U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
JPAL, INC.,
(Exact name of registrant as specified in its charter)
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Nevada 7389 33-0851302
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or Classification Code Number)
organization)
513 Calle Amigo, San Clemente, California 92673
(Address of registrant's principal executive offices) (Zip Code)
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(949) 637-3763
(Registrant's Telephone Number, Including Area Code)
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
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Common Stock, $.001 par value 3,797,469 $0.25 $949,367.00 $264.00
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The offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457
of Regulation C.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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Preliminary Prospectus
JPAL, Inc.,
a Nevada corporation
3,797,469 Shares of Common Stock
This prospectus relates to 3,797,469 shares of common stock of JPAL, Inc., a
Nevada corporation, which are issued and outstanding shares of our common stock,
acquired by the selling security holders in private placement transactions which
were exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933. No national securities exchange or the Nasdaq Stock
Market lists the common stock being offered by the selling security holders, and
we have not applied for listing or quotation with any national securities
exchange or automated quotation system.
The shares of common stock being offered by the selling security holders have
not been registered for sale under the securities laws of any state as of the
date of this prospectus. Brokers or dealers effecting transactions in the shares
of our common stock should confirm the registration thereof under the securities
laws of the states in which transactions occur or the existence of any exemption
from registration.
See "Risk Factors" on Pages 5 to 9 for factors to be considered before investing
in the shares of our common stock.
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.
The information in this prospectus is not complete and may be changed. The
selling security holders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
The date of this prospectus is August 17, 2000
Subject to completion.
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TABLE OF CONTENTS
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Prospectus Summary ............................................................................4
Risk Factors...................................................................................5
Use of Proceeds................................................................................9
Determination of Offering Price................................................................9
Dilution......................................................................................10
Selling Security Holders......................................................................10
Plan of Distribution..........................................................................10
Legal Proceedings.............................................................................11
Directors, Executive Officers, Promoters and Control Persons..................................12
Security Ownership of Certain Beneficial Owners and Management................................12
Description of Securities.....................................................................13
Interest of Named Experts and Counsel.........................................................14
Disclosure of Commission Position on Indemnification for Securities Act Liabilities...........14
Organization Within Last Five Years...........................................................15
Description of Business.......................................................................15
Management's Discussion and Analysis of Financial Condition and Results of Operations.........18
Description of Property.......................................................................19
Certain Relationships and Related Transactions.................... ...........................19
Market for Common Equity and Related Stockholder Matters......................................20
Executive Compensation .......................................................................21
Financial Statements..........................................................................22
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........22
Legal Matters.................................................................................22
Experts.......................................................................................22
Additional Information........................................................................22
Indemnification of Directors and Officers.....................................................22
Other Expenses of Issuance and Distribution...................................................23
Recent Sales of Unregistered Securities.......................................................23
Exhibits......................................................................................24
Undertakings..................................................................................24
Signatures ................................................................................26
Power of Attorney.............................................................................27
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Outside Back Cover Page
Dealer Prospectus Delivery Obligation
Until _______, 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' obligations to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
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Prospectus Summary.
Our Business: Our principal business address is 513 Calle Amigo,
San Clemente, California 92673; our telephone
number (949) 637-3763.
We are an Internet based provider of vacation
rental properties and services. We were originally
formed to provide vacation rental properties and
services for the Year 2000 New Year's Eve
celebration in Las Vegas. We generated revenues of
approximately $6,793 through December 31, 1999. We
intend to redesign our website to provide a wide
range of services to both vacationers and property
owners.
For vacationers who desire popular vacation
destinations, we intend to advertise on our website
privately owned rental properties, which, we
believe, offer the convenience and accommodations
of a condominium or home, while providing many of
the amenities and services of a hotel, generally at
a lower cost per person. We believe that vacation
condominium and home rentals generally offer
greater space and convenience than resort hotel
rooms, including separate living, sleeping and
eating quarters. As we generate revenues, we
anticipate that we will expand our website to
include specialized concierge-type services such as
arranging golf tee times, purchasing ski lift
tickets and making restaurant reservations.
For property owners, we intend to offer marketing
and rental services. Our primary source of revenue
has been property rental fees, which are charged to
the property owners as a percentage of the
vacationers' total rental price, and we anticipate
that those fees will continue to be our primary
source of revenue, although we intend to attempt to
generate additional revenue sources such as
Internet advertising.
Our State of Organization: We were incorporated in Nevada on March 31, 1999.
Number of Shares Being The selling security holders want to sell 3,797,469
Offered: shares of our common stock. The offered shares were
acquired by the selling security holders in private
placement transactions, which were exempt from the
registration and prospectus delivery requirements
of the Securities Act of 1933.
Number of Shares Outstanding 3,797,469 shares of our common stock are issued and
After the Offering: outstanding. We have no other securities issued.
Estimated use of We will not receive any of the proceeds from the
proceeds: sale of those shares being offered.
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RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative in nature and involves a lot of risks. No purchase of our common
stock should be made by any person who is not in a position to lose the entire
amount of his investment.
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Among the key factors that have a direct
bearing on our results of operations are the effects of various governmental
regulations, the fluctuation of our direct costs and the costs and effectiveness
of our operating strategy. Other factors could also cause actual results to vary
materially from the future results anticipated by those forward-looking
statements.
Because we are a new company with losses since our formation and we anticipate
that we will lose money in the foreseeable future, we may not be able to achieve
profitable operations.
We were incorporated in March 1999, and we began operations immediately
thereafter. As of June 30, 2000, our losses since inception were approximately
$19,413. We were originally formed to provide vacation rental properties and
services for the Year 2000 New Year's Eve celebration in Las Vegas. We generated
revenues of approximately $6,793 through December 31, 1999. We intend to
redesign our website to provide a wide range of services to both vacationers and
property owners. We have only generated revenues of approximately $1,290 in our
current fiscal year. Our prospects must be considered speculative, considering
the risks, expenses, and difficulties frequently encountered in the
establishment of a new business, specifically the risks inherent in the
development of electronic commerce. We cannot guaranty that unanticipated
technical or other problems will not occur which would result in material delays
in future product and service commercialization or that our efforts will result
in successful product and service commercialization. We cannot guaranty that we
will be able to achieve profitable operations.
Our ability to succeed is uncertain because we currently have limited revenues
and minimal marketing activities due to the lack of revenues.
We generated revenues of approximately $6,793 through December 31, 1999, and we
intend to redesign our website to provide a wide range of services to both
vacationers and property owners. We have only generated revenues of
approximately $1,290 in our current fiscal year. Our marketing activities are
significantly limited and, to fund more sophisticated marketing activities, we
need to generate revenues.
We anticipate that we will need to raise additional capital to complete our
website redevelopment and market our website.
To complete our development and market our website, we will be required to raise
additional funds. We believe that we may be able to acquire additional financing
at commercially reasonable rates. We cannot guaranty that we will be able to
obtain additional financing at commercially reasonable rates. We anticipate that
we will spend a lot of funds on the marketing and promotion of our website. The
minimum amount necessary to complete our current website redevelopment is
approximately $10,000. Our failure to obtain additional funds would
significantly limit or eliminate our ability to fund our sales and marketing
activities. This would have a material adverse effect on our ability to continue
our operation and compete with other providers.
We anticipate that we may seek additional funding through public or private
sales of our securities. That could include equity securities, or through
commercial or private financing arrangements. Adequate funds may not be
available when
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needed or on terms acceptable to us. In the event that we are not able to obtain
additional funding on a timely basis, we may be required to limit any proposed
operations or eliminate certain or all of our marketing programs, either of
which could have a material adverse effect on our results of operations.
Our inability to generate revenues will affect our ability to market our
products.
