share (the "Common") for cash in the amount of
$200,000, pursuant to Section 3(b) of the Securities Act of 1933, as amended
(the "Act"), and Rule 504 of Regulation D promulgated thereunder ("Rule 504")and
Section 517.061(11) of the Florida Code. These offerings were made in the State
of Florida and in France. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
There are no preliminary agreements or understandings between the
Company and its officers and directors or affiliates or lending institutions
with respect to any loan agreements or arrangements.
The Company intends to offer additional securities under Rule 506 of
Regulation D under the Act ("Rule 506) to fund its short and medium term
expansion plans. (See Part I, Item 1. Description of Business - (b) Business of
Issuer.").
See (b) "Business of Issuer" immediately below for a description of the
Company's proposed business.
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(b) Business of Issuer.
General
The Company is a developmental stage financial information services
company whose aim is to profit from the emerging multimedia Internet
broadcasting trend and it's convergence with the increasing popularity of
Internet advertising. The Company's interactive web site will present CEO
infomercials over the Internet to web-browsers, providing an alternative
approach to traditional resources. Recent advances in the creation of bandwidth
and the multicasting method of broadcasting that allows for real-time viewing,
is resulting in internet broadcasting gaining in popularity over traditional
broadcasting methods. The Company will use next-generation multimedia technology
and electronic broadcasting to enhance the informative content of its web site,
thereby attracting a significant following of web-browsers seeking investment
advice. The Company believes that by establishing brand recognition for its
unique interactive financial web site design, it will emerge as the industry
leader in this fast-growing market.
CEO-Channel.net, Inc. will provide critical information into the
personal insights of the members of a company's management team in addition to
the corporate summaries which are provided in Securities and Exchange filings.
The Company believes that the disclosure of personal insights by management
teams are key factors which are considered by the investing public when making
investment decisions. In accessing CEO-Channel.net the Company believes the
investing public will now be privy to an exclusive glimpse of the inner workings
of a company's corporate culture that heretofore was never accessible to the
general investing public. The non-conventional delivery of the uniquely personal
management insights dynamically transform and improve existing financial
information channels. The Company's web site and database for small-cap stocks
will be a valuable vehicle to better inform the investing public above and
beyond more traditional information providers. Not only will the CEO-Channel.net
become an information source to the public but it will also become the place to
go to meet company CEO's and to obtain an appreciation for the motivation behind
managerial decisions.
The Company will provide via its web site comprehensive financial
information to its web- browsers which contain detailed management profiles as
well as professional advice directly from seasoned analysts and company heads
that will evaluate and explore critical perspectives on the market and the
economy. CEO-Channel.net will serve as an Internet broadcasting service
available to all public company CEO's, providing each an opportunity to be aired
on a technologically advanced web-site and in front of a vast audience which
should grow daily. The Company's "infomercial" web-site will be an informative,
immediate, interactive tool for investors seeking to gain an original insight
into the personality behind their potential investment.
The Company believes that the CEO's of the NASDAQ Small-Cap Securities
companies will substantially increase their exposure to a greater public
audience, and web-browsers will in turn, gain valuable insights into the
thinking of managers of these companies free of charge. Central to the
CEO-Channel.net concept is the interactive function of its components/features
and the manner in which the Company will channel the information between
subscribers and our clients. The features whereby the Company will disseminate
information includes the following:
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o FORUMS: These will contain special topics, discussion panels and
education seminars of topics related to certain CEO profiles.
o CHAT ROOMS: Real-time discussions of the information concerning
the CEO profile in question-and-answer sessions entitled, "Lunch
with the CEO."
o BULLETIN BOARDS: On-Line information centers where subscribers
may post responses to infomercials and discussion sessions, offer
reactions directly to CEO's and suggest site content such as
which CEO's should be profiled and from what industry.
o SITE SPECIAL EVENTS: The Company's site will periodically host
keynote speakers who will contribute information or announcements
relevant to certain industries profiled by the infomercials. This
feature will be made available not only to subscribers but to any
browser who may gain access for a one-time visit to our site for
a nominal fee. SUBSCRIBER DATABASE: Demographics of subscribers
will be obtained from information posted on the bulletin boards
and incorporated in a database that will be offered to CEO's at a
fee.
Standard CEO Infomercial Content
The standard CEO infomercials will be broadcast live on the site to an
audience of web- browsers that will include potential online investors and
subscribers, as well as anybody interested in onbtaining financial information
over the Internet. All interviews will then be archived in the site's database.
The initial CEO infomercials will focus primarily on subjects that the Company
believes will provide added dimension to the information obtainable through
market indices. A personal glimpse of the CEO explaining his particular views,
will be central to the content of infomercial broadcasts. Other topics covered
will be comprised of the following:
o The CEO's personal aims and goals
o Specific company benchmarks
o Announcements of new product lines
o Financial Announcements to shareholders and prospective investors
Market Description and Analysis
Internet usage is growing at exponential rates. In fact some estimates
report that the number of Web users in 1998 were as high as 56 million. (See:
Investor's Business Daily, Internet is Weaving Its Way Throughout Society's
Fabric, January 19, 1999) The Company agrees with many analysts who hold the
view that the Internet and its usage today is merely the beginning of a new
revolution and is merely a launch pad for the potential capacity of the Internet
in the near future.
A subcategory of promising growth within the Internet is the
development of video and multimedia applications. There has been an ongoing
merging of video with internet mediums
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benefitting the Internet primarily. The Company believes that the number of
Internet browsers may soon exceed the corresponding television viewing audience
as the mass communications preference of the next century. The current rate of
growth in the number of Internet Browsers may in fact result in Internet
broadcasting replacing television within 5 to 10 years. In order for this
evolution to occur, however, it will be necessary to create additional
bandwidth. Bandwidth is the 28.8 kbps signal most consumers receive at home over
their telephone lines and is the lifeblood of Internet broadcasting. The greater
the bandwidth the more fluid a video will appear on a computer screen.
The evolution of internet capabilities to include the fluid
incorporation of video onto the Internet in the form of multimedia applications
has enhanced web site presentations, content and browser interactivity. The
presentation of video increases a web site's interactivity because it holds a
browser's attention longer and increases the likelihood that browsers will
return to the web site. The significant shift by web site designers to include
multimedia applications on the Internet, the Company believes, will greatly
influence the current market trend towards content-based multimedia web sites
that are aimed at delivering to browsers specific types of information and/or
services.
The high volume of Internet traffic caused by the increasing numbers of
browsers flocking to the web, has changed how the public views the usefulness of
the Internet from its early perception as a communication medium to a view of
the Internet as a commercial medium to be used by all manner of commerce. This
dramatic shift in viewpoint has been evidenced by the recent increases in
Internet advertising rates which have been further bolstered by the initiatives
of various Internet related companies commanding higher advertising dollars for
advertising space on their own sites.
