UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS Under Section 12(b) or
(g) of the Securities Exchange Act of 1934
Stock Watch Man, Inc.
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(Name of Small Business Issuer in its charter)
Nevada 88-0433815
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(State or other jurisdiction of (I.R.S. Employer Identification )
incorporation or organization) Number)
1016 Howard Avenue, Las Vegas, Nevada 89104
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(Address of principal executive offices) (zip code)
(702) 737-0963
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Issuer's Telephone Number
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
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Securities to be registered under section 12(g)of the Act:
Common Stock, $.001 par value per share, 15,000,000 shares authorized,
2,127,500 issued and outstanding as of September 30, 2000. Preferred
Stock, $0.001 par value per share, 10,000,000 shares authorized and
none issued nor outstanding as of September 30, 2000.
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FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Stock Watch Man, Inc., a new e-Commerce company ("StockWatchMan.com,")
or the ("Company") or the ("Registrant") cautions readers that certain
important factors may affect the Company's actual results and could
cause such results to differ materially from any forward-looking
statements that may be deemed to have been made in this Document or that
are otherwise made by or on behalf of the Company. For this purpose,
any statements contained in the Document that are not statements of
historical fact may be deemed to be forward-looking statements. This
Registration contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by
the use of predictive, future-tense or forward-looking terminology, such
as "believes," "anticipates," "expects," "estimates," "plans," "may,"
"will," or similar terms. These statements appear in a number of places
in this Registration and include statements regarding the intent, belief
or current expectations of the Company, its directors or its officers
with respect to, among other things: (i) trends affecting the Company's
financial condition or results of operations for its limited history;
(ii) the Company's business and growth strategies; (iii) the Internet
and Internet commerce; and, (iv) the Company's financing plans.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various
factors. Factors that could adversely affect actual results and
performance include, among others, the Company's limited operating
history, dependence on continued growth in the use of the Internet, the
Company's inexperience with the Internet, potential fluctuations in
quarterly operating results and expenses, security risks of transmitting
information over the Internet, government regulation, technological
change and competition.
The accompanying information contained in this Registration, including,
without limitation, the information set forth under the heading "Risk
Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business" identifies important
additional factors that could materially adversely affect actual results
and performance. All of these factors should be carefully considered
and evaluated. All forward-looking statements attributable to the
Company are expressly qualified in their entirety by the foregoing
cautionary statement. Any forward-looking statements in this report
should be evaluated in light of these important risk factors. The
Company is also subject to other risks detailed herein or set forth from
time to time in the Company's filings with the Securities and Exchange
Commission.
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ......................................................... 4
Item 1. Description of Business.................................. 4
Item 2. Management's Discussion and Analysis or Plan of
Operation................................................ 21
Item 3. Description of Property.................................. 22
Item 4. Security Ownership of Management and Others and Certain
Security Holders......................................... 22
Item 5. Directors, Executives, Officers and Significant
Employees................................................ 24
Item 6. Remuneration of Directors and Executive
Officers................................................. 25
Item 7. Certain Relationships and Related Transactions........... 25
Part II ......................................................... 26
Item 1. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters.............. 26
Item 2. Legal Proceedings........................................ 27
Item 3. Recent Sales of Unregistered Securities.................. 27
Item 4. Description of Securities................................ 27
Item 5. Indemnification of Directors and Officers................ 28
Part F/S ......................................................... 29
Item 1. Financial Statements..................................... 29
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure..................... 29
Part III ........................................................ 31
Item 1. Index to Exhibits....................................... 31
Item 2. Description of Exhibits................................. 31
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and the
Financial Statements and Notes related thereto appearing elsewhere in
this Registration. Except where the context otherwise requires, all
references in this Registration to (a) the "Registrant" or the "Company"
or "Stock Watch Man, Inc." refer to Stock Watch Man, Inc., a Nevada
corporation, (b) the "Web" refer to the World Wide Web and (c) the
"site" refer to the Company's Web site.