We may not be able to generate revenues to market our website effectively. Our
failure to market our website will harm our business and financial performance.
If we are unable to generate revenues, we anticipate that our marketing
activities will be very limited. Also, our expenses will be limited to the
day-to-day expenditures necessary to conduct business. Our President, Secretary,
director and principal shareholder, Ryan A. Neely, has paid our expenses since
March 2000. Mr. Neely will continue to pay our expenses in the event that we do
not generate additional revenues.
We operate in a highly competitive industry and we may not have adequate
resources to market our products in order to compete successfully.
Competition in the Internet industry is intense. We compete directly with other
companies and businesses that have developed and are in the process of
developing online vacation rental services which are functionally equivalent or
similar to our proposed online vacation rental services. We expect that these
competitors who have developed similar websites will market those websites to
our target customers, which will significantly affect our ability to compete.
Most of our competitors have substantially greater experience, financial and
technical resources, marketing and development capabilities than we do. Many of
those competitors with greater financial resources can afford to spend more
resources than we can to market their websites. We cannot guaranty that we will
succeed in marketing our websites and generating revenues. We cannot guaranty
that our competitors will not succeed in marketing their websites and generating
revenues.
Our ability to generate business depends on continued growth of online commerce.
Our ability to generate business through our website depends on continued growth
in the use of the Internet and in the acceptance and volume of commerce
transactions on the Internet. Rapid growth in the use of the Internet and online
services is a recent phenomenon. This growth may not continue. A sufficiently
broad base of consumers may not accept, or continue to use, the Internet as a
medium of commerce. We cannot guaranty that the number of Internet users will
continue to grow in general or with respect to our site or that commerce over
the Internet will become more widespread or that our sales will grow at a
comparable rate. As is typical in the case of a new and rapidly evolving
industry, demand and market acceptance for recently introduced services are
subject to a high level of uncertainty. The Internet may not prove to be a
viable commercial marketplace for a number of reasons including but not limited
to:
o the lack of acceptable security technologies;
o the lack of access and ease of use;
o congestion of traffic; inconsistent quality of service and the lack of
availability of cost effective, high speed service;
o potentially inadequate development of the necessary infrastructure;
o governmental regulation and/or taxation; and
o uncertainty regarding intellectual property ownership or the
enforcement of intellectual property rights.
We may not be able to attract and expand our online traffic.
We believe that redeveloping, maintaining and enhancing our website is a
critical aspect of our efforts to attract and expand our online traffic. The
number of Internet sites that offer competing services increases the importance
of establishing and maintaining brand recognition. Many of these Internet sites
already have well-established brands in online services or the travel industry
generally. Promotion of our website will depend largely on our success in
providing a high-quality online experience supported by a high level of customer
service. In addition, we intend to increase our spending on marketing and
advertising with the intention of expanding the recognition of our website to
attract and retain
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online users and to respond to competitive pressures. However, our proposed
expenditures may not be effective to promote our brand or that our marketing
efforts generally will achieve our goals.
We may not be able to maintain our web domain name, which may cause confusion
among web users and decrease the value of our brand name.
We currently hold a web domain name relating to our brand. Currently, the
acquisition and maintenance of domain names is regulated by governmental
agencies and their designees. The regulation of domain names in the U.S. and in
foreign countries is expected to change in the near future. As a result, we may
not be able to maintain our domain name. These changes could include the
introduction of additional top-level domains, which could cause confusion among
web users trying to locate our sites. Furthermore, the relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. We may be unable to prevent third parties from
acquiring domain names that are similar to ours. The acquisition of similar
domain names by third parties could cause confusion among web users attempting
to locate our site and could decrease the value of our brand name and the use of
our site.
A failure in the performance of our web hosting facility systems could harm our
business and reputation.
We depend upon a third party Internet service provider to host our web site. Any
system failure, including network, software or hardware failure, that causes an
interruption in the delivery of our web site or a decrease in responsiveness of
our web site service could result in reduced revenue, and could be harmful to
our reputation and brand. Our Internet service provider does not guarantee that
our Internet access will be uninterrupted, error free or secure. Any disruption
in the Internet service provided by such provider could significantly harm our
business. In the future, we may experience interruptions from time to time. We
do not have insurance to compensate us for any losses that may occur due to any
failures in our system or interruptions in our service. Our web servers must be
able to accommodate a high volume of traffic and we may in the future experience
slower response times for a variety of reasons. If we are unable to add
additional software and hardware to accommodate increased demand, this could
cause unanticipated system disruptions and result in slower response times. The
costs associated with accommodating such increased demand may exceed the
revenues the increased demand may generate. Users may become dissatisfied by any
system failure that interrupts our ability to provide access or results in
slower response time and thereby not return to the site.
Although Internet commerce has yet to attract significant regulation, government
regulation may result in fines, penalties, taxes or other costs that may reduce
our future earnings.
Our Internet and e-commerce businesses currently are not directly regulated by
any governmental agency, other than through regulations applicable to businesses
generally. However, due to the increasing popularity and use of the Internet, it
is possible that a number of laws and regulations may be adopted with respect to
the Internet covering, among other things, the following issues:
o taxation of consumer transactions;
o advertising;
o user privacy;
o unsolicited marketing;
o pricing;
o quality of products and services;
o intellectual property;
o information security; and
o anti-competitive practices.
The adoption of laws or regulations covering these issues may decrease the
growth of Internet commerce. Such laws could decrease the demand for our
products and services, increase our cost of doing business, or otherwise have an
adverse effect on our business, operating results or financial condition.
Moreover, the applicability to the Internet of existing laws governing issues
including intellectual property ownership,
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libel and personal privacy is uncertain. If these existing laws were to be
applied to the Internet, our business may be harmed.
Taxing authorities in a number of states are currently reviewing the appropriate
tax treatment of companies engaged in Internet commerce. New state tax
regulations may subject us to additional state sales, use and income taxes. The
adoption of any of these laws or regulations may decrease the growth of Internet
usage or the acceptance of Internet commerce which could, in turn, decrease the
demand for our products and services, increase costs and otherwise have a
material adverse effect on our business, results of operations and financial
condition. To date, we have not spent significant resources on lobbying or
related government affairs issues, but we may need to do so in the future.
Federal legislation imposing limitations on the ability of states to impose new
state taxes on e-commerce was enacted in 1998. The Internet Tax Freedom Act, as
this legislation is known, exempts specific types of sales transactions
conducted over the Internet from multiple or discriminatory state and local
taxation through October 21, 2001. It is possible that this legislation will not
be renewed when it terminates in October 2001. Failure to renew this legislation
or the enactment of new legislation could allow state and local governments to
impose taxes on Internet-based sales and use. Such taxes could decrease the
demand for our products and services or increase our costs of operations.
Our proposed computer infrastructure may suffer security breaches. Any such
breaches could jeopardize confidential information transmitted over the
Internet, cause interruptions in our operations or cause us to have liability to
third parties.
We intend to rely on technology that is designed to facilitate the secure
transmission of confidential information. Our computer infrastructure is
potentially vulnerable to physical or electronic computer break-ins, viruses and
similar disruptive problems. A party who is able to circumvent our proposed
security measures could misappropriate proprietary information, jeopardize the
confidential nature of information transmitted over the Internet or cause
interruptions in our operations. Concerns over the security of Internet
transactions and the privacy of users could also inhibit the growth of the
Internet in general, particularly as a means of conducting commercial
transactions. To the extent that our activities involve the storage and
transmission of proprietary information, including personal financial
information, security breaches could expose us to a risk of financial loss,
litigation and other liabilities. We do not have insurance to protect us against
these losses. Any security breach would have a material adverse effect on our
business, results of operations and financial condition.
