As filed with the Securities and Exchange Commission on May 8, 2000
File No._________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WHOLESALE ON THE NET, INC.
(Exact name of registrant as specified in its charter)
Nevada 522200 75-2823489
- ----------------------------- ----------------------- ------------------
(State or jurisdiction of (Primary Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
1529 E. I-30, Suite 104, Garland, Texas 75043 (972) 303-0405
(Address, including the ZIP code & telephone number, including area code of
Registrant's principal executive office)
Thomas N. Bieger
1529 E. I-30, Suite 104, Garland, Texas 75043 (972) 303-0405
(Name, address, including zip code, and telephone number, including area code of
agent for service)
Copies to:
T. Alan Owen & Associates
Attorneys at Law
1112 East Copeland Road, Suite 420
Arlington, Texas 76011
(817) 460-4498
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of Each Amount Proposed Maximum Proposed Amount of
Class of Securities To be Offering Price Maximum Aggregate Registration
to be Registered Registered Per Unit Offering Price Fee
- --------------------------------------------------------------------------------
Common Stock,
$0.001 par value
Minimum 200,000 $0.25 $ 50,000 $278
Maximum 4,000,000 $0.25 $1,000,000 $278
- --------------------------------------------------------------------------------
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 the registration statement
shall hereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Initial Public Offering
Prospectus
Wholesale On The Net, Inc.
Minimum of 200,000 shares of common stock, and a
Maximum of 4,000,000 shares of common stock
$0.25 per share
The Offering: Thomas Bieger is the sole
Per Share Minimum Maximum officer and director and he is
--------- -------- ---------- offering the securities to
Public Price ... $ 0.25 $ 50,000 $1,000,000 investors. The funds will be
Underwriting held in escrow by an attorney
discounts .. 0.015 3,000 60,000 until the minimum amount is
Proceeds to sold and the offering will end
Issuer $0.235 $ 47,000 $ 940,000 on October 31, 2000.
Underwriting discounts/commissions are only
payable if registered broker-dealers
participate in the offering.
There is currently no market for our securities.
----------------------------
This Investment Involves a High Degree of Risk. You should Purchase Shares Only
If You Can Afford A Complete Loss. See "Risk Factors" Beginning on Page 3.
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or disapproved of
these securities or passed upon the adequacy
or accuracy of the prospectus. Any
representation to the contrary is a criminal
offense.
----------------------------
This Prospectus is dated May 2, 2000
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PROSPECTUS SUMMARY
OUR COMPANY
We are engaged in the sale of products over the internet. We plan to
focus on businesses who in our judgement are financially sound but who might
have a difficult time getting financing at a bank or other traditional sources.
We will lease to these type of businesses since we will be able to charge a
higher lease rate than to businesses with unblemished credit histories. We will
concentrate on equipment and vehicles that are an integral part of the business
which will help further to secure our financial position and secure our payment
stream.
THE OFFERING
Minimum Maximum
--------- ---------
Common stock offered 200,000 4,000,000
Total shares outstanding after this offering 1,200,000 5,000,000
USE OF PROCEEDS:
Most of the money you invest will represent proceeds to the company. We will use
the proceeds from this offering to:
o pay expenses of this offering
o develop our website to offer more products and better service
o marketing and general working capital
DILUTION: You will suffer substantial dilution if you invest in this offering.
The dilution is described below:
o assuming the minimum is sold, you will suffer a dilution of $0.84 for
every dollar you invest. In other words, a one dollar investment will
have a book value of $0.16 (sixteen cents) after the offering; a
twenty-five cent investment ($0.25 -one share) will have a book value
of $0.04 (four cents) after the offering;
o assuming the maximum is sold, you will suffer a dilution of $0.24 for
every dollar you invest. In other words, a one dollar investment will
have a book value of $0.76 (seventy- six cents) after the offering; a
twenty-five cent investment ($0.25 -one share) will have a book value
of $0.19 (nineteen cents) after the offering.
2
<PAGE>
RISK FACTORS
You should carefully consider the risks described below and all other
information contained in this prospectus before making an investment decision.
We rely on our sole officer and director, and since we have no other employees,
if we lose his services, we will cease operations causing your investment to
become worthless.
We depend upon the continued services of our executive officer. Since
we have no other executive officers and no capital with which to attract others
at this time, the loss of his services could cause our company to go dormant or
to close down, which would cause the value of your common stock purchased in
this offering to become worthless.
Our sole officer has no experience in operating an internet based company
company, and this lack of experience could cause our company to fail in its
business.
We are reliant on our sole officer to develop and operate our company
in an industry in which he has no experience. At this time he has no commitments
for sales or cross marketing agreements and may not be able to market the
website to generate sales in the future. If he is unable to generate sales, the
value of your investment may decline or become totally worthless.
If we sell only a small amount in this offering, we will only be able to develop
our website and only have limited funds with which to market our website; if we
do not market our website sufficiently, it could cause our business to grow
slowly or even fail.
Should we raise only a small amount in this offering we may only be
able to develop our website so that is it more user friendly and visually
appealing. If we raise only a small amount in this offering, a visually
appealing website is not sufficient in and of itself to generate sales, and we
may not have funds to market our website to generate sales; if this happens your
investment may become worthless.
If we sell only a small amount in this offering and technology changes rapidly,
we may not have the funds to dedicate to keeping up with the technology; if we
cannot keep up with the changing technology, it could cause our website to
become obsolete and cause your investment to become worthless.
The market in which the Company competes is characterized by rapidly
changing technology, evolving industry standards, frequent new service and
product announcements, introductions and enhancements and changing customer
demands. Accordingly, the Company's future success will depend on its ability to
adapt to rapidly changing technologies, to adapt its services to evolving
industry standards and to continually improve the performance, features and
reliability of its service in response to competitive service and product
offerings and evolving demands of the marketplace. The failure of the Company to
adapt to such changes would harm the Company's business. In addition, the
widespread adoption of new Internet, networking or telecommunications
technologies or other technological changes could require substantial
expenditures by the Company to modify or adapt its services or infrastructure.
If we only raise a small amount in this offering and technology changes too
rapidly, we may not have the funds to devote to these changes and if this
happens, your investment may become worthless.
3
<PAGE>
We have very little operating history and have not proved we can operate
successfully. If we fail, your investment in our common stock will become
worthless.
Having very little operating history makes it difficult to evaluate our
business and forecast our future operating results. We have not proved that we
can market effectively over the internet so as to generate sales and continue
finding products to sell. Our cash flow will be dependent on the successful
implementation of marketing plans and marketing arrangements to attract buyers
to our website. If we cannot enter into marketing arrangements to generate
sales, the business could suffer from poor cash flow, which will cause the value
of your investment in our common stock to decline or become worthless.
No public market has existed for our shares and an active trading market may not
develop or be sustained; if that happens, you may not be able to sell the shares
you purchase in this offering.
There has been no public market for our common shares. We cannot assure
you that an active trading market will develop or be sustained after this
offering. You may not be able to resell your shares at or above the initial
public offering price. The initial public offering price has been determined
arbitrarily and may not be indicative of the market price for our common shares
after this offering.
Our opinion from our independent certified public accountant has a paragraph
that states that we do not have sufficient capital to continue as a going
concern
A 'going concern opinion' which was expressed by our auditor means that
we do not have sufficient capital resources to operate for the next twelve
months in a manner similar to other companies in our industry. The risk to you
should you purchase common stock in this offering is that we do not raise
sufficient capital and do not continue as a going concern and the amount you can
sell your common stock purchased in this offering is lower than the amount you
paid for it.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
forward-looking statements are not historical facts but rather are based on
current expectations, estimates and projections about our industry, our beliefs
and our assumptions. Words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks" and "estimates", and variations of these words and similar
expressions, are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control, are
difficult to predict and could cause actual results to differ materially from
those expressed, implied or forecasted in the forward-looking statements. In
addition, the forward-looking events discussed in this prospectus might not
occur. These risks and uncertainties include, among others, those described in
"Risk Factors" and elsewhere in this prospectus. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus. Except as required by
law, we undertake no obligation to update any forward-looking statement, whether
as a result of new information, future events or otherwise.
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<PAGE>
PLAN OF DISTRIBUTION
This is a direct participation offering of the common stock of the
Company and is being sold on behalf of the Company by our sole officer and
director, who will receive no commission on such sales.
The money we raise in this offering before the minimum amount is sold
will be held under an escrow agreement with T. Alan Owen & Associates, P.C.,
Attorneys at Law. Such funds will be refunded immediately if the minimum amount
is not sold by October 31, 2000.
We will also invite licensed soliciting broker-dealers that are members
of the National Association of Securities Dealers, Inc. to participate, who may
hereafter be engaged by us to sell the common stock since at this time we have
no underwriting agreement with any licensed broker- dealer. We will pay a 6%
commission to the registered broker dealers. Our offering will continue until
October 31, 2000. Since we have no underwriting agreement with a licensed
broker-dealer, the success of this offering is based on the efforts of the sole
officer and director of the Company at this time. We anticipate selling our
common stock to investors in the United States, Canada and in some foreign
countries.
Mr. Bieger or his associates/affiliates may not purchase securities in
this offering in order to reach the minimum. They may purchase shares after the
minimum has been met but that amount is limited to twenty percent (20%) of the
total number of shares sold.
Certificates for shares of common stock sold in this offering will be
delivered to the purchasers by Signature Transfer Company, the stock transfer
company chosen by the company as soon as the Minimum subscription amount is
raised. See the section titled "TRANSFER AGENT".
USE OF PROCEEDS
The total cost of the minimum offering, exclusive of any sales
commissions paid to participating broker dealers, is estimated to be $15,278
($32,278 if the maximum is sold) consisting primarily of legal, accounting and
blue sky fees. There are no agreements or arrangements in place as of the date
of this Prospectus for participation of any broker dealers in this offering.
5
<PAGE>
The following table sets forth how we anticipate using the proceeds
from selling common stock in this offering, reflecting the Minimum and Maximum
subscription amounts:
$50,000 $500,000 $1,000,000
Minimum Midpoint Maximum
- --------------------------------------------------------------------------------
Legal, Accounting & Printing Expenses 8,000 12,000 25,000
Other Offering Expenses 7,278 7,278 7,278
Marketing Expenses & Due Diligence 3,000 30,000 60,000
Net Proceeds to Company 31,722 450,722 907,722
---------- ---------- ----------
TOTAL $ 50,000 $ 500,000 $1,000,000
The following describes each of the expense categories:
o legal, accounting and printing expense amount is the estimated costs
associated with this offering;
o other offering expenses includes SEC registration fee, Blue Sky fees
and miscellaneous expenses with regards to this offering.
o marketing expenses & due diligence is the amount we will pay to
registered broker-dealers who might help us raise money in this
offering. This represents a commission of six percent (6%) of the
offering amount ($3,000 if brokers raise the minimum amount for us and
$60,000 if brokers raise the maximum amount for us). If registered
broker dealers do not help us raise funds, this amount will represent
additional proceeds to the company.
The following table sets forth how we anticipate using the net proceeds
to the company:
$50,000 $500,000 $1,000,000
Minimum Midpoint Maximum
- --------------------------------------------------------------------------------
Development of website $ 10,000 $ 50,000 $ 100,000
Marketing and general corporate overhead 21,722 400,722 807,722
----------- ----------- -----------
Proceeds to company $ 31,722 $ 450,722 $ 907,722
Discussion of the proceeds and the business is included in the section titled
"Plan of Operations".
DESCRIPTION OF BUSINESS
We were incorporated in Nevada on June 30, 1999. The founder, Thomas
Bieger is our sole director, officer and employee and holds 600,000 shares of
common stock which we issued to him for $2,000, composed of $500 cash and $1,500
of his services.
6
<PAGE>
We are in the business of selling products over the internet. We
currently have two categories of products available for sale, and will add more
categories as we make marketing agreements with suppliers. The categories we
currently offer are:
o Framed Art
o Water filters
As we have recently been organized, there exists very little historical
operating performance and minimal sales. All sales have been framed art.
Wholesaleonthenet.net.net is an Internet based seller of various products. Today
we sell only artwork and water filters. It is the intention of the company to
expand its product offerings in the future as we enter into agreements with
suppliers of other products and can afford to place them on our website. We
currently are selling prints/artwork that are by a well know artist, Doris
Morgan. We plan to add additional high quality limited edition prints purchased
from publishers around the country. In addition, oil paintings and standard
prints are also available.