The Web has become an interactive interface for commerce and for the
transmission of information that has appropriated even traditional broadcasting
and communication technologies. The Company believes that with demand surging
for both personal and business-related multimedia, and the Internet Service
Providers ("ISP's") competing for greater market share, a duel impetus is
fueling the need to send multimedia over the Internet. The key trends which have
contributed to the increased growth of multimedia on the Internet are the
following: the popularity of multimedia in its own right and the increase in
Internet advertising.
Marketing Strategy
The Company intends to profit from the present surge in demand for
multimedia technology on the Internet, by delivering next-generation online
video services via electronic broadcasting. The Company aims to establish an
extensive market presence within the financial information services industry by
offering a unique investor resource and establishing strong brand recognition.
Ceo- channel.net believes that its unique financial information will propel its
web site to a premier position within the market by its effective analysis and
exploitation of current market trends. The Company believes its combination of
innovative and practical content with state-of-the-art multimedia technology
will yield an attractive and profitable venture. The Company will strive to
remain at the forefront of timely and valuable developments in the financial
information services industry by constantly refining its web site and content
therein.
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BUSINESS STRATEGY
The Company's objective is to deliver financial information through
accessing the newly developing and evolving multimedia application available on
the internet and to become a leading brand name provider of such information
services. Our marketing strategy is to focus on the CEO's of various public
companies and to design industry specific internet infomercials which the web
browsing public can access on a 24 hour daily basis (hereinafter referred to as
"24/7") on the internet. Our market focus is on the growing web browsing public
and their growing interest in obtaining quality and timely insights into company
specific financial information.
PRESENT AND FUTURE COMPANY FOCUS
Our near-term marketing focus is to establish and solidify our market
presence and position as the "go to" source for Internet based Financial
Information Services in the United States and to use that foundation as a basis
for expanding into additional markets via the World Wide Web.
Risk Factors
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
1. Dependence on Management: Virtually all decisions concerning the
customers and users, advertisers, and potential strategic partners to begin to
contact, the type of services to promote and direct marketing material to
disseminate, and the establishment of a customer profile database by the Company
will be made or significantly influenced by the Company's President, Mr.
Christian Patrick Gutierrez. Mr. Gutierrez is expected to devote such time and
effort to the business and affairs of the Company as may be necessary to perform
his responsibilities as an executive officer of Gutierrez. The loss of the
services of Mr. Gutierrez would adversely affect the conduct of the Company's
business and its prospects for the future. The Company presently holds no
key-man life insurance on the life of, and has no employment contract or other
agreement with Mr. Gutierrez.
2. A Short History of Operations. We are a development stage company
with a limited operating history upon which an evaluation of the Company's
prospects can be based. Our prospects and the potential value of our common
stock must be considered risky. We face the uncertainties, expenses, delays and
difficulties associated with establishing a new Internet based Financial
Information Services business.
3. No Customer Base. The Company was only recently organized and
currently has no users or customers. Further, the very limited funding currently
available to the Company will not permit it to commence business operations in
the industry except on a very limited scale. There can be no assurance that the
debt and/or equity financing, which is expected to be required by the Company in
order for it to continue in business after the expiration of the next twelve
(12) months, will be available. The Company has no users or customers presently
and there can be no assurance that it will be successful in obtaining such in
its initial prospective marketing area encompassing the U.S. The Company could
be expected to experience substantial difficulty in attracting the high volume
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of customers in the prospective target market which would enable Ceo-channel.net
to achieve commercial viability. (See Part I, Item 1. "Description of Business,"
(b) "Business of Issuer - Business Strategy")
4. High Risks and Unforeseen Costs Associated with Ceo-channel.net's
Entry into the Internet based Financial Information Services Industry. There can
be no assurance that the costs for the establishment of a customer base or for
the obtaining of substantial flow of infomercial productions by public company
CEO's for Ceo-channel.net will not be significant. Therefore, the Company may
expend significant unanticipated funds or significant funds may be expended by
it without development of a commercially viable business. In addition, there can
be no assurance that cost overruns will not occur or that such cost overruns
will not adversely affect the Company. (See Part I, Item 1. "Description of
Business," (b) "Business of Issuer")
5. Ability to Grow. The Company expects to grow through internal
growth. The ability of the Company to grow will depend on a number of factors,
including the availability of working capital to support such growth, existing
and emerging competition and the Company's ability to maintain sufficient profit
margins in the face of increasing competition. The Company must also manage
costs in a changing regulatory environment, adapt its infrastructure and systems
to accommodate growth and recruit and train qualified personnel.
6. No Dividends. While payments of dividends on the Common Stock rests
with the discretion of the Board of Directors, there can be no assurance that
dividends can or will ever be paid. Payment of dividends is contingent upon,
among other things, future earnings, if any, and the financial condition of the
Company, capital requirements, general business conditions and other factors
which cannot now be predicted. It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future.
7. No Cumulative Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted and
one-third of the Company's outstanding Common Stock constitute a quorum,
investors who purchase shares of the Company's Common Stock may not have the
power to elect even a single director and, as a practical matter, the current
management will continue to effectively control the Company.
8. Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. (See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Managers.")
9. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common Shareholders. Potential Anti-Takeover and
Other Effects of Issuance of Preferred Stock May Be Detrimental to Common
Shareholders. The Company is authorized to issue up to 10,000,000 shares of
preferred stock. $.0001 par value per share (hereinafter referred to as the
"Preferred Stock"); none of which shares has been issued. The issuance of
Preferred Stock does not require approval by the shareholders of the Company's
Common Stock. The Board of Directors, in
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its sole discretion, has the power to issue shares of Preferred Stock in one or
more series and to establish the dividend rates and preferences, liquidation
preferences, voting rights, redemption and conversion terms and conditions and
any other relative rights and preferences with respect to any series of
Preferred Stock. Holders of Preferred Stock may have the right to receive
dividends, certain preferences in liquidation and conversion and other rights;
any of which rights and preferences may operate to the detriment of the
shareholders of the Company's Common Stock. Further, the issuance of any shares
of Preferred Stock having rights superior to those of the Company's Common Stock
may result in a decrease in the value of market price of the Common Stock
provided a market exists, and additionally, could be used by the Board of
Directors as an anti-takeover measure or device to prevent a change in control
of the Company.
10. No Secondary Trading Exemption. In the event a market develops in
the Company's shares, of which there can be no assurance, secondary trading in
the Common Stock will not be possible in each state until the shares of Common
Stock are qualified for sale under the applicable securities laws of the state
or the Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular state, the shares of Common Stock could
not be offered or sold to, or purchased by, a resident of that state. In the
event that a significant number of states refuse to permit secondary trading in
the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
11. Possible Adverse Effect of Penny Stock Regulations on Liquidity of
Common Stock in any Secondary Market. In the event a market develops in the
Company's shares, of which there can be no assurance, then if a secondary
trading market develops in the shares of Common Stock of the Company, of which
there can be no assurance, the Common Stock is expected to come within the
meaning of the term "penny stock" under 17 CAR 240.3a51-1 because such shares
are issued by a small company; are low-priced (under five dollars); and are not
traded on NASDAQ or on a national stock exchange. The Securities and Exchange
Commission has established risk disclosure requirements for broker-dealers
participating in penny stock transactions as part of a system of disclosure and
regulatory oversight for the operation of the penny stock market. Rule 15g-9
under the Securities Exchange Act of 1934, as amended, obligates a broker-dealer
to satisfy special sales practice requirements, including a requirement that it
make an individualized written suitability determination of the purchaser and
receive the purchaser's written consent prior to the transaction. Further, the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990 require a
broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure instrument that provides information about penny
stocks and the risks in the penny stock market. Additionally, the customer must
be provided by the broker-dealer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and the salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. For so long as the Company's Common
Stock is considered penny stock, the penny stock regulations can be expected to
have an adverse effect on the liquidity of the Common Stock in the secondary
market, if any, which develops.