Rapid technological changes may render our technology obsolete or decrease the
competitiveness of our services.
To become competitive in the online travel industry, we must enhance and improve
the functionality and features of our websites. The Internet and the online
commerce industry are rapidly changing. In particular, the online travel
industry is characterized by increasingly complex systems and infrastructures.
If competitors introduce new services with new technologies, or if new industry
standards and practices emerge, our websites and proprietary technology and
systems may become obsolete. Our future success will depend on our ability to do
the following:
o enhance our existing services;
o develop and license new services and technologies that address the
increasingly sophisticated and varied needs of our prospective
customers and suppliers;
o respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.
Developing our websites and other proprietary technology entails significant
technical and business risks. We may use new technologies ineffectively or we
may fail to adapt our websites, transaction-processing systems and network
infrastructure to customer requirements or emerging industry standards. If we
face material delays in introducing new services, products and enhancements, our
customers and suppliers may forego the use of our services and use those of our
competitors.
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Our officers and directors are engaged in other activities that could have
conflicts of interest with us. Therefore, our officers and directors may not
devote sufficient time to our affairs.
The persons serving as our officers and directors have existing responsibilities
and may have additional responsibilities to provide management and services to
other entities. As a result, conflicts of interest between us and the other
activities of those entities may occur from time to time, in that our officers
and directors shall have conflicts of interest in allocating time, services, and
functions between the other business ventures in which they may be or become
involved and our affairs.
In addition to serving as our President, Secretary and a director, Ryan A. Neely
is the Secretary and a director of MVD, Inc. a Delaware corporation and a
provider of digital entertainment products. Mr. Neely currently devotes
approximately half of his time to MVD, Inc. We do not believe that we have any
conflicts of interest with the business or industry of MVD, Inc., other than Mr.
Neely's duty to provide management and services.
In addition to serving as our Treasurer and a director, Jason J. Ortega has been
a branch manager for Enterprise Rent-a-Car Company since 1994. Mr. Ortega is
responsible for the day-to-day operations as well as the management of all
employees at his branch. Mr. Ortega currently devotes a significant portion of
his time to Enterprise Rent-a-Car Company. We do not believe that we have any
conflicts of interest with the business or industry of Enterprise Rent-a-Car
Company, other than Mr. Ortega's duty to provide management and services.
Our officers, directors and principal security holders own approximately 72.35%
of our outstanding shares of common stock.
Our directors, officers and principal (greater than 5%) security holders, taken
as a group, together with their affiliates, beneficially own, in the aggregate,
approximately 72.35% of our outstanding shares of common stock. Certain
principal security holders are our directors or executive officers. Such
concentrated control of the company may adversely affect the price of our common
stock. These security holders may also be able to exert significant influence,
or even control, matters requiring approval by our security holders, including
the election of directors. In addition, certain provisions of Nevada law could
have the effect of making it more difficult or more expensive for a third party
to acquire, or of discouraging a third party from attempting to acquire, control
of us.
We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot guaranty
that an active public market will develop or be sustained. Therefore, investors
may not be able to find purchasers for their shares of our common stock. Should
there develop a significant market for our shares, the market price for those
shares may be significantly affected by such factors as our financial results
and introduction of new products and services. Factors such as announcements of
new or enhanced products by us or our competitors and quarter-to-quarter
variations in our results of operations, as well as market conditions in the
high technology sector may have a significant impact on the market price of our
shares. Further, the stock market has experienced extreme volatility that has
particularly affected the market prices of stock of many companies and that
often has been unrelated or disproportionate to the operating performance of
those companies.
Use of Proceeds
We will not receive any proceeds from the sale of shares of our common stock
being offered by the selling security holders.
Determination of Offering Price
Factors Used to Determine Share Price. The offering price of the shares being
offered by the selling security holders has no relationship to any established
criteria of value, such as book value or earnings per share. Additionally,
because we have no significant operating history and have not generated any
revenues to date, the price of our common stock is
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not based on past earnings, nor is the price of the shares of our common stock
indicative of current market value for the assets owned by us. No valuation or
appraisal has been prepared for our business and potential business expansion.
Dilution
The shares offered for sale by the selling security holders are already
outstanding and, therefore, do not contribute to dilution.
Selling Security Holders
The following table sets forth the number of shares, which may be offered for
sale from time to time by the selling security holders. The shares offered for
sale constitute all of the shares known to us to be beneficially owned by the
selling security holders. None of the selling security holders has held any
position or office with us, except as specified in the following table. Other
than the relationships described below, none of the selling security holders had
or have any material relationship with us.
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Name of Selling Security Holder Shares of Common Stock
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Ryan A. Neely, President, Secretary and a director 1,100,000
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Jason Ortega, Treasurer and a director 50,000
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Thomas E. Stepp, Jr.(1) 265,823
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Richard Reincke(1) 265,823
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Michael Muellerleile(1) 265,823
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Judy Buehlman 400,000
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Patti Tipton 400,000
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Sean and Janna Connelly 100,000
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Scott J. Sherman 50,000
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Michelle M. Mirrotto 50,000
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Tim Neely 50,000
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Donald J. Preihs 50,000
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Sharareh Frouzesh 50,000
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JR Sterling 50,000
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Paul W. Fournier 50,000
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Jeffrey M. Hoss 50,000
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Kamal John Shukur 50,000
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A. V. Neely 50,000
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Susan Hennessy 50,000
--------------------------------------------------------------------------------
Kyle Holtzhauzen 50,000
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Shawn G. Peterson 50,000
--------------------------------------------------------------------------------
Eric Peterson 50,000
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Sonny Martinez 50,000
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Karl Hoshor 50,000
--------------------------------------------------------------------------------
Nicole Clark 50,000
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Thomas J. Slosson 50,000
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Jerry A. Cardenas 50,000
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(1) Thomas E. Stepp, Jr.; Richard Reincke and Michael J. Muellerleile are
employees of Stepp & Beauchamp LLP, which is legal counsel to the company.
Plan of Distribution
The selling security holders may sell our common stock in the over-the-counter
market, or on any securities exchange on which our common stock is or becomes
listed or traded, in negotiated transactions or otherwise. The selling security
holders may sell our common stock at prices then prevailing or related to the
then current market price or at negotiated prices. The shares will not be sold
in an underwritten public offering.
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The shares may be sold directly or through brokers or dealers. The methods by
which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from selling security holders (or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser) in amounts to be
negotiated. Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for a selling
security holder, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to such selling security
holder. Broker-dealers who acquire shares as principal may resell those shares
from time to time in the over-the-counter market or otherwise at prices and on
terms then prevailing or then related to the then-current market price or in
negotiated transactions and, in connection with such resales, may receive or pay
commissions.
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
We have filed the Registration Statement, of which this prospectus forms a part,
with respect to the sale of the shares by the selling security holders. There
can be no assurance that the selling security holders will sell any or all of
the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution. Also, the selling security holders are
subject to applicable provisions which limit the timing of purchases and sales
of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Legal Proceedings
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
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Directors, Executive Officers, Promoters and Control Persons.
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could have a material adverse effect on our operations, profits and
future development, if suitable replacements are not promptly obtained. We
anticipate that we will enter into employment agreements with each of our key
executives. We cannot guaranty that each executive will remain with us during or
after the term of his or her employment agreement. In addition, our success
depends, in part, upon our ability to attract and retain other talented
personnel. Although we believe that our relations with our personnel are good
and that we will continue to be successful in attracting and retaining qualified
personnel, we cannot guaranty that we will be able to continue to do so. Our
officers and directors will hold office until their resignations or removal.