The use of the Internet as a sales forum is a cost effective, convenient method
for a customer to make purchases. We allow our buyers customers to bypass
traditionally expensive, regionally fragmented intermediaries and transact
business on a 24-hour-a-day, seven-day-a-week basis. We do not have to bear
overhead expenses generally associated with traditional storefront operations,
customers thereby cutting out costly traditional intermediaries, thus allowing
for lower selling costs.
Additionally, we inventory no product because under our agreements with
suppliers, we have them drop ship under our name directly to our customers. This
again reduces our overhead since we have no inventory carrying cost.
Our website platform is a robust, Internet-based, centralized trading platform
that facilitates the selling of a wide variety of items. It is a fully
automated, topically arranged, intuitive and easy-to- use online service that is
available on a 24- hour-a-day, seven-day-a-week basis. Buyers can easily search
the items listed by category. At this time, our customers cannot search by
specific item, but we plan to add that feature in the future.
Buying from Wholesaleonthenet.net: Buyers enter Wholesaleonthenet.net through
its home page, which contains a listing of product categories that allows for
easy exploration of current products and prices.
MARKET ANALYSIS
- ---------------
There has been a change in the rules for purchasing goods and services.
Traditional methods are time consuming and expensive, involving companies to
carry large amounts of inventory and customers having to personally visit the
place of business to choose a product. The following table reflects the changing
methods in which consumers transact business:
7
<PAGE>
<TABLE>
<CAPTION>
INDUSTRY TRADITIONAL E-BUSINESS "NET EFFECT"
- -------- ------------------------ -------------------------- -------------------------
<S> <C> <C> <C>
AUTOS Consumers physically Internet users shop EGM is born 8/99 -
visit multiple online auto sites to spec. consumers use the Net to
dealerships, haggle over cars and compare invoice order customized cars for
price, and eventually prices or even place a bid delivery in less than 10
drive a car home days.
- -------- ------------------------ -------------------------- -------------------------
MORTGAGES Customer calls broker, Customer visits e-loan, E-loan closed over $2
receives approval in 2-3 receives approval, selects billion in mortgage loans
days and closes loan in best rate and closes in 3 in 1998
21 days days
- -------- ------------------------ -------------------------- -------------------------
BROKERAGE Customer calls Merrill Customer researches From 1997 to today, the
Lynch, consults with company on-line and US stock broker
broker on a trade and executes trade for as population has been
pays $650 commission little as $8.95 reduced by over 20,000
fee
- -------- ------------------------ -------------------------- -------------------------
INSURANCE Customer visits local Customer visits Today, 12% of insurers
State Farm Progressive on-line, sell policies on-line,
representative for quote receives competitive several even by-passing
and policy quotes, purchase policy traditional agent network
- --------- --------------------------- --------------------------- ---------------------------
</TABLE>
It is this trend of purchasing patterns that the Internet is fostering and we
are strategically positioned to capitalize on. The growth in business to
business e-commerce has grown to $110 trillion in 1999. Projections estimate
business to business e-commerce will grow to $250 trillion in the year 2000,
$500 trillion in 2001, $840 trillion in 2002 and $1,330 trillion in 2003.
Similarly, business to consumer e-commerce business totaled $20 trillion in
1999. It is estimated business to consumer growth will be to $30 trillion in
2000, $50 trillion in 20001, $80 trillion in 2002, and $110 trillion in 2003.
This translates into a compound growth rate of 113% per year.
The preceding illustrates that the Internet has emerged as a global medium
allowing millions of people from all over the world to not only communicate with
each other but also get most any information they desire and, more critically,
transact business electronically. This company believes the increase in Internet
usage will be a result of:
o The increase of personal computers both in residential domiciles and
places of business;
o Easier, faster, and less expensive access to the Internet;
o Improvements in the infrastructure of the Internet; and
o New methods to access the Internet, specifically cable and satellite
As the use of the Internet grows as a business to business medium, this company
believes businesses will develop products and services to satisfy this new
method of doing business. Many products already support such initiatives and due
to the convenience and simplicity of Internet commerce, it is the belief of this
company that as consumers become more comfortable in transacting business over
the Internet, Internet commerce will only increase.
8
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The unique interactive and user friendly nature of the Internet has led to its
fast growth as a method by which to buy and sell goods and services. Internet
companies can be fast, efficient and inexpensive. Companies that have
traditionally delivered goods and services from land based brick and mortar
locations have embraced the Internet as it has afforded them the ability to:
o Reach broad, world wide audiences overcoming the limitations inherent
in brick and mortar operations
o Attract and penetrate new revenue streams
o Marketing efficiencies and economies are realized as they can be
directed to specific demographic groups
A recent report by The University of Texas' Center for Research in Electronic
Commerce estimated that the Internet economy generated approximately $300
billion in US revenue and was responsible for 1.2 million jobs in 1998. A recent
study by the Organization for Economic Cooperation and Development predicted
that worldwide Internet commerce will grow to $1 trillion by 2005. It is the
belief of this company that Internet retail purchases will grow by similar
amounts.
THE INTERNET: THE MEDIUM OF TOMORROW'S RETAILER
- -----------------------------------------------
Andrew S. Grove, CEO and Chairman of Intel Corporation, presented the keynote
presentation at the Asia Pacific Information Technology Summit. To summarize,
Mr. Grove stated the following:
The megatrend in information technology will be The Internet
The Internet will grow due to home PC penetration, the
connectedness of those PC's, low cost, and available
telecommunications access.
Internet commerce:
o Allows small companies and individuals as well as large companies to
transact business electronically
o Allows a real-time matching of sellers and qualified buyers
o Reduces the cost of infrastructure for supplies by using standard,
shared networks
Types of Internet commerce:
o Consumer to business
o Business to business
Total adult users of the Internet: 60 million in the US or 20% of the population
Internet commerce:
o Reduces cost of sales/distribution for sellers
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o Turns buyers into informed purchasers
Growth of Internet commerce worldwide:
o In 1996 $8 billion was transacted over the Internet. In 2002, it is
projected $327 billion will be transacted over the Internet, 21% of
that being Business to Consumer and 79% Business to Business.
We believe the growth of the Internet will revolutionize the way consumers buy
and sell goods and services. This trend can be proven from an historical
standpoint as follows:
According to Forrester Research and Cowles/Simba, 1997 online transactions
totaled $9 billion. According to these same surveys, 1997 business to business
transactions totaled $7.5 billion. Piper Jaffray estimates that by the year 2001
Internet based business to business transactions will total $201.6 billion a
year. Forrester Research estimates that by 2002 online business to business
transactions will total $327 billion.
Additionally, CommerceNet/Neilsen Internet Demographic Survey for April 1999
yielded the following statistics:
The number of Internet users over the age of 16 in the US and Canada has reached
92 million, up from 79 million just 9 months prior.
o The number of women purchasing online increased 80% from the
last survey
o 13% of all online buyers made their first purchase in the
preceding month.
o The number 1 category of items shopped for online was cars and
car parts
According to a survey by NFO Interactive, 3 million new shoppers were to make
their first online purchase during the 1999 holiday season. Drivers for first
time Internet buyers was deep price discounts (80%), assurance of privacy (67%),
and ease of returns.
We believe that the increase in female shoppers over the Internet (up 80% from
the last survey) will drive home decorative product sales such as those found at
Wholesaleonthenet.net.
Survey by NFO Interactive: Three Million New Internet Shoppers for Christmas
- --------------------------------------------------------------------------------
(October 18, 1999):
- -------------------
Three million new shoppers will make their first online purchase by the 1999
holiday season, according to a survey by NFO Interactive. The survey found that
the new shoppers are taking to the Internet because of promises of privacy,
discounts, real-time customer support, and the ability to return a product to a
brick-and-mortar facility.
The study "Online Retail Monitor: Branding, Segmentation, and Web Sites" shows
that the shoppers joining the ranks of online purchasers (as opposed to window
shoppers) will push the number of actual online shopping households over 27
million.
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"The upcoming holiday shopping season provides an excellent opportunity for
online retailers to cultivate their market share," said Tim Washer, Director of
Research for NFO Interactive. "The key will be to win first-time shoppers by
ameliorating privacy-related concerns and providing more attractive discounts,
and then to convert them into site-loyal customers. At easy check-out and
fulfillment experience will be critical.
Nearly 80% of Internet window shoppers say deeper price discounts will entice
them to purchase online. Privacy assurances ease of product return, and
real-time customer support will also influence online purchase decisions, the
study found.
According to the survey, the online shoppers who will buy online for the first
time this holiday season are Internet savvy, and while they haven't purchased
online yet, they have typically researched an average of four of five product
categories online, including apparel, consumer electronics, computer software,
and software and music.
The new shoppers are somewhat evenly divided along gender lines (56% percent
women and 44% men) and are surprisingly diverse in age. Almost 30% are in the
40-49 age group and one-quarter are 30-39. More than half (55%) have household
incomes over $55,000. The new shoppers enjoy shopping offline, but have spent as
much time online as shoppers who have already purchased something via the
internet.
- -------------------------------------------------------------------------------
Real-time Customer support 11.6%
- ------------------------------------ ------------------------------------
Gender of First-Time Buyers
- ------------------------------------ ------------------------------------
Women Men
- ------------------------------------ ------------------------------------
56% 44%
- ------------------------------------ ------------------------------------
Ages of First-Time Buyers
- ------------------------------------ ------------------------------------
Age Group Percent
- ------------------------------------ ------------------------------------
Under 30 14.5%
- ------------------------------------ ------------------------------------
30-39 25.4%
- ------------------------------------ ------------------------------------
40-49 29.7%
- ------------------------------------ ------------------------------------
50-59 21.0%
- ------------------------------------ ------------------------------------
0ver 60 9.4%
- ------------------------------------ ------------------------------------
How Consumers Find E-Commerce Sites
- ------------------------------------ ------------------------------------
Type URL directly 60.0%
- ------------------------------------ ------------------------------------
Bookmarks 48.1%
- ------------------------------------ ------------------------------------
Search Engines 42.2%
- ------------------------------------ ------------------------------------
Banner ads 14.0%
- ------------------------------------ ------------------------------------
Source - NFO Interactive
- -------------------------------------------------------------------------------
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The NFO study also reports that 60% of online consumers who have already
purchased from a Web site arrive at destination retail sites by typing in the
URL directly, while 48.1 percent bookmarks, and 42.2 percent go through search
engines. Fully 14 percent buyers report they were led to site where they made a
purchase via banner ad.
"Brick-and-mortar merchants have a great opportunity to use their stores to
promote their Web sites and their Web sites to promote their stores," Washer
said. "Our research is clearly confirming the importance of this symbiotic
relationship between retailing channels."
Shoppers that look but don't buy spend about 8 hours per week on the Internet,
compared to 11 hours per week spent buy buyers. The buyers all spend at least
five more hours per week watching network television. But the lookers and
shoppers spend more than six hours a week listening to the radio.
"Although Internet media claim a larger share of the consumer's attention span,
traditional media and conventional store-based merchandising still have a
tremendous impact on the behavior of online shoppers," Washer said.
3rd ANNUAL ONLINE RETAILING REPORT by ERNST & YOUNG:
- ----------------------------------------------------
Online Holiday Shoppers to Triple:
- ----------------------------------
The Third Annual Online Retailing Report by Ernst & Young projects a holiday
shopping season that will see a huge increase in the volume of online shoppers
and dollars spent online.
According to the survey of 1,2000 online shoppers, the number of regular online
shoppers will almost triple from 1998. Last year, 23% of respondents did at
least 10% of their holiday shopping online. On 1999, that number will be 67%,
according to Ernst & Young.
The survey also found that consumers will do more of their shopping online. The
number of people doing at least half their online shopping will increase by a
factor of five. In 1998, only 4% of online shoppers did at least 50% of their
holiday shopping online; in 1999 that number jumps to 19% of shoppers.
Conversely, the number of online consumers who have no plans to shop online
during the holidays dropped dramatically, from 49% to 11%.
"Given this data, and considering the dramatic increase in the number of
Internet sites and merchandise available, we are making some bullish predictions
about 1999 online shopping figures," said Stephanie Shern, Global Vice Chairman,
Retail and Consumer Products for Ernst & Young. "We are projecting online sales
for the holiday of $12 to $15 billion. Our estimate of total revenue for
calendar year 1999 is $25 to $30 billion."