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12. Need for additional Capital Resources. Our capital requirements
have been and will continue to be significant. Our future capital requirements
will depend on many factors. These factors include (i) the extent and timing of
acceptance of our services, (ii) the cost of increasing our sales and marketing
activities, (iii) our operating results and, (iv) the status of competing
services.
We anticipate that our existing capital resources and
revenues from operations will be adequate to satisfy our capital requirements
for at least the next 12 months. Because our capital requirements cannot be
accurately predicted, however, we may require additional financing prior to the
expiration of these 12 months. Also, we may require additional financing after
expiration of the 12 months. If and when needed, we may not be able to obtain
additional financing or if available such financing may be on terms not
satisfactory or advantageous to our shareholders. Our inability to obtain needed
financing could have a material adverse effect on our financial condition or
results of operations. We could be required to reduce significantly or suspend
our operations, including research and development activities, seek a merger
partner or sell additional securities on terms that are highly dilutive to the
purchasers of our common stock pursuant to the offering.
We have limited or no control of the above risks. Because we determine
our expenditure levels in advance of each quarter, our ability to reduce costs
quickly in response to an unforeseen revenue shortfall is limited. Therefore,
operating results would be adversely affected if projected revenues for a given
quarter are not achieved. Due to the foregoing and because of the relatively
fixed nature of certain of our costs our quarterly operating results are likely
to vary significantly in the future, period-to-period comparisons of our results
of operations may not necessarily be meaningful, in any event, such comparisons
may not be indicative of future performance.
13. The Company may not be able to successfully manage our growth. In
the event we experience substantial growth, such growth will challenge our
management and operating resources, require the hiring of more technical, sales
and marketing, support and administrative personnel, and customer service
capabilities, and directly cause the Company to expand management information
systems.
In addition, there can be no assurance that the Company will be able to
attract and retain the necessary personnel to accomplish our growth strategies
and/or not experience constraints that will adversely affect our ability to
satisfy customer demand in a timely fashion and/or to satisfactorily support our
customers. If the Company is unable to manage growth effectively, business and
results of operations could be materially and adversely affected.
14. Competition within the Internet based Financial Information
Services Industry is intense. The Internet based Financial Information Services
Industry in the United States is a business which is characterized by an
increasing and substantial number of new market entrants. These market entrants
have introduced or are developing an array of new services relating to the
internet transmission of financial information. Each of these entrants is
positioning its services as the preferred source for the web browsing public to
obtain public and insightful financial information and insights.
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This market is therefore characterized by intense competition. More
specifically, we compete with numerous well-established companies. These
companies include many of the on-line brokerage services companies, CNBC,
Bloomberg, Reuters and other internet based financial news and service
providers.
Certain competitors may be developing services which we are unaware.
These services may be similar or superior to our services. Most of our
competitors possess substantially greater financial, marketing, personnel and
other resources than us. They may also have established reputations relating to
the marketing and development of financial information services.
As the market for internet based financial information services
matures, new competitors are likely to emerge. Increased competition is likely
to result in price reductions, reduced gross margins and loss of market share,
any of which could materially adversely affect our business and results of
operations. There can be no assurance that we will be able to compete
successfully, that competitors will not develop services in a manner which may
render our services obsolete or less marketable, or that we will be able to
successfully enhance our services or develop new technological applications for
delivering financial information services when necessary.
15. The Company has limited Internet Financial Information Services
Industry experience. We will also rely on unrelated third parties to provide
material infomercial content as part of our Internet Financial Information
Services. Following the registration, we will have limited financial, personnel
and other resources to undertake extensive marketing activities. Achieving
market recognition and acceptance of our services will require significant
efforts and expenditures to create awareness, demand and interest by potential
system sponsors and browsers. There is no assurance that we will be able to meet
our current objectives or succeed in positioning our services as a preferred
choice for browsers wishing to access our financial information.
16. Intellectual Property Right Infringement. Our success in the
delivery of our Internet Financial Information is largely dependent upon our
software technology and third party information providers. The Company may also
rely on a combination of trade secret, copyright and trademark laws, and
non-disclosure agreements to protect its proprietary rights to financial
infomercial productions. There is no assurance that such measures will
adequately protect such proprietary rights. There is also no assurance that our
competitors will not independently acquire substantially equivalent or superior
rights to the same financial infomercial productions.
We believe that our services will not infringe on the intellectual
property rights of others and are not aware of any asserted claims. However,
there is no assurance that a person or company will not assert a claim against
us for violating such person's and/or company's property rights. It is also
possible that any such assertion may require us to enter into royalty
arrangements, resulting in possible extensive and costly litigation, or possibly
even prohibit us from marketing our services.
Competitive Environment
The market for the Company's products and services is characterized by
rapidly changing technology, evolving industry standards and frequent
introduction of new services. The Company's
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success will partially depend upon its ability to enhance the production of its
existing services and to introduce new and valuable information which web
browsers will find valuable and insightful. In addition, there can be no
assurance that services or technologies developed by one or more of the
Company's present or potential competitors could not render obsolete both
present and future services of the Company.
There also can be no assurance that the Company's services will receive
or maintain substantial market acceptance. Changes in customer preferences could
adversely affect levels of market acceptance of the Company's services and the
Company's operating results.
The industry that the Company operates in is characterized by
competition from new entrants, as well as competition by established
participants. Although the Company believes that it will be able to establish
and maintain a meaningful market niche, there can be no assurance that a
competitor with greater financial and human resources than the Company will not
enter the Company's market with services and technology similar to and/or
identical to those of the Company.
The Company's ability to compete successfully will depend in large part
on its ability to protect any proprietary software it may develop. The Company
currently has no patents, trademarks or copyrights with respect to its services,
software designs or processes, and will attempt to protect its efforts by
limiting the people with knowledge of its specifications to those with a need to
know and by having such persons execute confidentiality agreements. The Company
will also rely, to the extent possible, on trade secret law to protect its
intellectual property. There can be no assurance, however, that any intellectual
property protection or trade secret protection will be sufficient to protect the
Company and its business from others seeking to copy or appropriate the
Company's proprietary information.
To establish, maintain or increase the Company's market share position
in the Internet based Financial Information Services industry, we will
continually need to enhance our current services, introduce new product features
and enhancements, and expand application of developing technological
capabilities. We currently compete principally on the basis of the specialized
nature of our services and how they are delivered through the utilization of
multimedia technology.