Our directors and principal executive officers are as specified on the following
table:
======================================================================
Name Age Position
----------------------------------------------------------------------
Ryan A. Neely 29 President, Secretary and a Director
----------------------------------------------------------------------
Jason J. Ortega 28 Treasurer and a Director
======================================================================
Ryan A. Neely. Mr. Neely is our President, Secretary and a director since March
2000. Mr. Neely manages all aspects of our operations, including web development
and marketing and sales of our products. From May 1999 to September 1999, Mr.
Neely worked as a sales account manager for Unified Research Laboratories, Inc.,
which was recently acquired by Symantec Corporation. Unified Research
Laboratories, Inc. is a developer of Internet content-control software and web
filtering technologies. From August 1998 to May 1999, Mr. Neely was the
co-founder of Filtering Associates, a manufacturer representative for several
Internet content-control companies. From 1996 to August 1998, Mr. Neely worked
for Log-On Data Corp., Inc., a California corporation, as a Regional Sales
Manager where he was responsible for all enterprise sales. Mr. Neely is the
Secretary and a director of MVD, Inc. a Delaware corporation and a provider of
digital entertainment products. Mr. Neely has not been a director of any other
reporting company.
Jason J. Ortega. Mr. Ortega is our Treasurer and a director. Mr. Ortega
currently manages our finances and subsequent to the completion of our current
website redevelopment, Mr. Ortega will market our website, products and
services. In addition to serving as our Treasurer and a director, Mr. Ortega has
been a branch manager for Enterprise Rent-a-Car Company since 1994. Mr. Ortega
is responsible for the day-to-day operations as well as the management of all
employees at his branch. Mr. Ortega currently devotes a significant portion of
his time to Enterprise Rent-a-Car Company. Mr. Ortega earned his Bachelor of
Science degree in Kinesiology from California State University, Chico in 1994.
Mr. Ortega has not been a director of any other reporting company. Mr. Ortega
has not been a director of any other reporting company.
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of August 17, 2000 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
12
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Amount and Nature of Beneficial Percent of Class
Owner Owner
------------------- ----------------------------------- ------------------------------------ -----------------
<S> <C> <C> <C>
Common Stock Judy Buehlman 400,000 shares 10.53%
P.O. Box 4641,
Blue Jay, California 92317
Common Stock Patty Tipton 400,000 shares 10.53%
P.O. Box 4641,
Blue Jay, California 92317
Common Stock Thomas E. Stepp, Jr., 265,823 shares(1) 7.00%
1301 Dove Street, Suite 460,
Newport Beach, CA 92660
Common Stock Richard Reincke, 265,823 shares(1) 7.00%
1301 Dove Street, Suite 460,
Newport Beach, CA 92660
Common Stock Michael Muellerleile, 265,823 shares(1) 7.00%
1301 Dove Street, Suite 460,
Newport Beach, CA 92660
Common Stock Ryan A. Neely, 1,100,000 shares President, 28.97%
513 Calle Amigo, Secretary, Director
San Clemente, CA 92673
Common Stock Jason J. Ortega, 50,000 shares, Treasurer, Director 1.32%
513 Calle Amigo,
San Clemente, CA 92673
Common Stock All directors and named executive 30.29%
officers as a group
</TABLE>
(1)law firm affiliation
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description of Securities
We were originally authorized to issue 2,000 shares of $.01 par value common
stock. On April 6, 2000, we filed Amended and Restated Articles of Incorporation
with the Nevada Secretary of State to authorize 50,000,000 shares of $.001 par
value common stock and 5,000,000 shares of $.001 par value preferred stock. As
of August 17, 2000, 3,797,469 shares of our common stock were issued and
outstanding and no shares of our preferred stock are issued and outstanding.
13
<PAGE>
Each shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of the directors. The holders of our common stock are entitled to
receive dividends when, as and if declared by our Board of Directors from funds
legally available therefore. Cash dividends are at the sole discretion of our
Board of Directors. In the event of our liquidation, dissolution or winding up,
the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having any
preference in relation to our common stock. Holders of shares of our common
stock have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
Interest of Named Experts and Counsel.
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or our "counsel", as that term is defined pursuant to
Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in us, except as specified
below, or was a promoter, underwriter, voting trustee, director, officer, or
employee of the company, at any time prior to the filing of this Registration
Statement.
Thomas E. Stepp, Jr., Richard Reincke and Michael J. Muellerleile, are employees
of Stepp & Beauchamp LLP, which serves as our legal counsel. Thomas E. Stepp,
Jr. owns 265,823 shares of our common stock. Richard Reincke owns 265,823 shares
of our common stock. Michael J. Muellerleile owns 265,823 shares of our common
stock.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
Article Ten of our Amended and Restated Articles of Incorporation provides,
among other things, that our directors shall not be personally liable to us or
our shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability
o for any breach of such director's duty of loyalty to us or our
security holders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or unlawful stock
purchase or redemption by us; or
o for any transaction from which such director derived any improper
personal benefit.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Indemnification Agreements. We will enter into indemnification agreements with
each of our executive officers. We will agree to indemnify each such person for
all expenses and liabilities, including criminal monetary judgments, penalties
and fines, incurred by such person in connection with any criminal or civil
action brought or threatened against such person by reason of such person being
or having been our officer or director or employee. In order to be entitled to
indemnification by us, such person must have acted in good faith and in a manner
such person believed to be in our best interests. With respect to criminal
actions, such person must have had no reasonable cause to believe his or her
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors,
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<PAGE>
officers and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in that act and is, therefore, unenforceable.
Organization Within Last Five Years
Transactions with Promoters. There were no transactions with promoters.
Description of Business
Our Background. JPAL, Inc. was incorporated pursuant to the laws of the State of
Nevada on March 31, 1999. On April 6, 2000, we filed Amended and Restated
Articles of Incorporation with the Secretary of State of Nevada to amend and
restate Articles of Incorporation in their entirety and specifically to
authorize 50,000,000 shares of $.001 par value common stock.
Our Business. We are an Internet based provider of vacation rental properties
and services. We were originally formed to provide vacation rental properties
and services for the Year 2000 New Year's Eve celebration in Las Vegas. We
generated revenues of approximately $6,793 through December 31, 1999. We intend
to redesign our website to provide a wide range of services to both vacationers
and property owners. We have only generated revenues of $1,290 in our current
fiscal year.
For vacationers who desire popular vacation destinations, we intend to advertise
on our website privately owned rental properties, which offer the convenience
and accommodations of a condominium or home, while providing many of the
amenities and services of a hotel, generally at a lower cost per person. We
believe that vacation condominium and home rentals generally offer greater space
and convenience than resort hotel rooms, including separate living, sleeping and
eating quarters. As we generate revenues, we anticipate that we will expand our
website to include specialized concierge-type services such as arranging golf
tee times, purchasing ski lift tickets and making restaurant reservations.
For property owners, we intend to offer marketing and rental services. Our
primary source of revenue has been property rental fees, which are charged to
the property owners as a percentage of the vacationers' total rental price, and
we anticipate that those fees will continue to be our primary source of revenue,
although we intend to attempt to generate additional revenue sources such as
Internet advertising.
In order to effectuate our business plan during the next three to six months, we
need to complete the redevelopment of our website. Upon completion of our
website redevelopment, we intend to raise capital to fund our proposed marketing
activities. If we are unable to raise sufficient capital necessary to market our
website, we believe that our officers and directors who are also principal
shareholders of the company will contribute funds to pay for our expenses.
Therefore, we have not contemplated any plan of liquidation in the event that we
do not generate further revenues or raise capital.