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The demographics Ernst and Young collected look like this:
o 59 % of women, continuing a growing trend of women making online
purchases
o 58% are married
o 58% are age 30-49; 23% are over 50; and 19% are 18-29
o 58% are from the middle income bracket, earning $30,000 to $69,000
o Buyers with children outweigh buyers without children, 61% to 53%
"E-tailers are not just selling to early adopters anymore. They're selling to
consumers who are more like the general population," said Tom Reynolds, National
Director, Consulting Services, Retail & Consumer Products for Ernst & Young.
"Just like brick-and-mortar stores, e-tailers have to build relationships with
their customers. This relationship begins with marketing, but it develops
through customer relationships and truly effective merchandising."
ACTIVEMEDIA RESEARCH: Consumables Market Takes Larger Share of E-Commerce:
- --------------------------------------------------------------------------
Total online retail sales during 1999 are expected to reach $66 billion,
according to ActivMedia Research, and the buying of consumable products will
lead the way into the next century.
ActivMedia's report "Consumable Products: Building Customer Loyalty Online"
found that 40% of the buyers who purchase consumable products online purchasing
power and account for $3.8 billion in online revenue.
Health & Beauty products are leading the way among consumable products,
according to the report. The grocery market has been inhibited by real-world
delivery systems and has only begun to see its potential, the report has found.
Two in Five online buyers shop for consumable online, and this group represents
a select group of mature online shoppers who purchase much more than the basic
books, music, or gifts online. In the past year, they purchased health and
beauty, healthcare and pharmaceuticals, groceries for households supplies,
gourmet items, and pet supplies online.
In terms of dollars spent, consumables buyers spend a majority (56%) of online
purchase dollars. This group is more likely than average to shoot for a variety
of personal and business items from several sectors, including clothing, home
and garden, sporting goods, jewelry, office supplies, and manufacturing
supplies.
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New Watch Demographic Stats
- --------------------------------------------------------------------------------
Percentage of Males and Females Using the Internet
- --------------------------------------------------------------------------------
Nation Male Female
- ------------------------- ------------------------ -------------------------
Canada 41% 34%
- ------------------------- ------------------------ -------------------------
Singapore 30% 21%
- ------------------------- ------------------------ -------------------------
USA 30% 21%
- ------------------------- ------------------------ -------------------------
Australia 29% 21%
- ------------------------- ------------------------ -------------------------
New Zealand 27% 22%
- ------------------------- ------------------------ -------------------------
Germany 20% 9%
- ------------------------- ------------------------ -------------------------
Hong Kong 16% 9%
- ------------------------- ------------------------ -------------------------
Taiwan 15% 9%
- ------------------------- ------------------------ -------------------------
Malaysia 8% 5%
- ------------------------- ------------------------ -------------------------
China 4% 2%
- ------------------------- ------------------------ -------------------------
Philippines 3% 2%
- ------------------------- ------------------------ -------------------------
Thailand 1% 2%
- ------------------------- ------------------------ -------------------------
Indonesia 1% 1%
- --------------------------------------------------------------------------------
Source - AC Nielsen Net Watch
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Percentage of Population Using the Internet
- --------------------------------------------------------------------------------
Canada 38%
------------------------- ------------------------
Australia 25%
------------------------- ------------------------
Singapore 25%
------------------------- ------------------------
USA 25%
------------------------- ------------------------
New Zealand 24%
------------------------- ------------------------
UK 15%
------------------------- ------------------------
Germany 14%
------------------------- ------------------------
Hong Kong 14%
------------------------- ------------------------
Taiwan 12%
------------------------- ------------------------
France 11%
------------------------- ------------------------
Philippines 8%
------------------------- ------------------------
Malaysia 7%
------------------------- ------------------------
China 4%
------------------------- ------------------------
Thailand 2%
------------------------- ------------------------
Indonesia 1%
- --------------------------------------------------------------------------------
Source - AC Nielson Net Watch
- --------------------------------------------------------------------------------
Experienced Internet Shoppers Satisfied with Online Shopping
- ------------------------------------------------------------
Even though 88% of experienced Web buyers abandoned their online carts at some
point during the 1999 holiday season and 40% reported various problems, Internet
shoppers were generally more satisfied shopping online than anyplace else,
according to a study by Andersen Consulting.
14
<PAGE>
Nearly three-quarters (73%) of experienced Web buyers ranked Internet shopping
the highest in terms of overall satisfaction compared to brick and mortar stores
(60%) and catalogs (56%).
"Even though online shopping has its flaws, experienced Internet users do
shopping on the Web. But the long-term message is clear: Internet retail must
solve their infrastructure problems or suffer consequences," said S. Johnson,
co-director of Andersen Consulting's eCommerce Program. "Thirty-five percent of
online shoppers who experienced problems on a particular site left that site for
another, our study revealed. Given high customer-acquisition costs, e-tailers
can't continue to lose one of every ten consumers and expect to survive. Their
top concern must be infrastructure improvements."
- --------------------------------------------------------------------------------
Source of Gift Purchases
- --------------------------------------------------------------------------------
Percent Purchased Via
- --------------------------------------------------------------------------------
Type of Gift Internet Catalog Stores
- --------------------------------------------------------------------------------
Toys 483357
- --------------------------------------- ---------------------------------------
Books 471534
- --------------------------------------- ---------------------------------------
Music 421534
- --------------------------------------- ---------------------------------------
Videotapes 351730
- --------------------------------------- ---------------------------------------
Clothing 294181
- --------------------------------------- ---------------------------------------
Computer/Hardware
Software 251029
- --------------------------------------- ---------------------------------------
Collectibles/Candies/Knickknacks 232648
- --------------------------------------- ---------------------------------------
Households items/
Appliances 171234
- --------------------------------------- ---------------------------------------
Consumer Electronics 171025
- --------------------------------------- ---------------------------------------
Cosmetics/ Personal Care 162629
- --------------------------------------- ---------------------------------------
Sporting Goods 149416
- --------------------------------------- ---------------------------------------
Greeting Cards 132035
- --------------------------------------- ---------------------------------------
Food/Wine 111025
- --------------------------------------- ---------------------------------------
Gift Certificates 9638
- --------------------------------------- ---------------------------------------
Flowers/Gardening Items 9145
- --------------------------------------- ---------------------------------------
Pet Gifts 6921
- --------------------------------------- ---------------------------------------
Periodical Subscriptions 5004
- --------------------------------------- ---------------------------------------
Jewelry 3724
- --------------------------------------- ---------------------------------------
Other 13118
- --------------------------------------------------------------------------------
Source: Anderson Consulting
- --------------------------------------------------------------------------------
15
<PAGE>
When asked which type of product or service feature would increase the
likelihood of purchasing more products or services over the Internet in the
future, respondents cited free delivery, on-time guarantees, and no sales tax
most often.
- --------------------------------------------------------------------------------
Features That Will Drive E-Commerce
- --------------------------------------------------------------------------------
Feature Percent of Internet Purchasers
- --------------------------------------------------------------------------------
Free product delivery 98%
- --------------------------------------- ---------------------------------------
On-time delivery guarantees 95%
- --------------------------------------- ---------------------------------------
No Sales Tax 91%
- --------------------------------------- ---------------------------------------
Coupons/promotions 83%
- --------------------------------------- ---------------------------------------
Toll-free customer assistance 68%
- --------------------------------------- ---------------------------------------
Live, online customer assistance 62%
- --------------------------------------- ---------------------------------------
Customer reviews or recommendations 62%
- --------------------------------------- ---------------------------------------
Helpful hints for colors, sizes, etc. 58%
- --------------------------------------- ---------------------------------------
Free gift wrapping 58%
- --------------------------------------- ---------------------------------------
Gift Suggestions 46%
- --------------------------------------------------------------------------------
Source - Andersen Consulting
- --------------------------------------------------------------------------------
Taking respondents from Andersen Consulting's October 1999 pre-holiday shopping
study of 1,492 online shoppers, a total of 541 of these Internet users responded
to a follow-up over on eight-day period beginning December through January. The
survey was administrated on the Internet. The data was weighted to the Internet
population, and a small number of respondents who did not purchase holiday gifts
were eliminated from the sample.
PC Data Online surveyed 4,742 US home-based Internet users who had shopped
online in the past two months. The survey was conducted January 2000.
Q4 1999: The Official Story
- ---------------------------
March 2, 2000: In its first official estimate of retail e-commerce, the
Department of Commerce announced today that fourth quarter 1999 retail sales
online reached $5.3 billion (+ $0.3 billion).
According to the Commerce Department, these e-commerce sales equaled 0.64% of
total retail sales for the quarter, which were $821.2 billion.
Online Shoppers Lured by Low Costs, Free Shipping (2/28/00)
- -----------------------------------------------------------
Online shoppers still want guaranteed security and easy-to-use sites, but
keeping costs down, especially with free-shipping, is among the most effective
means of enticing Internet users to return to shopping sites, according to
research by Cyber Dialogue.
16
<PAGE>
According to the survey of intensive Internet users, the leading categories that
users found very important in prompting return visits were guaranteed
transaction security (85%), price discounts (79%), free shipping (76%), ease of
finding items (69%), and a prominently posted delivery and shipping costs policy
(67%). At the other end of the spectrum, users found the availability of other
shoppers' opinions (14%), the ability to personalize information and receive
updates (23%), and click shopping (30%) among the least important.
Overall, free-shipping impacted the decision of 90% of online adults who made
the holiday gift purchases in 1999. Even the lure of brand names when compared
to the promise of free-shipping, with more than 63% of online users indicating
they would prefer to shop at a site offering free shipping over one with
well-known brands.
"A clear majority of online shoppers are most interested in simple, easy to
understand characteristics like low prices and free-shipping," said Qaalf
Dibeehi, a senior analyst at Cyber Dialogue. "Currently, consumers appear to
understand cyber-shopping in something similar to catalog shopping terms. This
is not to discount the importance of online-specific innovative, however, but
the popularity of free-shipping and low prices can't be underestimated when
building a site that understands its online visitors.
What does this mean for online marketing tools such as e-mail updates and
personalization? A study done in April of 1999 in the UK by Fletcher Research
found that Internet users who personalize and configure Web pages are more
likely to make online purchases than those who do not. Fletcher found that 68%
of Web users who had personalized a site made a purchase online, compared to the
28% that had not used personalization features.
Another study done in April of 1999 by Cognitiative Inc. found that
sale-oriented e-mail is disliked so much that one-third of the consumers
surveyed avoid the vendors that send it. Only telemarketing rated as most
intrusive than e-mail as marketing measures go.
Cyber Dialogue's study also examined the past and future behavior of online
shoppers. More than 73% of the survey's respondents indicating they planned on
increasing their online purchasing during 2000, indicating increased importance
of driving return visitors to shopping sites.
Other Cyber Dialogue findings include:
o Women expected to spend on average $271 during the holiday season, but
actually spent and average of $468
o Men expected to spend and average of $381 during the holiday season but
actually spent an average of only $206
o 60% of online users who made a holiday order contacted customer service
via e-mail, compared to 36% by phone and % though live online service
Cyber Dialogue's findings are from the firm's January 2000 Omnibus, a depth
survey of more than 1,000 adults drawn from Cyber Dialogue's database of
intensive online consumers.
17
<PAGE>
Marketing Strategy:
- -------------------
Our marketing strategy is to promote its name and attract buyers to the
Wholesaleonthenet.net website. To attract users to our website, we historically
have relied primarily on word of mouth and being one of many "art" or "water
filter" companies that come up on search engines. Going forward, we are
contemplating sponsorship relationships with high traffic websites and
agreements with search engines so that our site will be near the top/front of
searches for our products. Future marketing programs will include the use of
strategic purchases of online advertising to place advertisements in areas in
which it believes it can reach its target audience. The Company also will engage
in a number of marketing activities in traditional media such as advertising in
print media and at trade shows and other events. We also plans to advertise in a
number of targeted publications.
The market for product purchasing over the Internet is new, rapidly evolving and
intensely competitive.
In order to respond to changes in the competitive environment, we may, from time
to time, make pricing, service or marketing decisions or acquisitions that could
harm its business. We are not bound by traditional geographic market boundaries.
If a product can be delivered by a shipping company such as UPS or Federal
Express, we can be a viable source.