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Part I
Item 1. Description of Business
A. Business Development, Organization and Acquisition Activities
Stock Watch Man, Inc., a new Internet e-Commerce company, hereinafter
referred to as ("StockWatchMan.com") or the ("Company") or the
("Registrant"), was organized by the filing of Articles of Incorporation
with the Secretary of State of the State of Nevada on February 27, 1997.
Stock Watch Man, Inc. is a developmental stage company with a primary
business strategy to develop a WEB site (www.stockwatchman.com), market
its WEB site through the Internet search engines, develop interactive
links to its Web Site, e.g., Chat rooms, stock quotes, charts, news,
research, links to SEC, NASDAQ, and other financial resources.
The Company was formed on February 27, 1997. On March 1, 1997, founding
shareholders purchased 1,000,000 shares of the Company's authorized but
unissued treasury stock for cash and services. (A more complete
explanation of these transactions can be found on Question 7(b). In
July of 1997, the Company put up a simple website after approximately eight
months of relatively little activity, lack of financing and time restraints
the Company's president became involved in other things. The company was
inactive until August 1999. In August, 1999, the Company decided it needed
additional funding to proceed as a going concern. On August 2, 1999 the
company sold 400,000 shares of common stock to the Company's president for
$2,000. The Company decided to proceed with a 504 public offering in the
State of Nevada. The Company applied for and received a State Permit from
the Securities Division of the Nevada Secretary of State (See "Exhibit 99.1").
On March 31, 2000, the Company completed its Regulation D, Rule 504 offering
and issued 527,500 shares of its $.001 par value common stock at $.08 per share
for total cash of $42,200. On September 27, 2000, the Company issued 200,000
shares of its $.001 par value common stock for consulting services valued at
$200.
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B. Business of Issuer
1) Principal Products, Services and Principal Markets.
The Company hired the services of an Internet Web Site Developer. It is the
goal of the Company to offer an all inclusive financial resource Web site.
The Company foresees this Web site as an all-in-one focal point for financial
information. For example, for a nominal monthly fee, users of this Web Site,
would have access to real-time stock quotes, and have access to financial
resource information.
The Company has a web site at: "http:\\www.stockwatchman.com." The site was
primarily dormant until approximately June, 2000. The Company also has
utilized email to send out information to subscribers. It has been some
time since any activity has taken place with the subscriber list. It is
the company's intention to promote this informational e-mail service and
develop this from a free service to a fee service.
The Company's goal is to become an informative, comprehensive and user friendly
Internet-based financial site. The Company plans to market its WEB site through
search engines (e.g., Yahoo, Infoseek, Lycos, etc.) banner ads, etc. in order
to increase traffic across the Company's web site. The Company hopes it will
be able to market its financial products to consumers. As stated earlier, the
Company foresees this Web site as an all-in-one focal point for financial
information and services. If the website can become popular, i.e., increased
viewer traffic, management may consider offering special services for a
nominal monthly fee. The users of this Web Site, would have access to
real-time stock quotes, financial information concerning companies listed on
all the major stock exchanges, and access to Chat rooms so that they can
discuss similar issues or concerns regarding a certain financial topic. Once
Company develops traffic to its WEB site, it plans to sell banner ads.
LIMITED OPERATING HISTORY. The Company was organized February 27, 1997.
Activities to date have been limited primarily to organization,
initial capitalization, finding an appropriate web hosting facility in Las
Vegas, Nevada, setting up a Web site and commencing with initial
operations. The Company has had limited operations as of this date
The Company has developed a Business Plan and started taking the
necessary steps to become an Internet supplier of financial information.
The Company, however, has limited operating history and must be
considered to be a developmental stage company. Prospective investors
should be aware of the difficulties encountered by such new enterprises,
as the Company faces all of the risks inherent in any new business and
especially with a developmental stage company. These risks include, but
are not limited to, competition, the absence of an operating history,
the need for additional working capital, and the possible inability to
adapt to various economic changes inherent in a market economy. The
likelihood of success of the Company must be considered in light of
these obstacles, expenses that are frequently incurred in the operation
of a new business and the competitive environment in which the Company
will be operating.