Our Website (www.jpalco.com). Our redeveloped website will allow consumers to
search through all of our vacation condominium and home rentals, access detailed
property information including photographs and floor plans, obtain local market
information, as well as information about special offers and promotions. We
anticipate that the site will be developed to feature an on-line booking system
which will allow vacationers to check availability and make reservations
directly on-line. We plan to launch a number of important web site related
initiatives, including:
o virtual tours including interior and exterior views of a
representative sample of our condominium and home rental properties;
o search engine enhancements that will allow simultaneous searches
across multiple resort locations; and
o improved booking features.
Our primary source of revenue has been and will continue to be property rental
fees, which are charged to the property owners as a percentage of the
vacationer's total rental rate. Fee percentages for vacation condominiums and
homes range from approximately 3% to over 40% of rental rates depending on the
market and the type of services provided to the
15
<PAGE>
property owner. We believe that our proposed services, which are designed to
enhance rental income for property owners, will provide us with a competitive
advantage in attracting additional high quality condominiums and homes in our
markets.
Internet Advertising. We anticipate that we will be able to generate advertising
revenues from companies which have complementary products such as airlines and
travel agents and desire to advertise our on website. The Internet is emerging
as an attractive method for advertisers, due to the growth in the number of
Internet users, the amount of time Internet users spend on the Internet, the
increase in electronic commerce, the interactive nature of the Internet, the
Internet's global reach, the ability to reach targeted audiences and a variety
of other factors. Many of the largest advertisers in traditional media,
including consumer products companies, automobile manufacturers and others, have
increased their use of Internet advertising. We believe that larger companies
will begin to allocate significant portions of their total advertising budgets
for Internet advertising. We believe that significant revenues can be generated
from online advertising, initially from small business service providers and
product vendors and, as use of our website increases, from advertisers, such as
consumer products companies.
Future Products. If we generate significant revenues in the next twelve months,
we intend to develop our website to provide multiple location real estate
listings for condominiums and homes located in our resort locations for
customers interested in buying or selling a vacation home.
Our Target Markets and Marketing Strategy. We believe that our primary target
market will consist of owners of private home and condominiums that desire to
promote the rental of their rental properties. We believe that many owners of
private home and condominiums desire to rent their properties without being
responsible for the advertising and promotion of their own properties.
We will market and promote our website on the Internet. Our marketing strategy
is to promote our services and products and attract businesses to our website.
Our marketing initiatives include:
o utilizing direct response print advertisements placed primarily in
small business, entrepreneurial, and financially-oriented magazines
and special interest magazines;
o links to industry focused websites;
o advertising by television, radio, banners, affiliated marketing and
direct mail;
o presence at industry tradeshows; and,
o entering into affiliate marketing relationships with website providers
to increase our access to Internet business consumers.
Growth Strategy. Our objective is to become a dominant provider of Internet
vacation rentals. Our strategy is to continue providing clients with exceptional
service and developing comprehensive and updated listings vacation rentals. Key
elements of our strategy include:
o create global awareness of our products and services;
o continue and expand our website;
o increase the number of Internet users to our website;
o increase our relationships with clients;
o provide additional services for businesses and consumers; and
o pursue relationships with joint venture candidates which will support
our development.
Our Industry. The vacation rental and property management industry is highly
fragmented, with an estimated 3,000 vacation rental and property management
companies in the United States. We believe this fragmented market presents a
significant opportunity for a company offering a branded, national network of
high quality vacation condominiums and homes with superior levels of customer
service.
Our Competition. The Internet and e-commerce businesses are extremely
competitive and can be significantly affected by many factors, including changes
in local, regional or national economic conditions, changes in consumer
preferences,
16
<PAGE>
brand name recognition and marketing and the development of new and competing
technologies. We expect that existing businesses that compete with us and which
have greater resources than us will be able to undertake more extensive
marketing campaigns and adopt more aggressive advertising sales policies than
us, thereby generating more traffic to their web sites. If we are unable to
attract a significant number of users to our website, our business, financial
condition and results of operations will be materially adversely affected and we
may cease to be a commercially viable business. Many of these competitors have
greater financial and other resources, and more experience in research and
development, than us.
Patents and Proprietary Rights. Our success depends in part upon our ability to
preserve our trade secrets and operate without infringing the proprietary rights
of other parties. However, we rely on certain proprietary technologies, trade
secrets, and know-how that are not patentable. We own the Internet domain name
"www.jpalco.com." Under current domain name registration practices, no one else
can obtain an identical domain name, but someone might obtain a similar name, or
the identical name with a different suffix, such as ".org", or with a country
designation. The regulation of domain names in the United States and in foreign
countries is subject to change, and we could be unable to prevent third parties
from acquiring domain names that infringe or otherwise decrease the value of our
domain names.
Our Research and Development. We are not currently conducting any research and
development activities. We do not anticipate conducting such activities in the
near future. If we generate significant revenues, we may expand our product line
by entering into relationships with third parties.
Government Regulation. There is currently only a small body of laws and
regulations directly applicable to access to or commerce on the Internet.
However, due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted at the
international, federal, state and local levels with respect to the Internet,
covering issues such as user privacy, freedom of expression, pricing,
characteristics and quality of products and services, taxation, advertising,
intellectual property rights, information security and the convergence of
traditional telecommunications services with Internet communications. Moreover,
a number of laws and regulations have been proposed and are currently being
considered by federal, state and foreign legislatures with respect to these
issues. The nature of any new laws and regulations and the manner in which
existing and new laws and regulations may be interpreted and enforced cannot be
fully determined.
In addition, there is substantial uncertainty as to the applicability to the
Internet of existing laws governing issues such as property ownership,
copyrights and other intellectual property issues, taxation, libel, obscenity
and personal privacy. The vast majority of these laws were adopted prior to the
advent of the Internet and, as a result, did not contemplate the unique issues
and environment of the Internet. Future developments in the law might decrease
the growth of the Internet, impose taxes or other costly technical requirements,
create uncertainty in the market or in some other manner have an adverse effect
on the Internet. These developments could, in turn, have a material adverse
effect on our business, prospects, financial condition and results of
operations.
We provide our services through data transmissions over public telephone lines
and other facilities provided by telecommunications companies. These
transmissions are subject to regulation by the Federal Communications
Commission, state public utility commissions and foreign governmental
authorities. However, we are not subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses generally. Nevertheless, as Internet
services and telecommunications services converge or the services we offer
expand, there may be increased regulation of our business, including regulation
by agencies having jurisdiction over telecommunications services. Additionally,
existing telecommunications regulations affect our business through regulation
of the prices we pay for transmission services, and through regulation of
competition in the telecommunications industry.
The Federal Communications Commission has ruled that calls to Internet service
providers are jurisdictionally interstate and that Internet service providers
should not pay access charges applicable to telecommunications carriers. Several
telecommunications carriers are advocating that the Federal Communications
Commission regulate the Internet in the same manner as other telecommunications
services by imposing access fees on Internet service providers. The Federal
Communications Commission is examining inter-carrier compensation for calls to
Internet service providers, which could
17
<PAGE>
affect Internet service providers' costs and consequently substantially increase
the costs of communicating via the Internet. This increase in costs could slow
the growth of Internet use and thereby decrease the demand for our services.
Employees. As of August 17, 2000, we have two (2) employees. We anticipate that
we will not hire any employees in the next six months, unless we generate
significant revenues. We believe our future success depends in large part upon
the continued service of our key senior management personnel and our ability to
attract and retain managerial personnel.
Facilities. Our executive, administrative and operating offices are located at
513 Calle Amigo, San Clemente, California and are provided to us, at no charge,
by Ryan A. Neely.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Summary Financial Information. The summary financial information set forth below
is derived from the more detailed financial statements and notes thereto
appearing elsewhere in this Form SB-2. We have prepared our financial statements
contained in this Form SB-2 in accordance with generally accepted accounting
principles in the United States. All information should be considered in
conjunction with our consolidated financial statements and the notes contained
elsewhere in this Form SB-2.