Growth Strategy:
- ----------------
It is the objective of the company to be the leading provider of e-commerce
purchased framed and matted art. Key elements of our growth strategy include:
o Partner with industry leaders to quickly acquire customers. The company
intends to form strategic relationships with industry leaders to
rapidly acquire customers, build brand name recognition and accelerate
adoption of Internet purchased artwork. We anticipate continuing to add
additional strategic partnerships as our business grows and we expand
our portfolio of products and services.
o Build and promote our brand. The company intends to invest in building
brand awareness through a variety of marketing and promotional
techniques, both independently and in conjunction with our strategic
partners. Our brand will be promoted through word of month as well as
print, online banners, and virtual marketing, such as including our
logo and Web site address on each product purchased.
o Pursue multiple and recurring revenue streams. In addition to
wholesaling product line goods through our Web site, we intend to
expand those product offering to include other hard goods which will
not be constrained through inventory investment, obsolescence, or
falloff in demand as such goods will be direct shipped from the
manufacturer. To further elaborate, future goods advertised for sale on
our Web site will not be purchased by us but will be available for
purchase through contracted purchase agreements between
Wholesaleonthenet.net and the respective manufacturer.
In addition to the above, we will be exploring the picture rental and
consignment markets, the intention being to increase profit margins through the
leasing and/or renting of art work to company facilities.
18
<PAGE>
As mentioned, the Company plans to expand its e-commerce capability to include:
o Selling goods and services promoted to our advertisers' storefronts
o Auctions
o Electronic marketplaces
o Exchanges
o Selling goods and services from our proprietary virtual store
We will receive either a fee per transaction, a percentage of sales revenue or
some other minimum guaranteed payment. This type of revenue sharing or
commission sharing relationship is typical of e-commerce transactions and
relationships on the Internet.
Operations and Technology
- -------------------------
We have built a robust, but basic transaction processing system. Our system
handles all aspects of the sales process. The market in which the we compete is
characterized by rapidly changing technology, evolving industry standards,
frequent new service and product announcements, introductions and enhancements
and changing customer demands. Accordingly, our future success will depend on
its ability to adapt to rapidly changing technologies, to adapt its services to
evolving industry standards and to continually improve the performance, features
and reliability of its service in response to competitive service and product
offerings and evolving demands of the marketplace.
Competition
- -----------
We compete with a number of other companies and we expect competition to
intensify in the future. Barriers to entry are relatively low, and current and
new competitors can launch new sites at a relatively low cost using commercially
available software.
Additional information:
- -----------------------
We have made no public announcements to date and have no additional or
new products or services. In addition:
o we don't intend to spend funds in the field of research and
development;
o no money has been spent or is contemplated to be spent on customer
sponsored research activities relating to the development of new
products, services or techniques; and
o We don't anticipate spending funds on improvement of existing products,
services or techniques.
As of the filing date, the company has no paid employees. As necessary
due to lease volume, work load, and the like, employees will be brought on
board.
The company does not expect nor has it encountered any material effect
from the discharge of materials, environmental agencies, capital expenditures
for environmental control facilities, nor does it anticipate having to deal with
any such issue in the future.
19
<PAGE>
No segmented data is required for this offering.
PLAN OF OPERATIONS
Following is our plan of operations based upon the amount of capital we
raise in this offering. We are engaged in selling items over the internet. See
'Description of Business".
Assuming we raise the minimum amount in this offering, we will use part
of the funds to develop our website so that it is more appealing and easier to
use as well as buying some more sophisticated equipment to take the pictures and
capture more of a real life image. Along with that we will add additional
products and start developing cross marketing relationships with other websites
and even pay search engines or other companies fees to ensure that our website
shows among the top fifteen (15) or thirty (30) on particular searches i.e.
"artwork".
We will not pay salaries until such time as we are generating revenue
from sales and our overhead will be minimal because we will be using the
resources of our President. We will continue a shared relationship with the
President until our activity becomes too great for those facilities. As of the
date of this filing, we have no marketing or advertising arrangements in place.
Although we will not have to raise any funds in the next six months if we should
we raise only the minimum offering, our growth will be slower, we will not add
as many products, and our marketing efforts will have to be targeted to specific
groups based upon our product mix. We believe that as we add products, advertise
and market our website, that we will be successful in generating sales.
Assuming we raise $500,000 in this offering, a midpoint between the
minimum and maximum, We will work the same way as if we raised the minimum,
except that we will do more marketing and do it on a bigger scale. In addition,
we will institute 'weekly specials' which will be similar to closeouts, where a
company will want to reduce certain inventory as a reduced rate. Of course,
these could change at a moments notice.
Assuming we raise the maximum offering which would result in proceeds
to the company of $907,722, with which we should be able to do a significant
'makeover' on our website while still having what we believe to be adequate
funds to launch a major marketing effort. This will include banners on other
websites, payment to companies or search engines to guarantee our site coming up
near the top of the search lists, and efforts to provide to large groups i.e.
corporations and/or organizations, discounts to their employees/groups for
places on their corporate sites or brochures. Those brochures may be on the
internet or be regular printed brochures. If we raise the maximum amount in this
offering, we will not need to raise additional funds in the next six months; we
will be able to generate a significant marketing program to direct traffic to
our website, and be able to create a more diversified range of products to
appeal to every kind of buyer.
20
<PAGE>
We believe the key to building a profitable internet based sales
company is to provide many products, at a fair price, without having to
inventory any of them.
DESCRIPTION OF PROPERTY
Our corporate facilities are shared with our sole officer and director
which includes the use of telephones and equipment at no charge. This
arrangement will continue until we close our offering at which time we will pay
$200.00 per month. This arrangement will continue until such time as the Company
needs and can afford to lease its own office facilities.
We also lease space on an Internet Service Provider's server based upon
the amount of memory we use. At the present time we pay $32.50 per month. This
amount will increase as we use more space on the server.
MANAGEMENT OF THE COMPANY
The directors and officers of the Company, their ages and principal
positions are as follows:
Name Age Position
- --------------------------------------------------------------------------------
Thomas Bieger 38 President; Secretary and Director
Background of Directors and Executive Officers:
Thomas Bieger. Mr. Bieger formed the Company and at this time is its only
officer and director. His term as a director expires in May 2000. He graduated
in 1999 from Palmers Green University, London, England with a doctorate in
Environmental Science and Engineering. From 1981 to the present he has operated
Thomas Services, a State licensed environmental and indoor air quality
consulting and service Mr. Bieger's business affiliations during the last five
years follow: Trustee - Fresh Air Foundation - 1999 to the present.
Manager - Baronger Enterprises, LLC - 1997 to the present.
Initially, Mr. Bieger will not spend full time on the activities of the
company since his current activities would take up some of his time. These
activities include the industrial service firm he owns and oversees at this
time. He can devote more and more time to the activities of the company as time
goes on since his employees can run the environmental and air quality service
company and Mr. Bieger can step aside from those responsibilities at any time.
Initially, he expects to spend twenty hours per week and increase that weekly
time as the activities of the company require. Mr. Bieger is prepared to devote
himself full time to the success of the company.
21
<PAGE>
DIRECTOR AND EXECUTIVE COMPENSATION
Our sole officer and director has received no compensation other than
the 450,000 shares of common stock he received for services in July 1999 and has
no employment contract with the company.
Name of Person Capacity in which he served Aggregate
Receiving compensation to receive remuneration remuneration
- --------------------------------------------------------------------------------
Thomas Bieger President, Secretary 450,000 shares
and Treasurer of common stock
The common stock was issued soon after formation of the company and it
is impracticable to determine the cash value. The stock was issued over six
months ago for services performed which we cannot estimate the value since that
work continues through the filing and effectiveness of this registration
statement, with no other compensation to be granted for the work done on this
filing.
As of the date of this offering, there are no plans to pay any
remuneration to anyone in or associated with the company. When the company has
funds and/or revenue, the Board of Directors will determine any remuneration at
that time.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
Our Articles of Incorporation and our Bylaws limit the liability of
directors to the maximum extent permitted by Nevada law. We carry no director or
executive liability insurance.
PRINCIPAL SHAREHOLDERS
The following table lists the officers and directors who, at the date
hereof, own of record or beneficially, directly or indirectly, more than 10% of
the outstanding Common Stock, and all officers and directors of the Company:
Name and Address Amount owned
Title of Owner before offering Percent
- --------------------------------------------------------------------------------
President, Secretary Thomas Bieger 600,000 60.00%
And Director 1529 E. I-30
Suite 104
Garland, Texas 75043
After offering: Minimum 600,000 50.00%
- -------------- Maximum 600,000 12.00%
22
<PAGE>
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
In July 1999, the President of the company received 600,000 shares of
common stock which we issued to him for $2,000, composed of $500 cash and $1,500
of his services.
As of the date of this filing, there are no agreements or proposed
transactions, whether direct or indirect, with anyone, but more particularly
with any of the following:
o a director or officer of the issuer;
o any principal security holder;
o any promoter of the issuer;
o any relative or spouse, or relative of such spouse, of the above
referenced persons.
SUMMARY FINANCIAL DATA
The following table sets forth certain of our summary financial
information. This information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this prospectus. See
"Description of Business."
Audited Audited
Balance Sheet: March 31, 2000 June 30, 1999
-------------------- ----------------- -------------
Working Capital $ 1,324 $ -0-
Total Assets $ 20,265 $ 323
Total Liabilities $ 1,287 $ 323
Stockholders' Equity $ 18,978 $ -0-
June 30,1999 (date of
inception) to
Statement of Operations: March 31, 2000 June 30, 1999
------------------------ ---------------- -------------
Revenue $ 1,580 $ -0-
Operating Expense $ 3,581 $ -0-
Operating Income (Loss) $(3,028) $ -0-
Other Income $ 6 $ -0-
Net Income (Loss) $(3,022) $ -0-
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our common
stock. We do not intend to declare or pay any dividends on our common stock in
the foreseeable future, but rather to retain any earnings to finance the growth
of our business. Any future determination to pay dividends will be at the
discretion of our Board of Directors and will depend on our results of
operations, financial condition, contractual and legal restrictions and other
factors it deems relevant.
23
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31,2000.
Our capitalization is presented on:
o an actual basis;
o a pro forma basis to give effect to net proceeds from the sale of the
minimum number of shares (200,000) we plan to sell in this offering;
and
o a pro forma basis to give effect to the net proceeds from the sale of
the maximum number of shares (4,000,000) we plan to sell in this
offering.
After After
Actual Minimum Maximum
Mar 31, 2000 Offering Offering
------------ ------------ ------------
Stockholders' equity
Common Stock, $0.001 par value;
25,000,000 shares authorized; 1,000 1,200 5,000
Additional Paid In Capital 21,000 52,522 924,722
Retained deficit (3,022) (3,022) (3,022)
Total Stockholders' Equity 18,978 50,700 926,700
Total Capitalization 18,978 50,700 926,700
Number of shares outstanding 1,000,000 1,200,000 5,000,000
The company has only one class of stock outstanding. The common stock
sold in this offering will be fully paid and non assessable, having voting
rights of one vote per share, have no preemptive or conversion rights, and
liquidation rights as is common to a sole class of common stock. The company has
no sinking fund or redemption provisions on any of the currently outstanding
stock and will have none on the stock sold in this offering.
DILUTION
If you purchase the common stock, you will experience an immediate and
substantial dilution in the pro forma net tangible book value of the common
stock from the initial offering price.
The pro forma net tangible book value of the common stock as of March 31, 2000
was $18,978 or $0.02 per share. Pro forma net tangible book value per share is
equal to our total tangible assets, less total liabilities, divided by the
number of shares of common stock outstanding.
After giving effect to the sale of common stock offered by us in this offering,
and the receipt and application of the estimated net proceeds therefrom (at an
assumed initial public offering price of $0.25 per share, after deducting the
underwriting discounts and commissions, and estimated offering expenses), our
pro forma tangible book value as of March 31, 2000 would have been approximately
$50,700 or $0.04 per share, if the minimum is sold, and $926,700 or $0.19 per
share, if the maximum is sold.
24
<PAGE>
This represents an immediate increase in net tangible book value per common
share to our current stockholders and an immediate and substantial dilution to
new stockholders purchasing shares in this offering. The decrease in net
tangible book value is:
o $41,550 or $0.21 per share if we sell the minimum number of shares
(200,000) in this offering; and
o $258,640 or $0.06 per share if we sell the maximum number of shares
(5,000,000) in this offering.