Our competitors vary in size and in the scope and breadth of the
financial information services offered to the web browsing public. We may
encounter competition from a number of sources, including On-Line Brokerage
companies, National Media providers, National Newswire providers, CNBC,
Bloomberg, Rueters to name just a few. We compete against numerous, smaller,
privately-held companies with fewer resources based on breadth of financial
information , as well as larger, publicly-held companies with greater financial
resources, access to financial information and the resources to design and build
technologies to effectively disseminate it.
Many of our current and potential competitors, both privately-held and
publicly-held, have greater financial, technical, marketing and distribution
resources than ours. As a result, they may be able to respond more quickly to
new or emerging technological applications and changes in customer needs or to
devote greater resources to the development and distribution of their services.
In addition, because there are relatively low barriers to entry in the software
marketplace, we expect
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additional competition from other established or emerging companies as the
internet based financial information services market continues to mature.
Increased competition is likely to result in pricing pressures, reduced gross
margins and loss of market share, any of which could materially adversely affect
our business, financial condition and results of operations. There can be no
assurance that we will be able to compete successfully against current and
future competitors or that competitive pressures we encounter will not
materially adversely affect our business, financial condition and results of
operations.
Dependence on Key Customers and Suppliers
The Company is currently in the development stage and has no material
or critical customers, the loss of whom would have an adverse material impact on
operations. The Company does not anticipate that it will develop such
relationships in the near future.
Government Regulation
The Company's operations are subject to various federal, state and
local requirements which affect businesses generally, such as taxes, postal
regulations, labor laws, and environment and zoning regulations and ordinances
and the Federal Communications Commission.
We believe that current state and federal regulations concerning
electronic commerce do not apply to our current product line. However, there is
a move towards taxation of Internet use by several states including the State of
Washington.
FCC Regulatory Environment
The Company's efforts will be subject to the regulation of the Federal
Communication Commission ("FCC") because it will be operating an interactive
media broadcasting industry. Both federal and state authorities regulate the
manufacture and sale of multimedia production. The Company will obtain all
required federal and state permits, licenses, and bonds to operate its
facilities. There can be no assurance that the Company's operation and
profitability will not be subject to more restrictive regulation and increased
taxation by federal, state, or local agencies. All CEO-Channel.net, Inc.'s
programming is proprietary and will be protected by copyright laws.
Research and Development
The Company continues to make investments in research and development
to continue to remain on the leading edge in the delivery of multimedia
financial information services. The primary costs which are incurred in this
area entails the creation of new software code that can be applied to the ever
evolving utilization of video technology over the internet. Competing with
larger firms with substantially greater capital resources have required the
Company to devote significant portions of available resources to remain abreast
of industry developments and to offer competitive services.
13
<PAGE>
Reports to Security Holders
The Company will send out audited annual reports to its shareholders if
required by applicable law. Until such time, the Company does not foresee
sending out such reports.
The Company will make certain filings with the SEC as needed, and any
filings the Company makes to the SEC are available and the public may read and
copy any materials the Company files with SEC at the SEC's Public Reference Room
at 450 Fifth Street, N.W. Washington, D.C. 20549. The public may also obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC at (http://www.sec.gov).
Item 2. Management's Discussion and Analysis or Plan of Operation.
Discussion and Analysis
The Company was founded in February 1998 to develop an interactive
financial information services web site. It is a Florida chartered development
stage corporation which conducts business from its headquarters in West Palm
Beach, Florida. The Company has been focused upon the development of several
internet sites that it expects to be operational in late 2000 in accord with its
business plan, and has not generated revenues from operations from inception
(February 8, 1999) through March 31, 2000. Due to the Company's operating
history and limited resources, among other factors, there can be no assurance
that profitability or significant revenues on a quarterly or annual basis will
occur in the future. Moreover, the Company expects to continue to incur
operating losses through at least the fourth quarter 2000. And there can be no
assurance that losses will not continue after such date.
12 Month Plan of Operations
Over the next twelve(12) months the Company will focus on completing
the development of its internet sites and content to be provided therein. The
completion of the development of the Company's CEO-Channel.net will rely
significantly upon the Company's ability to obtain the commitment of various
CEO's of NASDAQ Small-Cap Securities companies to utilize these web sites as
viable alternative means of providing informative and valuable insights to the
public at large. It is the Company's belief that within the next twelve(12)
months by utilizing the full potential of next-generation multimedia technology
it will bring multimedia internet broadcasting of Financial and Company specific
information into the popular mainstream as a preferred communication and
information medium.
Over the next twelve(12) months the Company expects that it will be
necessary to raise additional funds to meet operating capital needs.
Accordingly, management is presently exploring all available alternatives for
debt and/or equity financing, including but not limited to private and public
securities offerings. The Company anticipates that it will offer over the next
twelve months as its central revenue raising alternative additional securities
under Rule 506 of Regulation D under
14
<PAGE>
the Act ("Rule 506) to fund its short and medium term expansion plans. All
anticipated offerings may be made to Florida residents located in the State of
Florida.
Net Sales
For the year ended December 31, 1999, a discussion regarding net sales
and the cost of sales is not applicable on an audited basis due to the fact that
research and development costs were not able to be offset to any extent.
Operating Expenses
Sales and Marketing: These expenses of the Company on an unaudited
basis consist mainly of compensation and general and administrative expenses.
Since inception through December 1999, the Company spent on an unaudited basis
approximately $ 104,187 on executive salaries, contract labor, related payroll
expenses, lease and related office expenses. The Company expects that such
expenses in 2000 will increase in absolute dollars as compared to 1999.
General and Administrative: These expenses of the Company on an
unaudited basis consist primarily of the general and administrative expenses for
salaries, contract labor and other expenses for management and finance and
accounting, legal and other professional services. From inception until the year
ended December 31, 1999 on an unaudited basis general and administrative
expenses were $47,064. The Company expects general and administrative expenses
to increase in absolute dollars in 2000 as compared to 1999, as the Company
begins to evolve from its research and development stage to its marketing and
active sales stage.
Results of Operations - For the Three Months ended March 31, 1999 and 2000
For the three(3) months ended March 31, 1999 and three(3) months ended
March 31, 2000, on an unaudited basis general and administrative expenses were
$135 and $17,287, respectively. The increase of $17,152 is due primarily to rent
and office expenses.
As of March 31, 1999 the Company had on an unaudited basis total
cumulative expenses of $153,413 of which $101,195 is attributable to
compensation expenses and $47, 064 is attributable to general and administrative
expenses.
Net Losses For the three(3) month period from January 1, 2000 to March
31, 2000 and 1999, the Company reported on an unaudited basis a net loss from
operations of $49,226 and $135 respectively. The first quarter 2000 net losses
include $28,000 in compensation to officers and $17,827 in general and
administrative expenses reflecting the Company's addition of officers and
increased office expenses related to the anticipated launch of its business plan
upon completion of its web site development. The first quarter 1999 net losses
include $135 in general and administrative expenses.