Period from March 31, 1999 (our date of formation) through December 31, 1999.
======================================================
Income Statement 1999
------------------------------------------------------
------------------------------------------------------
Revenue 6,793
------------------------------------------------------
Gross Profit (Loss) (16,422)
------------------------------------------------------
Net Income (Loss) (16,422)
------------------------------------------------------
Net Income (Loss) Per Share (0.00)
======================================================
======================================================
Balance Sheet 1999
------------------------------------------------------
------------------------------------------------------
Total Assets 3,557
------------------------------------------------------
Total Liabilities 844
------------------------------------------------------
Shareholders' Equity 2,713
======================================================
Liquidity and Capital Resources. We had cash of $884.00 as of December 31, 1999.
Our total assets were approximately $3,557 and our total liabilities were
approximately $844 as of December 31, 1999. Our former officer and director and
current principal shareholder, Judy Buehlman, paid a significant portion of our
expenses from inception through December 31, 1999.
Results of Operations. We were incorporated in March 1999, and we began
operations immediately thereafter. For the period of March 31, 1999 (our date of
formation) through December 31, 1999, we generated revenues of approximately
$6,793 and our losses were approximately $16,422.
For the Six Month Period Ended June 30, 2000.
Liquidity and Capital Resources. We had cash of $829 as of June 30, 2000. Our
total assets were approximately $3,202 and our total liabilities were
approximately $460 as of June 30, 2000. Our President, Secretary, director and
principal shareholder, Ryan A. Neely, has paid our expenses since March 2000. We
anticipate that Mr. Neely will continue to pay our expenses in the event that we
do not generate revenues or obtain additional working capital.
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<PAGE>
Results of Operations. For the six month period ending June 30, 2000, we have
generated revenues of approximately $1,290 and our losses are approximately
$2,991. We were originally formed to provide vacation rental properties and
services for the Year 2000 New Year's Eve celebration in Las Vegas. We generated
revenues of approximately $6,793 through December 31, 1999. We intend to
redesign our website to provide a wide range of services to both vacationers and
property owners in our current fiscal year. Our prospects must be considered
speculative, considering the risks, expenses, and difficulties frequently
encountered in the establishment of a new business, specifically the risks
inherent in the development of electronic commerce.
Our Plan of Operation for the Next Twelve Months. We were originally formed to
provide vacation rental properties and services for the Year 2000 New Year's Eve
celebration in Las Vegas. We intend to redesign our website to provide a wide
range of services to both vacationers and property owners. We have only
generated revenues of approximately $1,290 in our current fiscal year. Our
prospects must be considered speculative, considering the risks, expenses, and
difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in the development of electronic commerce.
Our plan of operation is materially dependent on our ability to complete the
redevelopment of our website and raise additional capital to market our website.
If we are able to raise additional capital or generate significant revenues, we
anticipate that those revenues will be used to market our website, provide us
with working capital and pay our legal and accounting fees for the next twelve
months. If we raise additional capital or generate those revenues, then we
expect that our expenses for the next twelve months will be approximately
$100,000. If we are unable to raise additional capital or generate revenues,
then we anticipate that our expenses for the next twelve months will be limited
to the day-to-day expenditures necessary to conduct business.
In our opinion, our available funds will satisfy our working capital
requirements through November 2000. Our forecast for the period for which our
financial resources will be adequate to support our operations involves risks
and uncertainties and actual results could fail as a result of a number of
factors. We anticipate that we may need to raise additional capital to develop
and conduct our operations. Such additional capital may be raised through public
or private financing as well as borrowings and other sources. There can be no
assurance that additional funding will be available on favorable terms, if at
all. If adequate funds are not available, we believe that our officers and
directors will contribute funds to pay for our expenses. Therefore, we have not
contemplated any plan of liquidation in the event that we do not generate
revenues.
Description of Property
Property held by Us. As of the date specified in the following table, we held
the following property:
=====================================================================
Property June 30, 2000 December 31, 1999
---------------------------------------------------------------------
Cash $829.00 $884.00
---------------------------------------------------------------------
Property and Equipment, net $2,373.00 $2,673.00
=====================================================================
Our Facilities. Our facilities are located at 513 Calle Amigo, San Clemente,
California 92673. The facilities are provided, at no charge, by Ryan A. Neely,
our President, Secretary and a director. We do not have a written lease or
sublease agreement and Mr. Neely does not expect to be paid or reimbursed for
providing office facilities.
Certain Relationships and Related Transactions
Conflicts Related to Other Business Activities. The persons serving as our
officers and directors have existing responsibilities and, in the future, may
have additional responsibilities, to provide management and services to other
entities in addition to us. As a result, conflicts of interest between us and
the other entities may occur from time to time.
In addition to serving as our President, Secretary and a director, Mr. Neely is
the Secretary and a director of MVD, Inc. a Delaware corporation and a provider
of digital entertainment products. Mr. Neely currently devotes approximately
half
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<PAGE>
of his time to MVD, Inc. We do not believe that we have any conflicts of
interest with the business or industry of MVD, Inc., other than Mr. Neely's duty
to provide management and services.
In addition to serving as our Treasurer and a director, Mr. Ortega has been a
branch manager for Enterprise Rent-a-Car Company since 1994. Mr. Ortega is
responsible for the day-to-day operations as well as the management of all
employees at his branch. Mr. Ortega currently devotes a significant portion of
his time to Enterprise Rent-a-Car Company. We do not believe that we have any
conflicts of interest with the business or industry of Enterprise Rent-a-Car
Company, other than Mr. Ortega's duty to provide management and services.
We will attempt to resolve any such conflicts of interest in our favor. Our
officers and directors are accountable to us and our shareholders as
fiduciaries, which requires that such officers and directors exercise good faith
and integrity in handling our affairs. A shareholder may be able to institute
legal action on our behalf or on behalf of that shareholder and all other
similarly situated shareholders to recover damages or for other relief in cases
of the resolution of conflicts in any manner prejudicial to us.
Related Party Transactions.
Ryan A. Neely, our President, Secretary and director, currently provides office
space to us at no charge.
In 1999, we paid $2,600 to Sean Connelly, one of our shareholders, for web
development and maintenance services.
Judy Buehlman, Patty Tipton and Sean and Janna Connelly, our former officers and
directors, were issued 900,000 shares of our common stock in exchange for
services provided to us, which were valued at $900. In addition, during the
period ended December 31, 1999, Judy Buehlman, our former officer and director
and current principal shareholder, paid for various goods and services relating
to our operations including travel, entertainment, trade shows and
transportation costs. These expenses have been included in the results of
operations for the period and recorded as additional paid-in capital
stockholders' equity.
Market for Common Equity and Related Stockholder Matters
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service. We are not required to comply with the timely
disclosure policies of any exchange or quotation service. The requirements to
which we would be subject if our securities were so listed typically include the
timely disclosure of a material change or fact with respect to our affairs and
the making of required filings. Although we are not required to deliver an
annual report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
When we become a reporting company with the Securities and Exchange Commission,
the public may read and copy any materials filed with the Securities and
Exchange Commission at the Securities and Exchange Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that could be sold pursuant to Rule 144 pursuant to the
Securities Act of 1933 or that the we have agreed to register under the
Securities Act of 1933 for sale by security holders. The approximate number of
holders of record of our common stock is twenty-seven (27).