The following table illustrates this per share dilution:
- --------------------------------------------------------
Minimum Maximum
------- -------
Assumed initial public offering price $0.25 $0.25
Pro forma net tangible book value as of March 31, 2000 $0.02 $0.02
Pro forma net tangible book value after this offering $0.04 $0.19
Increase attributable to new stockholders: $0.02 $0.17
Pro forma net tangible book value
as of March 31, 2000 after this offering $0.04 $0.19
Decrease to new stockholders ($0.21) ($0.06)
The following table summarizes on a pro forma basis as of March 31,
2000, shows the differences between the number of shares of common stock
purchased, the total consideration paid and the total average price per share
paid by the existing stockholders and the new investors purchasing shares of
common stock in this offering:
After After
Actual Minimum Maximum
Mar 31, 2000 Offering Offering
------------ ----------- ------------
Existing stockholders:
- ---------------------
Consideration paid per share 0.022
New stockholders:
- ----------------
Consideration paid per share 0.25
Dilution to new stockholders ( $0.21) ( 0.06)
25
<PAGE>
DESCRIPTION OF COMMON STOCK
We have authorized capital in our Company consisting of 25,000,000
shares of Common Stock, $0.001 par value per share. As of March 31, 2000, there
were 1,000,000 shares of Common Stock issued and outstanding.
Every investor who purchases common stock is entitled to one vote at
meetings of the shareholders of the Company and to participate equally and
ratably in any dividends declared by us and in any property or assets that may
be distributed by us to the holders of Common Stock in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the Company.
The existing stockholders have no preemptive rights to purchase common
stock offered for sale by us, and no right to cumulative voting in the election
of our directors.
LEGAL PROCEEDINGS
We are not involved in any legal proceedings at this time.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
There are no special federal tax implications associated with this
business enterprise.
LEGAL MATTERS
Certain matters relating to the legality of the Common Stock offered
hereby will be passed upon for the Company by T. Alan Owen & Associates P.C.,
Attorneys at Law, 1112 East Copeland Road, Suite 420, Arlington, Texas 76011.
EXPERTS
The financial statements as of March 31, 2000, and for the nine months
ended March 31, 2000, and for the period from inception (June 30, 1999) to June
30, 1999, and for the period from inception (June 30, 1999) to March 31, 2000 of
the Company included in this Prospectus have been audited by Charles E. Smith,
independent certified public accountant, as set forth in his report. The
financial statements have been included in reliance upon the authority of him as
an expert in accounting and auditing.
TRANSFER AGENT
We will serve as our own transfer agent and registrar for the common
stock until such time as our registration on Form SB-1 is effective and then we
intend to retain Signature Transfer Company, 14675 Midway Road, Suite 221,
Dallas, Texas 75244.
26
<PAGE>
<PAGE>
Charles E. Smith
Certified Public Accountant
709-B West Rusk
Suite 580
Rockwall, Texas 75087
--------------------------
TELEPHONE (214) 212-2307
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
of Wholesale On The Net, Inc.
I have audited the accompanying balance sheets of Wholesale On The Net,
Inc. as of March 31, 2000 and June 30, 1999, and the related statements of
operations, stockholders' equity and accumulated deficit, and cash flows for the
nine months ended March 31, 2000, period from inception (June 30, 1999) to June
30, 1999, and the period from inception (June 30, 1999) to March 31, 2000. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Wholesale On The
Net, Inc. as of March 31, 2000 and June 30, 1999, and the results of operations
and its cash flows for the nine months ended March 31, 2000, the period from
inception (June 30, 1999) to June 30, 1999, and the period from inception (June
30, 1999) to March 31, 2000 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As described in Note D to the
financial statements the Company is a start up enterprise and presently does not
have capital resources which raises doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustment that might arise from the outcome of this uncertainty.
/s/ Charles E. Smith
- ---------------------
Charles E. Smith
Rockwall, Texas
April 27, 2000
1
<PAGE>
<TABLE>
<CAPTION>
WHOLESALE ON THE NET, INC.
(a development stage enterprise)
BALANCE SHEETS
March 31, 2000 and June 30, 1999
ASSETS
------
March 31, 2000 June 30, 1999
-------------- --------------
<S> <C> <C>
Current assets:
Cash $ 1,324 $ 0
Property, plant and equipment
Web Site (net of amortization) 18,667 0
Other assets:
Organization costs (net of amortization) 274 323
-------------- --------------
Total assets $ 20,265 $ 323
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable $ 0 $ 0
Advances from affiliate 1,287 323
-------------- --------------
Total Current Liabilities 1,287 323
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 1,000,000
and zero shares issued and outstanding at
March 31, 2000 and June 30, 1999 respectively 1,000 0
Additional paid-in-capital 21,000 0
Accumulated Deficit (3,022) 0
-------------- --------------
Total Stockholders' Equity 18,978 0
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,265 $ 323
============== ==============
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
WHOLESALE ON THE NET, INC.
(a development stage enterprise)
STATEMENT OF OPERATIONS
Nine months ended March 31, 2000, and
Period from inception (June 30, 1999) to June 30, 1999, and
Period from inception (June 30, 1999) to March 31, 2000
Period from Period from
inception to inception to
Nine months (June 30, 1999) (June 30, 1999)
ended to to
March 31, 2000 June 30, 1999 March 31, 2000
-------------- -------------- ---------------
<S> <C> <C> <C>
Sales $ 1,580 $ 0 $ 1,580
Cost of sales 1,027 1,027
-------------- -------------- ---------------
Gross profit $ 553 $ 0 $ 553
Operating expenses:
Amortization 1,383 1,383
General and adminsitrative 2,198 2,198
-------------- -------------- ---------------
Total Operating Expense 3,581 0 3,581
-------------- -------------- ---------------
Operating (loss) (3,028) 0 (3,028)
Other income:
Interest income 6 6
-------------- -------------- ---------------
Net loss ($3,022) $ 0 ($3,022)
============== ============== ===============
Weighted average shares outstanding 919,091 -0- 919,091
============== ============== ===============
Loss per share ($0.00) ($0.00) ($0.00)
============== ============== ===============
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
WHOLESALE ON THE NET, INC.
(a development stage enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from inception (June 30, 1999) to March 31, 2000
Common Paid In
Shares Amount Capital Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance,
June 30, 1999
(date of inception) -0- -0- -0- -0-
Shares issued on July 1, 1999 for:
Cash 150,000 150 350 500
Services 450,000 450 1,050 1,500
August 27, 1999 for:
Cash 400,000 400 19,600 20,000
Net Loss - nine months
ended March 31, 2000 (3,022)
---------- ---------- ---------- ----------
Balance
December 31, 1999 1,000,000 $ 1,000 $ 21,000 $ 18,978
========== ========== ========== ==========
</TABLE>
See accompanying notes.
4
<PAGE>
<TABLE>
<CAPTION>
WHOLESALE ON THE NET, INC.
(a development stage enterprise)
STATEMENT OF CASH FLOWS
Nine months ended March 31, 2000, and
Period from inception (June 30, 1999) to June 30, 1999, and
Period from inception (June 30, 1999) to March 31, 2000
Period from Period from
inception to inception to
Nine months (June 30, 1999) (June 30, 1999)
ended to to
March31, 2000 June 30, 1999 March31, 2000
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($3,022) $0 ($3,022)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Amortization 1,382 0 1,382
Advances from shareholder 964 323 1,287
Stock issued for services 1,500 0 1,500
------------- ------------- -------------
NET CASH (USED) BY OPERATING ACTIVITIES: 824 323 1,147
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for organization costs (323) (323)
Payment to build Web Site (20,000) (20,000)
------------- ------------- -------------
Total cash flows from investing activities (20,000) (323) (20,323)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 20,500 20,500
------------- ------------- -------------
NET INCREASE IN CASH $1,324 $0 $1,324
CASH, BEGINNING OF PERIOD -0- -0- -0-
------------- ------------- -------------
CASH, END OF PERIOD $1,324 $0 $1,324
============= ============= =============
</TABLE>
See accompanying notes.
5
<PAGE>
WHOLESALE ON THE NET, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
Note A - Nature of Business and Summary of Significant Accounting Policies:
- ---------------------------------------------------------------------------
History:
- -------
The Company was organized June 30, 1999 under the name of Wholesale On The Net,
Inc. in the State of Nevada. The Company's business plan outlines its plan of
operations which is to sell products over the internet.
Basis of Accounting:
- -------------------
It is the Company's policy to prepare its financial statements on the accrual
basis of accounting in conformity with generally accepted accounting principles.
Sales are recorded as income in the period in which they are earned and expenses
are recognized in the period in which the related liability is incurred.
Revenue Recognition:
- -------------------
Revenue is recognized when work is performed and amount invoiced.
Cash and Cash Equivalents:
- -------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.
Loss per Common Share:
- ---------------------
Loss applicable to common share is based on the weighted average number of
shares of common stock outstanding during the year.
Accounting Estimates:
- --------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Income Tax:
- ----------
The Company is subject to the greater of federal income taxes computed under the
regular system or the alternative minimum tax (ATM) system. The Company uses an
asset and liability approach for the accounting and financial reporting of
income tax. Under this method, deferred tax assets and liabilities are
determined based on temporary differences between the financial carrying amounts
and the tax bases of assets and liabilities using enacted tax rates in effect in
the years in which the temporary differences are expected to reverse.
6
<PAGE>
WHOLESALE ON THE NET, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
Note B - Stockholders' Equity:
- -----------------------------
Common Stock:
- ------------
The Company is authorized to issue 25,000,000 common shares of stock at a par
value of $0.001 per share. These shares have full voting rights. At March 31,
2000 and June 30, 1999, there were 1,000,000 and zero shares outstanding
respectively.
The Company has not paid a dividend to its shareholders.
Note C - Income Taxes:
- ---------------------
The Company had a net operating loss of $3,022 for the period presented. No
deferred tax asset has been recognized for the operating loss as any valuation
allowance would reduce the benefit to zero.
Note D - Going Concern:
- ----------------------
The Company has minimal capital resources available to meet obligations expected
to be incurred given that it is a start up enterprise. Accordingly, the
Company's continued existence is dependent upon the successful operation of the
Company's plan of operations, selling common stock in the Company, or obtaining
financing. Unless these conditions among others are met, the Company may be
unable to continue as a going concern.
7
<PAGE>
No dealer, salesman or any other person has been authorized to give any
quotation or to make any representations in connection with the offering
described herein, other than those contained in this Prospectus. If given or
made, such other information or representation'; must not he relied upon as
having been authorized by the Company or by any Underwriter. This Prospectus
does not constitute an offer to sell, or a solicitation of an otter to buy any
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such an offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
Prospectus Summary 2
Corporate Information 2
Risk Factors 3
Forward Looking Statements 4
Plan of Distribution 5
Use of Proceeds 5
Description of Business 6
Plan of Operations 20
Description of Property 21
Management of the Company 21
Director and Executive Compensation 22
Director's and Officers' Indemnification and Insurance 22
Principal Shareholders 22
Interest of Management and Others in Certain Transactions 23
Summary Financial Data 23
Dividend Policy 23
Capitalization 24
Dilution 24
Description of Common Stock 25
Legal Proceedings 26
Certain Federal Income Tax Considerations 26
Legal Matters 26
Experts 26
Transfer Agent 26
Financial Statements F-1
Until the (90th day after the later of (1) the effective date of the
registration statement or (2) the first date on which the securities are offered
publicly), all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Indemnification of Directors and Officers
If applicable, the Broker-Dealer Selling Agreement will provide for
indemnification of the Company, and its officers, directors and employees
against certain liabilities. **If applicable.
Item 14. Other Expenses of Issuance and Distribution
All expenses. including all allocated general administrative and overhead
expenses. related to the offering or the organization of the Company will be
borne by the Company. The following table sets forth a reasonable itemized
statement of all anticipated out-of-pocket and overhead expenses (subject to
future contingencies) to be incurred in connection with the distribution of the
securities being registered, reflecting the minimum and maximum subscription
amounts.
Minimum Maximum
--------- ---------
SEC Registration Fee $ 278 $ 278
Printing and Engraving Expenses 2,000 19,000
Legal Fees and Expenses 5,000 5,000
Edgar Fees 1,800 1,800
Marketing and Due Diligence Expenses 3,000 60,000
Accounting Fees and Expenses 1,000 1,000
Blue Sky Fees and Expenses 5,000 5,000
Miscellaneous 200 200
--------- ---------
TOTAL $ 18,278 $ 96,278
Item 15. Recent Sales of Unregistered Securities
The Company sold to its founder 600,000 shares of common stock which was
issued to him for $2,000, composed of $500 cash and $1,500 of his services. This
stock was issued under the exemption under the Securities Act of 1933, section
4(2); this section states that transactions by an issuer not involving any
public offering is an exempted transaction. The company relied upon this
exemption because in a private transaction during July 1999, the founder, sole
officer and director purchased stock for a combination of $500 cash and $2,000
of services.