15
<PAGE>
Financial Condition, Capital Resources and Liquidity
On an unaudited basis as of the three(3) months ended March 31, 2000,
the Company had assets totaling $84,060 and liabilities of $11,341. Since the
Company's inception, it has accepted subscriptions in the amount of $224,980 in
cash as consideration for the issuance of shares of Common Stock.
In 1999, the Company accepted subscriptions in the amount of $224,980
from the sale of 2,200,000 shares of common stock in a private placement
conducted pursuant to an exemption from registration contained in sections 3(b)
of the Act and Rule 504 of Regulation D promulgated thereunder. The offering was
made in the State of Florida.(See: Part II, Item 4. "Recent Sales of
Unregistered Securities").
Net Operating Losses
The Company
On an unaudited basis the Company has net operating loss carry-forwards
of $152,000 which expire in the year beginning December 31, 2019 and 2020. The
company has deferred tax assets, cumulative as of March 31, 2000 of $23,000
resulting from the loss carry-forwards, for which it has established a valuation
allowance as the Company has no history of profitable operations. Until the
Company's current operations begin to produce earnings, it unclear as to the
ability of the Company to utilize such carry-forwards. (See: PART F/S - Notes to
Consolidated Unaudited Financial Statements - F-12)
Year 2000 Compliance
The Company has determined that the Year 2000 impact has not been
material to the Company and that it will not impact its business, operations or
financial condition since all of the internal software utilized by the Company
has been upgraded on site at minimal cost to support Year 2000 versions.
Forward-Looking Statements
This Form 10-SB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-SB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
demand for the Company's products and services, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
actual results or developments will conform
16
<PAGE>
with the Company's expectations and predictions is subject to a number of risks
and uncertainties, general economic market and business conditions; the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company; changes in laws or regulation; and other factors, most of which are
beyond the control of the Company. Consequently, all of the forward-looking
statements made in this Form 10-SB are qualified by these cautionary statements
and there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized,
that they will have the expected consequence to or effects on the Company or its
business or operations. The Company assumes no obligations to update any such
forward-looking statements.
Item 3. Description of Property
The Ceo-Channel.net, Inc., office is located at 222 Lakeview Avenue,
Suite 160-417,West Palm Beach, Florida, 33401. This office space is available to
the Company on a month to month basis at an annualized rate of $600. The Company
also leases office space in New York through an informal agreement through July
31, 2000. The current New York Lease requires monthly payments of $2,625, which
includes insurance, real estate taxes, building maintenance and upkeep.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
The following shareholding information relates to any person or group
who is known to be the beneficial owner of more than five percent of any class
of the issuer's voting securities:
--------------------------------------------------------------------------------
Title of Name and Address Amount and Nature Percent of
Class of Beneficial Beneficial Class
Owner Owner (1)
--------------------------------------------------------------------------------
Common Stock Christian Patrick Gutierrez(1) 200,000 9.09%
--------------------------------------------------------------------------------
All Executive Officers, Directors 200,000 9.09%
-----------------------------------
(1) Based upon 2,200,000 shares of the Company's Common Stock issued and
outstanding as of April 15, 2000.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
of our executive officers and directors. Our directors are generally elected at
the annual shareholders' meeting and
17
<PAGE>
hold office until the next annual shareholders' meeting or until their
successors are elected and qualified. Executive officers are elected by our
board of directors and serve at its discretion. Our bylaws authorize the board
of directors to be constituted of not less than one and such number as our board
of directors may determine by resolution or election. Our board of directors
currently consists of four members.
NAME AGE POSITION
-------------------------- --- --------
Christian Patrick Gutierrez 25 President, Secretary, Treasurer,
Director & Chairman of the Board
Stephan Chabanel 25 Technical Advisor
------------------------
Family Relationships
There are no family relationships between or among the executive
officer and director of the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934:
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors and persons who own more
than 10% of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (hereinafter referred to as the
"Commission") initial statements of beneficial ownership, reports of changes in
ownership and annual reports concerning their ownership, of Common Stock and
other equity securities of the Company on Forms 3, 4 and 5, respectively.
Executive officers, directors and greater than 10% shareholders are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
reports they file. To the Company's knowledge, Mr. Gutierrez comprises all of
the Company's executive officers, directors and greater than 10% beneficial
owners of its common Stock, and have complied with Section 16(a) filing
requirements applicable to them during the Company's fiscal year ended December
31,1999 up to the 1st quarter ended March 31, 2000.
Business Experience
Officers and Directors
The following is a brief description of the business background of our
executive officers, and directors:
CHRISTIAN PATRICK GUTIERREZ, has served as the Company's sole executive
officer since inception. He recently completed 2 years studying Spanish in
Chile. Prior to that, he served for 3 years in the U.S. Navy where he was
assigned to the Nuclear Technology Division. Christian has a degree in Physics
from Thomas Edison State College. Christian is also a graduate of the New York
Film Academy. He is fluent in both Spanish and French.
18
<PAGE>
STEPHAN CHABANEL, has served as the technical advisor since April 1999.
Mr. Chabanel's responsibilities include the architectural design for the
financial-service orientated site. His design includes provisions for a
trading-selling database as well as market research for the site's development.
Additionally, Mr. Chabanel is the Internet Site Designer for U-matters.com where
he has initiated and is responsible for the architectural design for the
service-orientated site which takes orders and provides tracking information
about shipments. Mr. Chabanel was employed at Prothault, Inc. as a Sales
Representative from September 1998 to April 1999 where his responsibilities
included client support, customer service, market research, and the development
of the Porthault line of products. From September 1998 to September 1999, he was
the Site Manager at DiginetDiamonds.com where he was responsible for the
preliminary architectural design for an e-commerce site creating provisions for
on-line orders and payments. Mr. Chabanel has been an Internet Site Designer
since 1996, some of his other designs and creations include: Pick
Communications.com., Lasertec International, and Ingenico America Corp. From
June 1991 to June 1997, while at Berner & Berner P.C., Mr. Chabanel was
responsible for the accuracy and reconstruction of the files for the company,
its clients and accounting department. In 1996 Mr. Chabanel earned his Bachelor
of Arts degree in History and Political Science from New York University.
Item 6. Executive Compensation:
At such time as the Company commences operations, it is expected that
the Board of Directors will approve the payment of salaries in a reasonable
amount to its officer for his services. At such time, the Board of Directors
may, in its discretion, approve the payment of additional cash or non-cash
compensation for services to the Company.
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans but has the intention of implementing
such plans in the future.
Compensation of Directors
The Company has no standard arrangements for compensating the directors
of the Company for their attendance at meetings of the Board of Directors.
Item 7. Certain Relationships and Related Transactions:
At the current time, the Company has no provision to issue any
additional securities to management, promoters or their respective affiliates or
associates. At such time as the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although the Company has a very large amount of
authorized but unissued Common Stock and Preferred Stock which may be issued
without further shareholder approval or notice, the Company intends to reserve
such stock for the Rule 506 offerings contemplated to implement continued
expansion, for acquisitions and for properly approved employee compensation at
such time as such plan is adopted. (See Part I, Item 1. "Description of Business
- (b) Business of Issuer.")