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
20
<PAGE>
Penny Stock Regulation. Shares of our common stock will probably be subject to
rules adopted the Securities and Exchange Commission that regulate broker-dealer
practices in connection with transactions in "penny stocks". Penny stocks are
generally equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form (including language, type,
size and format), as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
Executive Compensation.
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our Chief
Executive Officer and our other executive officers whose total annual salary and
bonus are anticipated to exceed $50,000 during the year ending December 31,
2000. Our Board of Directors may adopt an incentive stock option plan for our
executive officers which would result in additional compensation.
<TABLE>
<CAPTION>
======================================================================================================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other
Salary ($) Compensation ($) Compensation
------------------------------------------------------------------------------------------------------
Ryan A. Neely, President,
<S> <C> <C> <C> <C> <C>
Secretary, Director 2000 None None None None
------------------------------------------------------------------------------------------------------
Jason J. Ortega, Treasurer,
Director 2000 None None None None
======================================--==============================================================
</TABLE>
21
<PAGE>
Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our Board of Directors.
Compensation of Officers. As of August 17, 2000, our officers have received no
compensation for their services provided to us.
Employment Contracts. We anticipate that we will enter into an employment
contract with Ryan A. Neely.
Financial Statements
<PAGE>
JPAL, INC.
REPORT AND FINANCIAL STATEMENTS
FOR THE PERIODS MARCH 31, 1999 (INCEPTION)
THROUGH DECEMBER 31, 1999 AND
THE SIX MONTHS ENDED JUNE 30, 2000
<PAGE>
[LETTERHEAD OF LESLEY, THOMAS, SCHWARZ & POSTMA, INC.]
July 27, 2000
To the Board of Directors and Stockholders of
JPAL, Inc.
We have audited the accompanying balance sheets of JPAL, Inc. as of June
30, 2000 and December 31, 1999, and the related statements of operations,
changes in stockholders' equity, and cash flows for the six months ended June
30, 2000 and the period March 31, 1999 (inception) through December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of JPAL, Inc. as of June 30,
2000 and December 31, 1999, and the results of its operations and its cash flows
for the six months ended June 30, 2000 and the period March 31, 1999 (inception)
through December 31, 1999 in conformity with generally accepted accounting
principles.
/s/ Lesley, Thomas, Schwarz & POSTMA, INC.
---------------------------------------
A Professional Accountancy Corporation
Newport Beach, California
F-1
<PAGE>
JPAL, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 2) $ 829 $ 884
PROPERTY AND EQUIPMENT, net (Note 2) 2,373 2,673
-------- --------
Total assets $ 3,202 $ 3,557
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 460 $ 844
-------- --------
Total current liabilities 460 844
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value;
50,000,000 shares authorized,
900,000 and 3,000,000 shares issued or outstanding at
December 31, 1999 and June 30, 2000, respectively 3,000 900
Additional paid-in capital 19,155 18,235
Accumulated deficit (19,413) (16,422)
-------- --------
Total stockholders' equity 2,742 2,713
-------- --------
Total liabilities and stockholders' equity $ 3,202 $ 3,557
======== ========
</TABLE>
See accompanying notes to these financial statements
F-2
<PAGE>
JPAL, INC.
STATEMENTS OF OPERATIONS
Period
March 31,
1999
Six Months (inception)
Ended Through
June 30, December 31,
2000 1999
-------- --------
REVENUES $ 1,290 $ 6,793
OPERATING EXPENSES 3,981 22,835
OTHER EXPENSE
Depreciation 300 380
-------- --------
LOSS BEFORE PROVISION FOR INCOME TAXES (2,991) (16,422)
PROVISION FOR INCOME TAXES (Note 3) -- --
-------- --------
NET LOSS $ (2,991) $(16,422)
======== ========
BASIC LOSS PER SHARE $ (.00) $ (.00)
======== ========
DILUTIVE LOSS PER SHARE $ (.00) $ (.00)
======== ========
See accompanying notes to these financial statements
F-3
<PAGE>
JPAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
PERIOD MARCH 31, 1999 (INCEPTION) THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
Common Stock Additional
-------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, March 31, 1999 (inception)
-- $ -- $ -- $ -- $ --
ISSUANCE OF COMMON STOCK FOR SERVICES 900,000 900 900
ADDITIONAL PAID-IN-CAPITAL IN EXCHANGE
FOR GOODS AND SERVICES 18,235 -- 18,235
NET LOSS (16,422) (16,422)
---------- ---------- ---------- ---------- ----------
BALANCE, December 31, 1999 900,000 900 18,235 (16,422) 2,713
ISSUANCE OF STOCK 2,100,000 2,100 920 -- 3,020
NET LOSS (2,991) (2,991)
---------- ---------- ---------- ---------- ----------
BALANCE, June 30, 2000 3,000,000 $ 3,000 $ 19,155 $ (19,413) $ 2,742
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to these financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
Period
March 31,
1999
Six Months (inception)
Ended Through
June 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,991) $(16,422)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
Depreciation 300 380
Services provided in exchange for issuance of common stock
-- 900
Goods and services provided in exchange for additional
paid-in capital -- 18,235
Change in assets and liabilities
Increase (decrease) in accounts payable (384) 844
-------- --------
Net cash provided by (used in) operating activities (3,075) 3,937
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets -- (3,053)
-------- --------
Net cash used in investing activities -- (3,053)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 3,020 --
-------- --------
Net cash provided by financing activities 3,020 --
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(55) 884
CASH AND CASH EQUIVALENTS, beginning of period 884 --
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 829 $ 884
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ -- $ --
Cash paid during the period for income taxes $ -- $ --
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
During the period ended December 31, 1999, the Company issued stock in
exchange for services provided valued at $900
During the period ended December 31, 1999 the Company recorded additional
paid-in capital of $18,235 for goods and services paid for and provided
by a stockholder.
See accompanying notes to these financial statements
F-5
<PAGE>
JPAL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND DECEMBER 31, 1999
NOTE 1 - COMPANY OPERATIONS
JPAL, Inc. (the "Company") was incorporated in the state of Nevada on March
31, 1999 to operate as an internet based provider of vacation rental properties
and services. A majority of the services are to properties located in Nevada.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies are summarized as follows:
Cash and Cash Equivalents - For purposes of the balance sheets and
statements of cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Property and Equipment - Property and equipment are stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets which range from three to seven years. Repairs and
maintenance to property and equipment are expensed as incurred. When property
and equipment is retired or disposed of, the related costs and accumulated
depreciation are eliminated from the accounts and any gain or loss on such
disposition is reflected in income.
Advertising - Advertising costs are charged to operations when incurred.
Income Taxes - The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the difference between the
financial statement and the tax basis of assets and liabilities using enacted
rates in effect for the periods in which the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.
F-6
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Start-up Activities - The Company has adopted the provisions of Statement
of Position 98-5, "reporting Costs of Start-up Activities" ("SOP 98-5"). SOP
98-5 requires that the costs of start-up activities including organization costs
be expensed as incurred.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"). This statement mandates the liability
method of accounting for deferred income taxes and permits the recognition of
deferred tax assets subject to an ongoing assessment of realizability.
The components of the Company's income tax provision consist of:
<TABLE>
<CAPTION>
Period
March 31,
1999
Six Months (inception)
Ended Through
June 30, December 31,
2000 1999
------- -------
<S> <C> <C>
Federal taxes (deferred) net operating loss benefit $ (500) $(2,500)
Change in valuation account 500 2,500
------- -------
$ -- $ --
======= =======
</TABLE>
Deferred income taxes are provided for timing differences in the
recognition of certain income and expense items for tax and financial statement
purposes. The tax effect of the temporary differences giving rise to the
Company's deferred tax assets and liabilities as of June 30, 2000 and December
31, 1999 are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------- -------
<S> <C> <C>
Deferred income taxes
Net operating loss benefit $ 3,000 $ 2,500
Valuation allowance (3,000) (2,500)
------- -------
$ -- $ --
======= =======
</TABLE>
The Company has a federal net operating loss carryforward of approximately
$16,000 that will expire in 2019.