The Company sold to two companies, a total of 400,000 shares in
consideration for $20,000 which was used to pay for the website. This stock was
sold at $0.05 per share. This stock was issued under the exemption under the
Securities Act of 1933, section 4(2); this section states that transactions by
an issuer not involving any public offering is an exempted transaction. The
company relied upon this exemption because in a private transaction during
August 1999, these companies purchased stock for $20,000 cash.
<PAGE>
Item 16. Exhibits
The following Exhibits are filed as part of the Registration Statement:
Exhibit No. Identification of Exhibit
- ----------- -------------------------
3.1 - Articles of Incorporation
3.2 - By Laws
4.2 - Specimen Stock Certificate
10.4 - Subscription Escrow Agreement
10.5** - Form of Broker-Dealer Selling Agreement
10.6 - Form of Subscription Agreement
23.1 - Opinion of T. Alan Owen & Associates, Attorneys at Law
23.2 - Consent of T. Alan Owen & Associates, Attorneys at Law
23.3 - Consent of Charles E. Smith, Certified Public Accountant
** To be filed by amendment by Registrant if broker dealers are engaged to sell
Item 17. Undertakings
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act; and
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the Registration Statement.
(2) 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) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
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
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form SB-1 and authorizes this Registration Statement
to be signed on its behalf by the undersigned, being duly authorized, in the
City of Garland, State of Texas, on the 2nd day of May, 2000.
WHOLESALE ON THE NET, INC.
By: /s/ Thomas Bieger
-------------------------------
Thomas Bieger, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity and on
the date indicated:
Signature Title Date
- ----------------------- ----------------------- -----------------------
President, Secretary,
/s/ Thomas Bieger Treasurer; Director May 2, 2000
ARTICLES OF INCORPORATION
OF
WHOLESALE ON THE NET, INC.
I, the undersigned natural person of the age eighteen (18) years or more,
acting as incorporator of a corporation under the General Corporation Law of the
State of Nevada, do hereby adopt the following Articles of Incorporation:
ARTICLE I
The name of this corporation is Wholesale On the Net, Inc.
ARTICLE II
Its registered office in the State of Nevada is to be located at 2533 North
Carson Street, Carson City, Nevada 89706. The registered agent in charge therof
is Laughlin Associates at 2533 Noth Carson Street, Carson City, Nevada 89706.
ARTICLE III
The nature of the business and, the objects and purposes proposed to be
transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do
and in any part of the world, viz:
"The purpose of the corporation is to engage in any lawful act or
activity for which coporations may be organized under th General
Corporation Law of the State of Nevada."
ARTICLE IV
The amount of the total authorized capital stock of this corporation is Twenty
Five Million (25,000,000) shares with a par value of $0.001 each, amounting to
Twenty Five Thousand Dollars ($25,000.00).
ARTICLE V
The name and address of the incorporator signing the articles of incorporation
is as follows:
Thomas N. Bieger
1529 E. I-30, Suite 104
Garland, Texas 75043
<PAGE>
ARTICLE VI
The governing board of this corporation shall be known as directors, and the
number of directors may from time to time be increased or decreased in such
manner as shall be provided in the bylaws of this corporation, provided that the
number of directors shall not be reduced less than one or be more than ten.
The name and address of the first director, which is one in number, is as
follows:
Thomas N. Bieger
1529 E. I-30, Suite 104
Garland, Texas 75043
ARTICLE VII
Meetings of stockholders may be held outside of the State of Nevada at such
place or places as may be designated from time to time by the board of directors
or in the bylaws of the corporation.
ARTICLE VII
This corporation reserves the right to amend, alter, change or repeal any
provision contained in the articles of incorporation, in the manner now or
hereafter prescribed, and all rights conferred upon stockholders herein are
granted subject to this reservation.
ARTICLE VII Elimination or Limitation of Liability of Directors
No director shall be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director: provided, however, that
nothing contained herein shall eliminate or limit the liability of a director
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for any transaction
from which the director derived an improper personal benefit, or (iv) for any
act or omission occurring prior to their directorship.
ARTICLE VIII Indemnification of Directors and Officers
The corporation shall indemnify the directors and officers of the corporation,
and of any subsidiary of the corporation, to the full extent provided by the
laws of the State of Nevada. Expenses incurred by a director or officer in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation. In addition, the corporation may
advance expenses of such nature on any other terms and/or in any other manner
authorized by law.
<PAGE>
ARTICLE IX Amendment of Bylaws
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is authorized, subject to the bylaws, if any, adopted by the
shareholder, to adopt, alter or amend the bylaws of the corporation.
I, THE UNDERSIGNED, being the sole incorporator herein before named for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Nevada, do make, file and record these articles of incorporation,
hereby declaring and certifying that the facts stated herein are true, and
accordingly have hereunto set my hand.
Dated this 24th day of June 1999.
/s/ Thomas N. Bieger
------------------------------------
Thomas N. Bieger, Incorporator
State of Texas }
}
County of Dallas }
Before me, a notary public, on this day personally appeared Thomas N.
Bieger, known to me to be the person whose name is subscribed to the foregoing
document and, being by the first duly sworn, declared that the statements
therein contained are true and correct.
Given nder my hand and official seal of office on the 24th day of June,
1999.
/s/ Aimme Zulch
------------------------
Aimme Zulch
Notary Public
in and for the State of Texas
My commission expires: May 5, 2001
WHOLESALE ON THE NET, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
1. ANNUAL MEETING. An annual meeting of the stockholders, for the election
of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the
meeting, shall be held at such place on such date, and at such time as
the Board of Directors shall each year fix, which date shall be within
thirteen months subsequent to the later of the date of incorporation or
the last annual meeting of stockholders.
2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose
or purposes prescribed in the notice of the meeting, may be called by
the Board of Directors for the chief executive officer and shall be
held at such place, on such date, and at such time as they or he shall
fix.
3. NOTICE OF MEETINGS. Written notice of the place, date and time of all
meetings of the stockholders shall be given, not less than ten days nor
more than sixty days before date on which the meeting shall be held, to
each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by the Business Corporation Act of the
State of Nevada or the Articles of Corporation.
When a meeting is adjourned to another place, date or time written
notice need not be given of the adjourned meeting if the place, date
and time thereof are announce at the meeting at which the adjournment
is taken; provided, however, that if the date of any adjourned meeting
is more that thirty days after the date for which the meeting as
originally noticed, or if a new record date is fixed for the adjourned
meeting, written notice of the place, date and time of the adjourned
meeting shall be given in conformity herewith. At any adjourned meeting
any, business may be transacted which might have been transacted at the
original meeting.
4. QUORUM. At any meeting of the stockholders, the holders of a majority
of all of the shares of the stock entitled to vote at the meeting, in
person or by proxy, shall constitute a quorum for purposes, unless or
except to the extent that the presence of a larger number may be
required by law.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shared of the stock
entitled to vote who are present, in person or by proxy, may adjourn
the meeting to another place, date or time.
If a notice of any adjourned special meeting of stockholders is sent to
all stockholders entitled to vote thereat, stating that it will be held
with those present constituting a quorum, than except as otherwise
requires by law, those present at such adjourned meeting shall
constitute a quorum, and all matters shall be determined by a majority
of the votes cast as at such meeting.
<PAGE>
5. ORGANIZATION. Such person as the Board of Directors may have designated
or in the absence of such a person, the highest ranking officer of the
Corporation who is present shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be
such person as the chairman appoints.
6. CONDUCT OF BUSINESS. The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.
7. PROXIES AND VOTING. At any meeting of the stockholders, every
stockholder entitled to vote any vote in person or by proxy authorized
by an instrument in writing filed in accordance with the procedure
established for the meeting.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his name on the record date for the
meeting except as otherwise provided herein or required by law.
All voting, except on the election of director and where otherwise
required by law, shall be held by a voice vote; provided, however, that
upon demand thereof by a stockholder entitled to vote or his proxy, a
stock vote shall be taken. Every stock vote shall be taken by ballots,
each of which shall state the name of the stockholder or proxy voting
and such other information as may be required under the procedure
established for the meeting. Every vote taken by ballots shall be
counted by an inspector appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be
determined by a majority.
8. STOCK LIST. A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order for each class
of stock and showing the address of each such stockholder and the
number of shares registered in his name, shall be open to the
examination of any such stockholder, for any purpose germane to the
meeting, during ordinary business hours for a period of at least ten
(10) days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not specified, at the place where the meeting is
to be held.
The stock list shall be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the
number of shares held by each of them.
ARTICLE II
BOARD OF DIRECTORS
1. NUMBER AND TERM OF OFFICE. The number of directors who shall constitute
the whole board shall not be less than one nor more than twenty. Each
director shall be elected for a term of one year and until his
successor is elected and qualified, except as otherwise provided herein
or required by law. Any decrease in the authorized number of directors
shall not become effective until the expiration of the term of the
directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the
decrease.
<PAGE>
2. VACANCIES. If the office of any director becomes vacant by reason of
death, resignation, disqualification, removal or other cause, a
majority of the directors remaining in office, although less than a
quorum, may elect a successor for the unexpired term and until his
successor is elected and qualified.
3. REGULAR MEETINGS. Regular meetings of the Board of Director shall be
held at such place or places, on such date or dates, and at such time
or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall
not be required.
4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by one-third of the directors then in office if by the chief
executive officer and shall be held at such place, on such date and at
such time as they or he shall fix. Notice of the place, date and time
of each such special meeting shall be given to each director by whom it
is not waived by mailing written notice no;t less than three days
before the meeting of by telegraphing the same not less than 18 hours
before the meeting. Unless otherwise indicated in the notice thereof,
any and all business may be transferred at a special meeting.
5. QUORUM. At any of meeting of the Board of Directors, one-third of the
total number of the whole board, but never less than two, shall
constitute a quorum for all purposes. If a quorum shall fail to attend
any meeting, a majority of those present may adjourn the meeting to
another place, date, or time without further notice or waiver thereof.
6. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board
of Directors, or any committee thereof may participate in a meeting of
such board or committee by means of conference telephone or similar
communications equipment that enables all persons participating in the
meeting to hear each other. Such participation shall constitute
presence in person at such meeting.
7. CONDUCT OF BUSINESS. At any meeting of the Board of Directors, business
shall be transacted in such order and manner as the board may from time
to time determine, and all matters shall be determine by the vote of a
majority of the director present, except as otherwise provided herein
or required by law. Action may be taken by the Board of Directors
without a meeting if all members thereof consent thereto in writing and
the writing or writings are filed with the minutes of the proceedings
of the Board of Directors.
8. POWERS. The Board of Directors may, except as otherwise required by
law, exercise all such powers and so all such things as may be
exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power.
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or other acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine of written obligations of every kind,
negotiable or non-negotiable, secured, or unsecured, and to do
all things necessary in connection therewith;
<PAGE>
(4) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties
of any officer upon any other person for the being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers and agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers and
agents of the Corporation and its subsidiaries as it may
determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers and agents of the
Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, nor inconsistent with
these by-laws, for the management of the Corporation's
business and affairs.
ARTICLE III
COMMITTEES
1. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors, by a vote
of a majority of the whole board, may from time to time designate
committees of the board, with such lawfully delegatable powers and
duties as it thereby confers, to serve at the pleasure of the board and
shall, for those committees and any others provided for herein, elect a
director or directors to serve as the member or members, designating,
if it desires, other directors as alternative members who may replace
any absent or disqualified member at any meeting of the committee. Any
committee so designated may exercise the power and authority of the
Board of Directors to declare a dividend or to authorize the issuance
of stock of the resolution which designated the committee or a
supplemental resolution of the Board of Directors shall so provide. In
the absence or disqualification of any member of any of any committee
and any alternate member in his place, the member or members of the
committee present at the meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may by unanimous vote
appoint another member of the Board of directors to act at the meeting
in the place of the absent or disqualified member.
2. CONDUCT OF BUSINESS. Each Committee may determine the procedural rules
for meeting and conducting its business and shall act in accordance
therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to manners of all meetings;
one-third of the members shall constitute a quorum unless the committee
shall consist of one or two members, in which event one member shall
constitute a quorum; and all matters shall be determined by a majority
vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing,
and the writing or writings are filed with the minutes of the
proceedings of such committee.