19
<PAGE>
Item 8. Description of Securities.
The Company is authorized to issue 50,000,000 shares of Common Stock,
$0.0001 par value. The issued and outstanding shares of Common Stock being
registered hereby are validly issued, fully paid and non-assessable. The holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may from time to time determine.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted upon
by the stockholders. A majority vote is required on all corporate action.
Cumulative voting in the election of directors is not allowed, which means that
the holders of more than 50% of the outstanding shares can elect all the
directors as they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any directors. The shares of Common
Stock have no preemptive, subscription, conversion or redemption rights and can
only be issued as fully paid and non-assessable shares. Upon liquidation,
dissolution or winding-up of the Company, the holders of Common Stock are
entitled to receive a pro rata of the assets of the Company which are legally
available for distribution to stockholders.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred
Stock, $0.0001 par value. Currently there are no issued and outstanding
preferred shares of the Company.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
Market Information
NONE
Shareholders
The approximate number of holders of record of common equity is 26 as
of April 15, 2000.
Dividends
The Company has never declared or paid any cash dividends on its common
stock and does not intend to declare any dividends in the foreseeable future.
20
<PAGE>
Item 2. Legal Proceedings
From time to time, we may be involved in litigation relating to claims
arising out of our operations in the normal course of business. The Company is
not currently a party to any legal proceedings.
Item 3. Changes in and Disagreements with Accountants.
Because the Company has been generally inactive since its inception, it
has not had independent accountants until the retention of Durland and Company,
CPA's, P.A., 340 Royal Palm Way, Suite 204, Palm Beach, Florida 33480. There has
been no change in the Company's independent accountant during the period
commencing with the Company's retention of Durland and Company, CPA's, P.A.
through the date hereof.
Item 4. Recent Sales of Unregistered Securities.
In March 1999, the Company authorized the issuance of 200,000 shares of
Common Stock, $0.0001 par value per share as founders shares to its sole officer
and director. For such issuance, the Company relied upon Section 4(2) of the
Securities Act of 1933, as amended (the "Act") and Rule 506 of Regulations D
promulgated thereunder ("Rule 506") and Section 517.061(11) of the Florida Code.
See Part I, Item 7. "Certain Relationships and Related Transactions"; and Part
II, Item 4. "Recent Sales of Unregistered Securities."
In February and March 1999, the Company sold 2,000,000 shares of common
stock, $.0001 par value per share (the "Common") for cash in the amount of
$200,000, pursuant to Section 3(b) of the Securities Act of 1933, as amended
(the "Act"), and Rule 504 of Regulation D promulgated thereunder ("Rule 504")and
Section 517.061(11) of the Florida Code. These offerings were made in the State
of Florida and in France. See Part II, Item 4. "Recent Sales of Unregistered
Securities."
The facts relied upon the by the Company to make the federal exemption
available include the following: (i) the aggregate offering price for the
offering of the shares of Common Stock did not exceed $1,000,000, less the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering of the shares in reliance on any exemption
under Section 3(b) of, or in violation of Section 5(a) of, the Act; (ii) no
general solicitation or advertising was conducted by the Company in connection
with the offering of any of the shares; (iii) the fact that the Company has not
been since its inception (a) subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended; (b) an "investment
Company" within the meaning of the Investment Company Act of 1940, as amended;
or (c) a development stage Company that either has no specific business plan or
purpose or has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity or
person; and (iv) the required number of manually executed originals and true
copies of Form D were duly and timely filed with the U.S. Securities and
Exchange Commission.
The facts relied upon to make the Florida exemption available include
the following: (i) sales of the shares of Common Stock were not made to more
than 35 persons; (ii) neither the offer nor the
21
<PAGE>
sale of any of the shares was accomplished by the publication of any
advertisement; (iii) all purchasers either had a preexisting personal or
business relationship with one or more of the executive officers of ELVA or, by
reason of their business or financial experience, could be reasonably assumed to
have the capacity to protect their own interests in connection with the
transaction; (iv) each purchaser represented that he was purchasing for his own
account and not with a view to or for sale in connection with any distribution
of the shares; and (v) prior to sale, each purchaser had reasonable access to or
was furnished all material books and records of the Company, all material
contracts and documents relating to the proposed transaction, and had an
opportunity to question the executive officers of the Company. Pursuant to Rule
3E-500.005, in offerings made under Section 517.061(11) of the Florida Statutes,
an offering memorandum is not required; however each purchaser (or his
representative) must be provided with or given reasonable access to full and
fair disclosure of material information. An issuer is deemed to be satisfied if
such purchaser or his representative has been given access to all material books
and records of the issuer; all material contracts and documents relating to the
proposed transaction; and an opportunity to question the appropriate executive
officer. In the regard, the appropriate executive officer of the Company
supplied such information and was available for such questioning.
Item 5. Indemnification of Directors and Officers.
Article XI of the Company's Articles of Incorporation contains
provisions providing for the indemnification of directors and officers of the
Company as follows:
(a) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, of 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 otherwise serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), 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 believed to be in, or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, has no reasonable cause to believe his conduct is unlawful. The
termination of any action, suit or proceeding, by judgment, order, settlement,
conviction upon a plea of nolo contendere or its equivalent, shall not of itself
create a presumption that the person did not act in good faith 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
reasonable cause to believe the action was unlawful.
(b) The corporation shall 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 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,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, 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,
22
<PAGE>
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation,
unless, and only to the extent that, the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnification for such expenses which such court
deems proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections (a) and (b) of this Article,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the officer,
director and employee or agent is proper in the circumstances, because he has
met the applicable standard of conduct set forth in Section (a) or (b) of this
Article. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote and represented at a meeting
called for purpose.
(e) Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in advance
of the final disposition or such action, suit or proceeding, as authorized in
Section (d) of this Article, upon receipt of an understanding by or on behalf of
the director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
(f) The Board of Directors may exercise the corporation's power to
purchase and maintain insurance on behalf of any person who 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, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under these Amended Articles of Incorporation, the Bylaws, agreements,
vote of the shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office and shall continue as to person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the heirs
and personal representative of such a person.
The Company has no agreements with any of its directors or executive
offices providing for indemnification of any such persons with respect to
liability arising out of their capacity or status as officers and directors.
23
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or executive officer of the Company as to which indemnification is
being sought.
PART F/S
The Financial Statements of Ceo-Channel.net, Inc., required by Item 310
of Regulation SB commence on page F-1 hereof in response to Part F/S of this
Registration Statement on Form 10-SB and are incorporated herein by this
reference.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report.............................................F-1
Balance Sheets...........................................................F-2
Statements of Operations.................................................F-3
Statements of Stockholders' Equity.......................................F-4
Statements of Cash Flows.................................................F-5
Notes to Financial Statements............................................F-6
<PAGE>
FRANK L. SASSETTI & CO.