The Company's tax reporting year end is December 31st. If the Company has a
net operating loss carryforward from operations for the year ended December 31,
2000, it will expire in 2020.
F-7
<PAGE>
NOTE 4 - RELATED PARTY TRANSACTIONS
During the period ended December 31, 1999 the Company paid fees for the
construction of their website to a company owned by a stockholder. The total
amount paid for the period was $2,600.
During the period ended December 31, 1999, the Company entered into
consulting agreements for advisory services relating to the initial start-up of
the Company. Total fees were $900 for the period ended December 31, 1999 with
each consultant receiving a percentage of ownership in the form of common stock.
The services were valued using hourly rates at estimated fair market value of
similar services. In addition, during the period ended December 31, 1999 one of
the stockholders paid for various goods and services relating to the Company's
operations including travel, entertainment, trade shows and transportation
costs. These expenses have been included in the results of operations for the
period and recorded as additional paid-in capital stockholders' equity.
F-8
<PAGE>
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
In July 2000, our Board of Directors appointed Lesley, Thomas, Schwarz and
Postma, Inc., independent accountants, to audit our financials statements for
the period from March 31, 1999 (our date of formation) through December 31, 1999
and for the six month period ending June 30, 2000.
There have been no disagreements with our accountants since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by the
selling security holders has been passed upon by the law firm of Stepp &
Beauchamp LLP, located in Newport Beach, California.
EXPERTS
Our financial statements for the period from March 31, 1999 (our date of
formation) through December 31, 1999 and for the six month period ending June
30, 2000 appearing in this prospectus which is part of a Registration Statement
have been audited by Lesley, Thomas, Schwarz and Postma, Inc. and are included
in reliance upon such reports given upon the authority of Lesley, Thomas,
Schwarz and Postma, Inc. as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 with respect to the
common stock offered by the selling security holders. This prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules to the Registration Statement. For further information
regarding us and our common stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement. Information in this prospectus concerning the contents
of any contract or any other document referred to is not necessarily complete.
Reference is made in each instance to the copy of such contract or document
filed as an exhibit to the Registration Statement. All of that information is
qualified in all respects by such reference to such exhibit.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
Article Ten of our Amended and Restated Articles of Incorporation provides,
among other things, that our officers or directors shall not be personally
liable to us or our shareholders for monetary damages for breach of fiduciary
duty as an officer or director, except for liability
o for any breach of such officer's or director's duty of loyalty to us
or our security holders;
22
<PAGE>
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or unlawful stock
purchase or redemption by us; or
o for any transaction from which such officer or director derived any
improper personal benefit.
Accordingly, our officers or directors may have no liability to our shareholders
for any mistakes or errors of judgment or for any act of omission, unless such
act or omission involves intentional misconduct, fraud, or a knowing violation
of law or results in unlawful distributions to our shareholders.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our executive officers pursuant to which
we will agree to indemnify each such person for all expenses and liabilities,
including criminal monetary judgments, penalties and fines, incurred by such
person in connection with any criminal or civil action brought or threatened
against such person by reason of such person being or having been our officer or
director or employee. In order to be entitled to indemnification by us, such
person must have acted in good faith and in a manner such person believed to be
in our best interests and, with respect to criminal actions, such person must
have had no reasonable cause to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have 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.
Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the
common stock by the selling security holders. The estimated expenses of issuance
and distribution are set forth below.
================================================================
Registration Fees Approximately $264.00
----------------------------------------------------------------
Transfer Agent Fees Approximately $500.00
----------------------------------------------------------------
Costs of Printing and Engraving Approximately $500.00
----------------------------------------------------------------
Legal Fees Approximately $5,000.00
----------------------------------------------------------------
Accounting Fees Approximately $1,500.00
================================================================
Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On August 1, 2000, we issued 797,469 shares of our common stock to Thomas E.
Stepp, Jr., Richard Reincke and Michael Muellerleile, in a transaction which we
believe satisfies the requirements of that certain exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933,
which exemption is specified by the provisions of Section 4(2) of that act and
Rule 506 of Regulation D promulgated pursuant to that act by the Securities and
Exchange Commission. The shares were issued in exchange for legal services
provided to us.
On or about May 11, 2000, we issued 2,100,000 shares of our common stock for
$.001 per share. The shares were issued in a transaction which we believe
satisfies the requirements of that certain exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which exemption
is specified by the provisions of Section 4(2) of that act and Rule 506 of
Regulation D promulgated pursuant to that act by the Securities and Exchange
Commission. Specifically, the offer was made to "accredited investors", as that
term is defined under applicable federal and state securities laws, and no more
than 35 non-accredited investors. The value of the shares was arbitrarily set by
us and had no relationship to our assets, book value, revenues or other
established criteria of value. There were no commissions paid on the sale of
those shares. The net proceeds to us were $2,100. All twenty-one purchasers of
our common stock were business associates, personal friends or family members of
Ryan A. Neely, our President, Secretary and one of our directors.
23
<PAGE>
In April 1999, we issued 100 shares of our $.01 par value common stock to our
founding shareholders, Judy Buehlman, Patty Tipton and Sean and Janna Connelly,
in a transaction which we believe satisfies the requirements of that certain
exemption from the registration and prospectus delivery requirements of the
Securities Act of 1933, which is specified by the provisions of Section 4(2) of
that act. The shares were issued in exchange for services provided to us, which
were valued at $900. On April 6, 2000, we amended and restated our Articles of
Incorporation to authorize 50,000,000 shares of $.001 par value common stock. On
April 15, 2000, our Board of Directors authorized an exchange of those 100
shares of our $.01 par value common stock for 900,000 shares of our $.001 par
value common stock.
Exhibits
Copies of the following documents are filed with this Registration Statement,
Form SB-2, as exhibits:
Exhibit No.
1. Underwriting Agreement (not applicable)
3.1 Amended and Restated Articles of Incorporation (Charter Document)
3.2 Bylaws
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on unaudited interim financial information (not applicable)
23.1 Consent of Auditors
23.2 Consent of Counsel**
24. Power of Attorney is included on the Signature Page of the
Registration Statement
27. Financial Data Schedule
* Included in Financial Statements
** Included in Exhibit 5
Undertakings
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by
our director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is
24
<PAGE>
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To specify in the prospectus any facts or events arising after
the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) (Section 230.424(b)
of Regulation S-B) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
and
(iii) To include any additional or changed material information with
respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
25
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on our behalf by the undersigned, in the city of Newport Beach,
California, on August 17, 2000.
JPAL, Inc.,
a Nevada corporation
By: /s/ Ryan A. Neely
---------------------------------
Ryan A. Neely
Its: President, Secretary and Director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed on this 17th day of August, 2000, the
following persons in the capacities and on the dates stated:
/s/ Ryan A. Neely August 17, 2000
------------------------------
Ryan A. Neely
President, Secretary, Director
/s/ Jason J. Ortega August 17, 2000
------------------------------
Jason J. Ortega
Treasurer, Director
26
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Ryan A. Neely with the full power of substitution, as
attorney-in-fact, to sign in such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
JPAL, INC.
/s/ Ryan A. Neely August 17, 2000
------------------------------
Ryan A. Neely
President, Secretary, Director
/s/ Jason J. Ortega August 17, 2000
------------------------------
Jason J. Ortega
Treasurer, Director
27