<PAGE>
ARTICLE IV
OFFICERS
1. GENERALLY. The officers of the Corporation shall consist of a
president, one or more vice- presidents, a secretary, a treasurer and
such other subordinate officers as may from time to time be appointed
by the Board of Directors. Officers shall be elected by the Board of
Directors, which shall consider that subject at its first meeting after
every annual meeting of stockholders. Each officer shall hold his
office until his successor is elected and qualified or until his
earlier resignation or removal. The President shall be a member of the
Board of Directors. Any number of offices may be held by the same
person.
2. PRESIDENT. The president shall be the chief executive officer of the
Corporation. Subject to the provisions of these by-laws and to the
direction of the Board of directors, he shall have the responsibility
for the general management and control of the affairs and business of
the Corporation and shall perform all the duties and have all the
powers which are delegated to him by the Board of Directors. He shall
have power to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized. He shall have
general supervision and direction of all of the other officers and
agents of the Corporation.
3. VICE PRESIDENTS. Each Vice-President shall perform such duties as the
Board of Directors shall prescribe. In the absence or disabilities of
the President, the Vice-President who has served in such capacity for
the longest time shall perform the duties and exercise the powers of
the President.
4. TREASURER. The Treasurer shall have the custody of all monies and
securities of the Corporation and shall keep regular books of account.
He shall make such disbursements of the funds of the Corporation as are
proper and shall render from time to time an account of all such
transactions and of the financial condition of the Corporation.
5. SECRETARY. The Secretary shall issue all authorized notices for, and
shall deep minutes of all meetings of the stockholders and the Board of
Directors. He shall have charge of the corporate books.
6. DELEGATION OF AUTHORITY. The Board of Directors may from time to time
delegate the powers or duties of any officer to any other officer or
agents, notwithstanding any provision hereof.
7. REMOVAL. Any officer of the Corporation may be removed at any time with
or without cause by the Board of Directors.
8. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless
otherwise directed by the Board of directors, the President shall have
power to vote and otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of the stockholders of or with respect to
any action of stockholders of any other corporation in which this
Corporation may hold securities and otherwise to exercise any and all
rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
<PAGE>
ARTICLE V
RIGHT OF INDEMNIFICATION OF DIRECTOR, OFFICERS AND OTHERS
1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person for
whom he or she is the legal representative is or was a director or
officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director or officer, employee or
agent of another corporation, or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Nevada Business Corporation Act,
as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent such amendment permits the
Corporation to provide broader indemnification right than said law
permitted the Corporation to provide broader indemnification fight than
said law permitted the Corporation to provide prior to such amendment)
against all expenses, liability and loss (including attorney's fees,
judgments, fines, FRISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith. Such right shall be a contract right
and shall include the right to be paid by the Corporation for expenses
incurred in defending any such proceeding in advance of its final
disposition; provided, however, that the payment of such expenses
incurred by a director or officer of the Corporation in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director of
officer, including, without limitation, service to an employee benefit
plan) in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if
it should be determined ultimately that such director or offices is not
entitled to be indemnified under this section or otherwise.
2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1 is not paid
in full by the Corporation within 90 days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid
amount of the claim, and if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the
Texas Business Corporation Act for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or it
stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of
conduct set forth in the Texas Business Corporation Act, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had
not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that claimant had not met the applicable
standard of conduct.
3. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by Sections 1 and 2
shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of the stockholders or
disinterested directors or otherwise.
4. INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any such director, officer, employee or agent of the
Corporation or any other corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability oil loss,
whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the Texas Business
Corporation Act.
<PAGE>
ARTICLE VI
STOCK
1. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a
certificate signed by, or in the name if the Corporation by, the
President or a vice-president, and by the Secretary or and assistant
secretary, or the Treasurer or an assistant treasurer, certifying the
number of shares owned by him. Any of or all the signatures on the
certificate may be facsimile.
2. TRANSFERS OF STOCK. Transfers of stock shall be made only upon the
transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
corporation. Except where a certificate is issued in accordance with
Section 4 of Article VI of these by-laws, an outstanding certificate
for the number of shares involved shall be surrendered for cancellation
before a new certificate is issued therefor.
3. RECORD DATE. The Board of Directors may fix a record date, which shall
not be more than 60 nor less than 10 days before the date of any
meeting of stockholders, nor more than 60 days prior to the time for
the other action hereinafter described, as of which there shall be
determined the stockholders who are entitled: to notice of or to vote
at any meeting of stockholders or any adjournment thereof; to express
consent to corporate action in writing without a meeting; to receive
payment of any dividend or other distribution or allotment of any
rights; or the exercise any rights with respect to any change,
conversion or exchange of stock or with respect to any other lawful
action.
4. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event of the loss, theft
or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of directors may
establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
5. REGULATIONS. The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations as
the Board of Directors may establish.
6. CAPITAL STOCK - AUTHORIZATION AND ISSUANCE. The total number of shares
of all classes of stock which the Corporation shall have the authority
to issue is TWENTY-FIVE MILLION (25,000,000) shares of which all
TWENTY-FIVE MILLION (25,000,000) shares, designated as Common Stock,
shall have a par value of One Millicent ($0.001) per share.
A statement of the preferences, limitations and relative rights with
respect to the shares of Common Stock is as follows:
B. COMMON STOCK:
Subject to limitations set forth herein, the holders of the
shares of the Common Stock shall be entitled to receive
dividends when and as declared by the Board of Directors out
of any funds legally available therefor. In the event of any
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment in full of the
amounts which the holders of the shares of the Series
Preferred Stock are entitled to receive in such event, the
remaining assets of the Corporation shall be distributed
ratablytot he holders of the shares of the Common Stock. Each
holder of record of Common Stock shall be entitled to one vote
for each share held.
<PAGE>
1. CUMULATIVE VOTING RESTRICTION. The share holders of the
Corporation shall not have cumulative voting rights in the
election of directors.
2. PREEMPTIVE RIGHTS RESTRICTION. The Stockholders of the
Corporation shall not have any preemptive rights. No holder of
any of the shares of any class of stock of this Corporation
shall be entitled to the right to subscribe for, purchase, or
otherwise acquire any shares of any class of the Stock of this
Corporation which the Corporation proposes to issue or any
rights or options which the Corporation proposes to grant for
the purchase of shares of any class of the Corporation or for
the purchase of any shares, bonds, securities, or obligations
of the Corporation which are convertible into or exchangeable
for, or which carry any rights, to subscribe for, purchase, or
otherwise acquire shares of any class of the Corporation; and
any and all of such shares, bonds, securities, or obligations
of the Corporation, whether now or hereafter authorized or
created, may be issued, or may be reissued or transferred if
the same have been re-acquired and have treasury status, and
any and all of such rights and options may be granted by the
Board of Directors to such persons, firms, corporations, and
associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may
determine, without first offering the same, or any thereof, to
any said holder.
7. CAPITAL DISTRIBUTIONS TO STOCKHOLDERS.
(a) The Board of Directors may from time to time
distribute to the stockholders in partial
liquidation, out of the stated capital surplus of the
Corporation, a portion of its assets, in cash or
property, subject to the limitations contained in the
statutes of Texas.
(b) Whenever the Corporation shall be engaged in the
business of exploiting natural resources, dividends
may be declared and paid in cash and/or kind out of
the depletion reserves at the discretion of the Board
of Directors and in conformity with the statutes of
Texas.
ARTICLE VII
NOTICES
1. NOTICES. Whenever notice is required to be given to any stockholder,
director, officer, employee or agent, such requirement shall not be
construed to mean personal notice. Such notice may in every instance be
effectively given by depositing a writing in a post office or letter
box, in a postpaid, sealed wrapper, or by dispatching a prepaid
telegram, addressed to such stockholder, director, officer, employee or
agent at his or her address as the same appears on the books of the
Corporation. The time when such notice is dispatched shall be the time
of the giving of the notice.
2. WAIVERS. A written waiver of any notice, signed by a stockholder
director, officer, employee or agent, whether before or after the time
of the event for which notice is to be given, shall be deemed
equivalent to the notice required to be given to such stockholder,
director, officer, employee or agent. Neither the business nor the
purpose of any meeting need be specified in such a waiver.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
1. FACSIMILE SIGNATURE. In addition to the provisions for the use of
facsimile signatures elsewhere specifically authorized in these
by-laws, facsimile signatures of any director or officer of the
Corporation may be used whenever and as authorized by the Board of
Directors or a committee thereof.
2. CORPORATE SEAL. The Board of Directors may provide a suitable seal,
containing the name of the Corporation, which seal shall be in charge
of the secretary. If and when so directed by the Board of Directors or
a committee thereof, a duplicate of the seal may be kept and used by
the treasurer or by the assistant secretary of assistant treasurer.
3. RELIANCE UPON BOOKS, REPORTS, AND RECORDS. Each director, each member
of any committee designated by the Board of Directors, and each officer
of the Corporation shall, in performance of his duties, be fully
protected in relying in good faith upon the books of account or records
of the corporation, including reports made to Corporation by any of its
officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
4. FISCAL YEAR. The fiscal year of the Corporation shall be as fixed by
the Board of Directors.
5. TIME PERIODS. In applying any provision of these by-laws which require
that an act be done during a period of specified number of days prior
to an event, calendar days shall be used of the doing of the act shall
be excluded, and the day of the event shall be included.
6. BANK ACCOUNT AND LOAN AUTHORIZATION. Resolutions required by the banks
and/or other depository and lending institutions which refer to Board
of Directors resolutions may be signed by two officers of the
Corporation one of which shall be the President or Vice-President or
assistant Vice-President and the other endorsement shall be the
Secretary-Treasurer, Secretary or Assistant Secretary. This section
shall confirm the Board of Directors Agreement to the signing if such
resolutions which ar legally required by such bank and/or deposit or
loan institution. A copy of such resolution shall be immediately filled
in the records in and the minute books of the corporation.
ARTICLE IX
AMENDMENTS
These by-laws may be amended or repealed by the Board of Directors at any
meeting or by stockholders.
Certificate: The undersigned, being the duly elected and acting Secretary of
Wholesale On The Net, Inc., a Nevada corporation, hereby certifies the foregoing
By-laws of such corporation duly adopted by its Board of Directors.
Wholesale On The Net, Inc.
Secretary
SPECIMEN STOCK CERTIFICATE
--------------------------
CERTIFICATE [GRAPHIC OMITTED] NUMBER OF
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
WHOLESALE ON THE NET, INC.
The Corporation is authorized to issue 25,000,000 Common Shares - Par Value
$.001 each
This Certifies that______________________________________________is the owner of
________________________________________________________________fully paid and
non-assessable Shares of the above Corporation transferable only on the books of
the Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this Ceritificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated ___________________________
_______________________________ _______________________________
SECRETARY PRESIDENT
ESCROW AGREEMENT
----------------
This Escrow Agreement (the "Agreement") is made and entered into by and
among T. Alan Owen & Associates, P.C. ("TAO"), Attorneys at Law, Arlington,
Texas, and Wholesale On The Net, Inc. ("WOTN"), a Nevada corporation, on behalf
of all subscribers (the "Investors") to the initial public offering (the
"Offering") of common stock by WOTN, pursuant to a Registration Statement filed
under the Securities Act of 1933 on Form SB-1.
I
RECITALS
1.1 Purchase of Shares. The Investors, at a price of $0.25 per share,
desire to individually purchase from WOTN, an aggregate of between 200,000
shares and 4,000,000 shares (the "Shares") of the common stock of WOTN pursuant
to the terms of the Offering. However, there is no certainty that any Shares may
be purchased under the Offering.
1.2 Purpose Hereof. In order to facilitate the purchase of the Shares,
WOTN shall deposit all funds received by it from the sale of the Shares to
Investors (the "Escrow Funds") with TAO, and TAO shall hold the Escrow Funds and
not release them to WOTN until such time as is described below.
II
ESCROW PROVISIONS
2.1 Appointment of TAO. TAO is hereby appointed as Escrow Agent to
receive, hold, and distribute all funds deposited by the Investors for Shares,
all as hereinafter provided.
2.2 Deposit and Receipt of Funds. TAO shall deposit all funds for
purchase of the Shares in its Attorney Trust Account (the "Escrow Account").
Concurrently with the delivery of the deposits by each Investor, TAO shall give
each Investor and WOTN a receipt for the funds received by TAO.
2.3 Disbursement of Escrow Funds. Following deposit into the Escrow
Account of funds totaling $50,000.00, TAO shall disburse all such funds to WOTN
and shall notify all Investors that placed Escrow Funds with TAO that such
disbursement has taken place.