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
CEO-Channel.Com, Inc.
Independent Auditors' Report
We have audited the accompanying balance sheet of CEO-CHANNEL.COM,
INC. (a development statge enterprise) as of December 31, 1999 and the related
statements of operations, changes in stockholders' equity, and cash flows for
the initial period (February 2 - December 31) then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CEO-CHANNEL.COM,
INC. (a development stage enterprise) as of December 31, 1999, and the results
of its operations and its cash flows for the initial period (February 2 -
December 31) then ended in conformity with generally accepted accounting
principles.
/s/ Frank L. Sassetti & Co.
March 29, 2000
Oak Park, Illinois
F-1
<PAGE>
<TABLE>
<CAPTION>
CEO-CHANNEL.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents (Note 1) $ 104,568
-----------------------
Total Current Assets 104,568
-----------------------
PROPERTY, PLANT AND EQUIPMENT (Note 3)
Equipment 30,866
Less accumulated depreciation 3,280
-----------------------
Net Property, Plant and Equipment 27,586
-----------------------
OTHER ASSETS
Deposits 125
-----------------------
Total Other Assets 125
-----------------------
$ 132,279
=======================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued payroll taxes $ 11,160
-----------------------
Total Current Liabilities 11,160
-----------------------
STOCKHOLDERS' EQUITY
Preferred stock, 10,000,000 authorized,
none issued and outstanding, no par value
Common stock, 50,000,000 authorized, 2,200,000
issued and outstanding, $0.0001 par value 220
Additional paid in capital 224,760
Deficit accumulated during the development stage (103,861)
----------------------
Total Stockholders' Equity 121,119
----------------------
$ 132,279
======================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
CEO-CHANNEL.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
THE INITIAL PERIOD (FEBRUARY 2,1999 - DECEMBER 31,1999)
<S> <C>
Revenues $
---------------------
Operating Expenses
Executive salaries 57,538
Payroll taxes 5,138
Group health insurance 1,100
Contract labor 14,130
Occupancy 13,125
Depreciation 3,280
Miscellaneous administrative expenses 1,228
Professional fees 3,006
Telephone 1,802
Office expenses 3,840
---------------------
Total Operating Expenses 104,187
---------------------
Loss From Operations (104,187)
---------------------
Other Income
Interest 326
---------------------
Total Other Income 326
---------------------
Net loss $ (103,861)
=====================
Net Loss Per Share $ (0.05)
=====================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
CEO-CHANNEL.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THE INITIAL PERIOD (FEBRUARY 2,1999 - DECEMBER 31,1999)
<S> <C>
PREFERRED STOCK -
Balance at beginning of year $
---------------------
BALANCE AT END OF YEAR $
=====================
COMMON STOCK -
Balance at beginning of year $
Par value of stock issued (2,200,000) 220
---------------------
BALANCE AT END OF YEAR $ 220
=====================
ADDITIONAL PAID IN CAPITAL
Beginning of year $
Proceeds in excess of par value of shares
of common stock issued 224,760
---------------------
BALANCE AT END OF YEAR $ 224,760
=====================
DEFICIT ACCUMULATED IN THE DEVELOPMENT STAGE
Beginning of year
Net loss $ (103,861)
---------------------
BALANCE AT END OF YEAR $ (103,861)
=====================
TOTAL STOCKHOLDERS' EQUITY $ 121,119
=====================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CEO-CHANNEL.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
INITIAL PERIOD (FEBRUARY 2, 1999 - DECEMBER 31,1999)
<S> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Loss $ (103,861)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 3,280
Changes in operating assets and liabilities -
Deposits (125)
Accrued expenses 11,160
---------------------
Net Cash Used In
Operating Activities (89,546)
---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment (30,866)
---------------------
Net Cash Used In
Investing Activities (30,866)
---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 224,980
---------------------
Net Cash Provided By
Financing Activities 224,980
---------------------
INCREASE IN CASH AND EQUIVALENTS 104,568
CASH AND EQUIVALENTS -
Beginning of period
---------------------
End of period $ 104,568
=====================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-5
<PAGE>
CEO-CHANNEL.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1 . SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - The Company is developing several internet sites that
expect to be operational in 2000.
Property, Plant and Equipment - Property, plant and equipment are valued
at cost. Depreciation is provided for by the straight-line method over the
estimated useful lives of the assets. Such charges totaled $3,280 for the
initial period (February 2, 1999 - December 31, 1999). The estimated
useful lives of equipment vary between three and five years.
Use of Accounting 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 reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from these estimates.
Per Common Share Amounts - Per common share amounts are computed on the
basis of the weighted average number of shares of common stock
outstanding. The Company had no dilutive securities outstanding for the
period presented. Accordingly, basic and diluted earnings per share are
the same.
2 . CASH FLOW INFORMATION
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid debt instruments that have a maturity of three months or
less when purchased to be cash equivalents. There were no cash payments
for interest or income taxes for the initial period (February 2, 1999 to
December 31, 1999).
3. LEASE OBLIGATIONS
The Company leases its office space in New York under an agreement through
July 31, 2000. The current lease requires monthly payments of $2,625,
which includes insurance, real estate taxes, building maintenance and
upkeep. Occupancy charges totaled $13,125 in the initial period (February
2 - December 31, 1999). Future minimum lease payments are $18,375 in the
year ended December 31, 2000.
4. CONCENTRATIONS
The Company maintains its cash balances at various high credit quality
financial institutions. The balances may, at times, exceed federally
insured credit limits.
F-6
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Balance Sheets.............................................................F-8
Statements of Operations...................................................F-9
Statements of Stockholders' Equity........................................F-10
Statements of Cash Flows..................................................F-11
Notes to Financial Statements.............................................F-12
<PAGE>
<TABLE>
<CAPTION>
CEO-Channel.com, Inc.
(A Development Stage Enterprise)
Balance Sheets
March 31, December 31,
2000 1999
----------------- ------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 57,482 $ 104,568
----------------- ------------------
Total current assets 57,482 104,568
----------------- ------------------
PROPERTY AND EQUIPMENT
Equipment 31,607 30,866
Less: Accumulated depreciation (5,154) (3,280)
----------------- ------------------
Net property and equipment 26,453 27,586
----------------- ------------------
OTHER ASSETS
Deposits 125 125
----------------- ------------------
Total other assets 125 125
----------------- ------------------
Total Assets $ 84,060 $ 132,279
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued payroll and related liabilities $ 8,716 $ 11,160
Accrued expenses 2,625 0
----------------- ------------------
Total current liabilities 11,341 11,160
----------------- ------------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, authorized 10,000,000
shares, 0 issued and outstanding 0 0
Common stock, $0.0001 par value, authorized 50,000,000
shares; issued and outstanding 2,200,000 220 220
Additional paid-in capital 224,760 224,760
Deficit accumulated during the development stage (152,261) (103,861)
----------------- ------------------
Total stockholders' equity 72,719 121,119
----------------- ------------------
Total Liabilities and Stockholders' Equity $ 84,060 $ 132,279
================= ==================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
CEO-Channel.com, Inc.