2.4 TAO's Responsibility. TAO's sole responsibility under this
Agreement shall be for the recording of deposits by the Investors, the
safekeeping of the Escrow Funds, and the disbursement thereof in accordance with
Paragraph 2.3, and TAO shall not be required to take any other action with
reference to any matters which might arise in connection with the Escrow Funds
or this Agreement. TAO shall not be liable to WOTN or any Investor for anything
which TAO may do or refrain from doing in connection herewith, so long as TAO is
acting in good faith in an attempt to perform its duties under this Agreement or
unless Owen is guilty of gross negligence or willful misconduct. TAO is not a
party to, nor is it bound by, nor shall it give consideration to the terms or
provisions of, even though he may have knowledge of, (i) any agreement or
undertaking of any agreement with any other party or parties, except for this
Agreement, (ii) any agreement or undertaking which may be evidenced or disclosed
by this Agreement, and (iii) any other agreements regarding the Escrow Funds
that may now or in the future be deposited with TAO in connection with this
Agreement. TAO has no duty to determine or inquire into any happening or
occurrence or any performance or failure of performance of the Investors or WOTN
or any other parties with respect to agreements or arrangements with each other
or with any other party or parties.
<PAGE>
2.5 Indemnity to TAO. WOTN agrees to indemnify and hold TAO harmless
against and from any and all costs, expenses, claims, losses, liabilities, and
damages (including reasonable attorneys' fees) that may arise out of or in
connection with TAO's acting as Escrow Agent under the terms of this Agreement,
except in those instances where TAO has been guilty of gross negligence or
willful misconduct.
2.6 Return of Escrow Funds. If $50,000.00 is not deposited in the
Escrow Account by the Investors on or before 180 days after the effective date
of the offering, TAO shall promptly return to each Investor from the Escrow
Funds, an amount equal to the amount deposited by such Investor.
2.7 Effective Date and Termination. This Escrow Agreement shall become
effective on the date the first deposit is made by an Investor into Escrow. All
of the provisions of this Agreement shall terminate 180 days after the effective
date of the offering by refunding all funds in escrow to the Investors, or by
the disbursement of all Escrow Funds as herein set out. If not so terminated,
TAO at any time after such date may disburse the allocable portion of the Escrow
Funds to each respective Investor, close his records, and withdraw all of TAO's
liability and obligations in connection with the Escrow Funds and this Agreement
shall terminate.
III
MISCELLANEOUS
3.1 Multiple Counterparts. It is intended that this Agreement shall be
executed in multiple counterparts, each of which, when so executed, shall be
considered an original, but all of which shall together constitute one and the
same instrument.
3.2 Entire Agreement. This instrument evidences the entire agreement
between TAO and WOTN with respect to the purchase of the Shares by Investors
3.3 Controlling Law. The terms of this Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
<PAGE>
3.4 Notices. Any notice, request, instruction, or other instrument to
be given or served hereunder upon any party shall be deemed given or served if
in writing and delivered personally or sent by United States Mail, postage
prepaid, certified, return receipt requested, to the respective party or parties
at the following addresses:
a) If to TAO: T. Alan Owen & Associates, P.C.
1112 East Copeland Road
Suite 420
Arlington, Texas 76011
Attn: T. Alan Owen
b) If to WOTN: Wholesale On The Net, Inc.
1529 E. I-30
Suite 104
Garland, Texas 75043
Attn: Thomas Bieger
EXECUTED to be effective as of the 2nd day of May, 2000.
T. ALAN OWEN & ASSOCIATES, P.C.
By: /s/ T. Alan Owen
------------------------------
T. Alan Owen
WHOLESALE ON THE NET, INC.,
a Nevada corporation
By: /s/ Thomas Bieger
------------------------------
Thomas Bieger, President
WHOLESALE ON THE NET, INC.
SUBSCRIPTION AGREEMENT
May ____, 2000
WHOLESALE ON THE NET, INC.
1529 E. I-30, Suite 104
Garland, Texas 75043
Ladies and Gentlemen:
1. PURCHASE OF COMMON STOCK. Intending to be legally bound , I hereby agree
to purchase ________ shares of voting, no par value common stock (the "Shares")
of Wholesale On The Net, Inc. (the "Corporation") for ______________ U.S.
Dollars (number of Shares to be purchased multiplied by $0.25). This offer to
purchase is submitted in accordance with and subject to the terms and conditions
described in this Subscription Agreement (the "Agreement"). I acknowledge that
the Corporation reserves the right, in its sole and absolute discretion, to
accept or reject this subscription and the subscription will not be binding
until accepted by the Corporation in writing.
2. PAYMENT. I agree to deliver to the Corporation immediately available
funds in the full amount due under this Agreement, by certified or cashier's
check payable to the "WOTN 2000 Public Offering Escrow Account." The Corporation
shall promptly deposit the funds into the Escrow Account.
3. ISSUANCE OF SHARES. The Shares subscribed for herein will only be issued
upon acceptance by the Corporation as evidenced by the Corporation returning to
the investor an executed Agreement acknowledging acceptance and upon
satisfaction of the terms and conditions of the Escrow Agreement.
4. REPRESENTATION AND WARRANTIES.
A. I understand that the offering and sale of the Shares is registered
under (i) the Securities Act of 1933, as amended (the "Securities Act"), and
(ii) various States' Divisions of Securities in compliance with their
administration and enforcement of the respective States' Blue Sky Laws and
Regulations. In accordance therewith and in furtherance thereof, I represent and
warrant to and agree with the Corporation as follows:
[1] I am a resident of the State of ________________ as of the date of
this Agreement and I have no present intention of becoming a resident of any
other state or jurisdiction;
[2] I have received and have reviewed the Corporation's Prospectus
dated _________________, 2000;
[3] I have had a reasonable opportunity to ask questions of and receive
answers from a person or persons acting on behalf of the Corporation concerning
this investment, including the terms and conditions of this offering, and all
such questions have been answered to my full satisfaction;
<PAGE>
5. IRREVOCABILITY; BINDING EFFECT. I hereby acknowledge and agree that the
purchase hereunder is irrevocable, that I am not entitled to cancel, terminate
or revoke this Agreement or any agreements of the undersigned hereunder and that
this Agreement and such other agreements shall survive my death or disability
and shall be binding upon and inure to the benefit of the parties and their
heirs, executor, administrators, successors, legal representatives and assigns.
If the undersigned is more than one person, the obligations of the undersigned
hereunder shall be joint and several, and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and are binding upon each such person and his heirs, executors, administrators,
successors, legal representatives and assigns.
6. MODIFICATION. Neither this Agreement not any provisions hereof shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge or
termination is sought.
7. NOTICES. Any notice, demand or other communication which any party hereto
may require, or may elect to give to anyone interested hereunder shall be
sufficiently given if [a] deposited, postage prepaid, in a United States mail
box, stamped registered or certified mail, return receipt requested addressed to
such address as may be listed on the books of the Corporation, [b] delivered
personally at such address, or [c] delivered (in person, or by a facsimile
transmission, telex or similar telecommunications equipment) against receipt.
8. COUNTERPARTS. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts, and each of such counterparts
shall, for all purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof, and there are no
representations, covenants or other agreements except as stated or referred to
herein.
10. SEVERABILITY. Each provision of the Agreement is intended to be
severable from every other provision, and the invalidity or illegality of any
portion hereof shall not affect the validity or legality of the remainder
hereof.
11. ASSIGNABILITY. This Agreement is not transferable or assignable by the
undersigned except as may be provided herein.
12. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas as applied to residents of that
state executing contracts wholly to be performed in that state.
<PAGE>
INDIVIDUAL(S) SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ____ day of
___________, 2000.
Address:
- ----------------------------------- ------------------------------
Signature of Purchaser
------------------------------
- --------------------------------------------
Name(s) of Purchaser (Please print or type)
- -----------------------------------
Purchaser(s) Social Security Number
ENTITY SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ______ day of
_________________, 2000.
Address:
- ---------------------------- ------------------------------
Entity
------------------------------
- ------------------------------
Signed By
Its:
------------------------------
- ------------------------------
Date
PURCHASE ACCEPTED FOR _________ SHARES:
WHOLESALE ON THE NET, INC.
By: /s/ Tom Bieger
------------------------------
Tom Bieger, President
Date: _______________________________
T. ALAN OWEN & ASSOCIATES, P.C.
Attorneys at Law
One Arlington Centre
1112 East Copeland Road
Suite 420
Arlington, Texas 76011
TELEPHONE TELEFAX
(817) 460-4498 (817) 795-0154
(817) 461-6079 -- Metro
April 20, 2000
Wholesale On The Net, Inc.
1529 E. I-30, Suite 104
Garland, Texas 75043
Attention: Thomas N. Bieger
Dear Mr. Bieger:
As the sole director, officer and major shareholder of Wholesale On The
Net, Inc. (the "Corporation"), you have requested my opinion as special
securities counsel for the Corporation with regard to the issuance of its Common
Stock, par value of $0.001 per share (the "Common Stock"), upon organization and
pursuant to a public offering of a maximum of not more than 4,000,000 shares and
a minimum of not less than 200,000 shares, at a price of $0.25 per share.
In this respect, I have examined the following documents of the
Corporation:
1. Articles of Incorporation filed with the Secretary of State of
Nevada, under date of June 30, 1999.
2. A set of Bylaws approved and adopted by the Corporation upon
its organization.
3. Minutes of the organizational meeting held by Thomas N. Bieger
on July 1, 1999, as the sole director named in the Articles of
Incorporation, during which the following business, among
others, was transacted.
o Issuance of 600,000 shares of the Corporation's
Common Stock to Thomas Bieger as consideration for
services rendered and cash advanced to or for the
Corporation at a stated value of $2,000.
4. Written Consent of Sole Director, Thomas N. Bieger, dated
August 27, 1999, which authorizes the following transaction:
Issuance of 400,000 shares of Common Stock of the
Corporation as consideration for the payment of
$20,000 for the development of the Corporation's web
site which offers products for sale over the
Internet.
<PAGE>
5. Written Consent of Sole Director, Thomas N. Bieger, dated
January 31, 2000, which authorizes the following transaction:
Filing of a public offering of not more than
4,000,000 shares and not less than 200,000 shares of
the Corporation's Common Stock at a price of $0.25
per share pursuant to a registration statement to be
filed by the Corporation with the Securities and
Exchange Commission on Form SB-1.
Based upon my examination of the foregoing documents, which constitute
all of the records of the Corporation, I am of the opinion that the 1,000,000
shares of Common Stock presently outstanding constitute validly issued, fully
paid, and non-assessable shares of Common Stock, and that the shares authorized
for issuance pursuant to the public offering will, upon payment therefor,
likewise constitute validly issued, fully paid, and non-assessable shares of
capital stock of the Corporation.
Yours Truly,
/s/ T. Alan Owen
------------------
T. Alan Owen
T. ALAN OWEN & ASSOCIATES, P.C.
Attorneys at Law
One Arlington Centre
1112 East Copeland Road
Suite 420
Arlington, Texas 76011
TELEPHONE TELEFAX
(817) 460-4498 (817) 795-0154
(817) 461-6079 -- Metro
April 20, 2000
Mr. Thomas N. Bieger
Wholesale On The Net, Inc.
1529 E. I-30, Suite 104
Garland, Texas 75043
RE: Wholesale On The Net, Inc.
Form SB-1
Dear Mr. Bieger:
This letter shall serve to evidence my consent to being named in the
Prospectus for the referenced Corporation's captioned registration statement as
the attorney for the Corporation in connection with the offering described
therein and to the inclusion of my opinion with regard to the Corporation and
its capital stock as an exhibit to the registration statement.
Please advise me if I may be of any further service in this respect.
Sincerely yours,
/s/ T. Alan Owen
------------------
T. Alan Owen
Charles E. Smith
Certified Public Accountant
709-B West Rusk
Suite 580
Rockwall, Texas 75087
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TELEPHONE (214) 212-2307
Mr. Thomas N. Bieger
Wholesale On The Net, Inc.
1529 E. I-30, Suite 104
Garland, Texas 75043
RE: Wholesale On The Net, Inc.
Form SB-1
Dear Mr. Bieger:
This letter shall serve to evidence my consent to being named in the
Prospectus for the referenced Corporation's captioned registration statement as
the certified public accountant for the Corporation in connection with the
offering described therein and to the inclusion of my opinion on the financial
statements of the Corporation as a part of that registration statement.
Please advise me if I may be of any further service in this respect.
Sincerely yours,
/s/ Charles E. Smith
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Charles E. Smith
April 27, 2000