(A Development Stage Enterprise)
Statements of Operations
Period from
February 3, 1999
Three Months (Inception)
Ended March 31, through
-----------------------------------
2000 1999 March 31, 2000
----------------- ----------------- ---------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
REVENUES $ 0 $ 0 $ 0
----------------- ----------------- ---------------------
OPERATING EXPENSES
Compensation:
Officers 28,000 0 85,538
Others 1,526 0 15,657
General and administrative 17,827 135 47,064
Depreciation 1,873 0 5,154
----------------- ----------------- ---------------------
Total expenses 49,226 135 153,413
----------------- ----------------- ---------------------
Loss from operations (49,226) (135) (153,413)
----------------- ----------------- ---------------------
OTHER INCOME
Interest income 826 0 1,152
Total other income 826 0 1,152
----------------- ----------------- ---------------------
Net loss $ (48,400)$ (135)$ (152,261)
================= ================= =====================
Basic net loss per weighted average share $ (0.02)$ (0.01)
================= =================
Weighted average number of shares 2,200,000 48,898
================= =================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
CEO-Channel.com, Inc.
(A Development Stage Enterprise)
Statements of Stockholders'
Equity Period from February 3, 1999
(Inception) through March 31, 2000
Deficit
Accumulated
Additional During the Total
Number of Common Paid-in Development Stockholders'
Shares Stock Capital Stage Equity
------------- ----------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
BEGINNING BALANCE, February 3, 1999 (Inception) 0 $ 0 $ 0 $ 0 $ 0
Year Ended December 31, 1999:
----------------------------
Shares issued for cash 2,200,000 220 224,760 0 224,980
Net loss 0 0 0 (103,861) (103,861)
------------- ----------- ------------- ---------------- ---------------
BALANCE, December 31, 1999 2,200,000 220 224,760 (103,861) 121,119
Three Months Ended March 31, 2000:
---------------------------------
Net loss 0 0 0 (48,400) (48,400)
------------- ----------- ------------- ---------------- ---------------
BALANCE, March 31, 2000 (unaudited) 2,200,000 $ 220 $ 224,760 $ (152,261)$ 72,719
============= =========== ============= ================ ===============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
CEO-Channel.com, Inc.
(A Development Stage Enterprise)
Statements of Cash Flows
Period from
Three Months February 3, 1999
Ended March 31, (Inception)
through
----------------------------
2000 1999 March 31, 2000
--------------- --------------- --------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (48,400)$ (135)$ (152,261)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation 1,874 0 5,154
Stock issued for services
Changes in operating assets and liabilities:
(Increase) decrease in deposits 0 0 (125)
Increase (decrease) accrued expense 2,625 0 2,625
Increase (decrease) accrued payroll and related liabilities (2,444) 0 8,716
--------------- --------------- --------------------
Net cash used by operating activities (46,345) (135) (135,891)
--------------- --------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (741) 0 (31,607)
--------------- --------------- --------------------
Net cash used by investing activities (741) 0 (31,607)
--------------- --------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 0 5,000 224,980
--------------- --------------- --------------------
Net cash provided by financing activities 0 5,000 224,980
--------------- --------------- --------------------
Net increase (decrease) in cash (47,086) 4,865 57,482
CASH, beginning of period 104,568 0 0
--------------- --------------- --------------------
CASH, end of period $ 57,482 $ 4,865 $ 57,482
=============== =============== ====================
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-11
<PAGE>
CEO-Channel.com, Inc.
(A Development Stage Enterprise)
Notes to Financial Statements
(unaudited)
(1) Summary of Significant Accounting Policies
(a) The Company CEO-Channel.com, Inc. is a Florida chartered development
stage corporation which conducts business from its headquarters in West
Palm Beach, Florida. The Company was incorporated on February 3, 1999.
The Company has not yet engaged in its expected operations. The Company
is developing several internet sites that it expects to be operational
in 2000. Current activities include raising additional capital and
negotiating with potential key personnel and facilities. There is no
assurance that any benefit will result from such activities. The
Company will not receive any operating revenues until the commencement
of operations, but will nevertheless continue to incur expenses until
then.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
(b) Use of estimates The financial statements have been prepared in
conformity with generally accepted accounting principles. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition and revenues
and expenses for the year then ended. Actual results may differ
significantly from those estimates.
(c) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
(d) Net income (loss) per share Basic loss per share is computed by
dividing the net income (loss) by the weighted average number of common
shares outstanding during the period.
(e) Property and equipment All property and equipment are recorded at
cost and depreciated over their estimated useful lives, using the
straight-line method. Upon sale or retirement, the cost and related
accumulated depreciation are eliminated from their respective accounts,
and the resulting gain or loss is included in the results of
operations. Repairs and maintenance charges, which do not increase the
useful lives of the assets, are charged to operations as incurred.
(f) Interim financial information The financial statements for the
three months ended March 31, 2000 and 1999 are unaudited and include
all adjustments which in the opinion of management are necessary for
fair presentation, and such adjustments are of a normal and recurring
nature. The results for the three months are not indicative of a full
year results.
(2) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of no par value
preferred stock. Rights and privileges of the preferred stock are to be
determined by the Board of Directors prior to issuance. The Company had
2,200,000 and 0 shares of common and preferred stock issued and
outstanding, respectively, at March 31, 2000. In 1999, the Company
issued 2,200,000 shares of common stock under Regulation D offerings in
exchange for $224,980 in cash.
F-12
<PAGE>
CEO-Channel.com, Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(5) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company had net operating loss
carry- forwards for income tax purposes of approximately $152,000
expiring at December 31, 2019 and 2020.
The amount recorded as deferred tax assets as of March 31, 2000 is
approximately $23,000, which represents the amount of tax benefit of
the loss carry-forward. The Company has established a valuation
allowance against this deferred tax asset, as the Company has no
history of profitable operations.
F-13
<PAGE>
Part III
Item 1. Index to Exhibits
3(i).1 * Articles of Incorporation of Ceo-Channel.net, Inc.
f/k/a/ Ceo-Channel.com, Inc., f/k/a See You Online, Inc.
effective February 8, 1999.
3(i).2 * Amended Articles of Incorporation of Ceo-Channel.com, Inc.
f/k/a/ See You Online, Inc., filed March 4, 1999.
3(i).3 * Amended Articles of Incorporation of Ceo-Channel.net, Inc.
f/k/a/ Ceo- Channel.com, Inc., filed April 4, 2000.
3(ii).1 * Bylaws of Ceo-Channel.net, Inc. f/k/a/ Ceo-Channel.com, Inc.,
f/k/a/ See You Online, Inc.
27.1 * Financial Data Schedule
--------------------------
* Filed herein
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Ceo-Channel.net, Inc.
(Registrant)
Date:
--------------------------------------
Christian Patrick Gutierrez
President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- ----
By:
----------------------------
Christian Patrick Gutierrez President, Secretary
& Director