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(b) ANTICIPATED LOSSES FOR THE FORESEEABLE FUTURE The Company has
prepared audited financial statements as of September 30, 2000,
reporting that the Company is in its developmental stages. Its
ability to continue to operate as a going concern is fully dependent
upon the Company obtaining sufficient financing to continue its
development and operational activities. The ability to achieve
profitable operations is in direct correlation to the Company's
ability to raise sufficient financing. Accordingly, management
believes the Company's continued existence, future expansion, and
ultimate profitability is fully dependent upon raising sufficient
proceeds from this offering. It is important to note that even if
the appropriate financing is received, there is no guarantee that the
Company will ever be able to operate profitably or derive any
significant revenues from its operation. The Company could be required
to raise additional financing to fully implement its business plan.
(c) NEED FOR ADDITIONAL CAPITAL As of September 30, 2000 the Company
had working capital of $13,196. The Company may need additional capital
in order to step up a WEB site, market its WEB site, develop links
to its Web Site, e.g., financial Chat rooms, real time stock quotes,
and other links to financial resources.
If the company is successful, the need for additional funds will be
derived somewhat from internal revenues and earnings, however, the vast
majority may be received from future stock offerings. These future
offerings could significantly dilute the value of any previous
investor's investment value.
The Company fully anticipates that the proceeds from the sale of all
the Common Shares sold in the offering will be sufficient to provide
for the Company's capital need for the next twelve months. If the
capital needs are greater than expected, the Company will be required to
seek other sources of financing. No guarantees can be given that other
financing will be available, if required, or if available, will be on terms
and conditions satisfactory to management. The above outlined capital
problems which could significantly affect the value of any Common Shares
that are sold to the public and could result in the loss of an investor's
entire investment.
(d) Dependence on Continued Growth and Viability of the Internet
The Company's future success is substantially dependent upon continued
growth in the use of the Internet. To generate product sales,
advertising sales, e-Commerce service fees for Stock Watch Man, Inc.,
the Internet's recent and rapid growth must continue, and e-Commerce on
the Internet must become widespread. None of these can be assured. The
Internet may prove not to be a viable commercial marketplace.
Additionally, due to the ability of consumers to easily compare prices
of similar products or services on competing Web sites, gross margins
for e-Commerce transactions may narrow in the future and, accordingly,
the Company's revenues from e-Commerce arrangements may be materially
negatively impacted. If use of the Internet does not continue to
grow, the Company's business, results of operations and financial
condition would be materially and adversely affected. Additionally, to
the extent that the Internet continues to experience significant growth
in the number of users and the level of use, there can be no assurance
that its technical infrastructure will continue to be able to support the
demands placed upon it. The necessary technical infrastructure for
significant increases in e-Commerce, such as a reliable network backbone,
may not be timely and adequately developed. In addition, performance
improvements, such as high-speed modems, may not be introduced in a timely
fashion. Furthermore, security and authentication concerns with respect to
transmission over the Internet of confidential information, such as credit
card numbers, may remain. Issues like these could lead to resistance against
the acceptance of the Internet as a viable commercial marketplace. Also, the
Internet could lose its viability due to delays in the development or adoption
of new standards and protocols required to handle increased levels of activity,
ordue to increased governmental regulation. Changes in or insufficient
availability of telecommunications services could result in slower
response times and adversely affect usage of the Internet. Demand and
market acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty, and there exist few
proven services and products.
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The Internet may not be commercially viable in the long term for a
Number Of reasons, including potentially inadequate development of the
necessary network infrastructure or delayed development of enabling
technologies, performance improvements and security measures. To the
extent that the Internet continues to experience significant growth in
the number of users, their frequency of use or their band width
requirement, there can be no assurance that the infrastructure for the
Internet and other online services will be able to support the demands
placed upon them. In addition, the Internet or other online services
could lose their viability due to delays in the development or adoption
of new standards and protocols required to handle increased levels of
Internet or other online service activity, or due to increased
governmental regulation. Changes in or insufficient availability of
telecommunications services to support the Internet or other online
services also could result in slower response times and adversely
affect usage of the Internet and other online services generally and
Stock Watch Man, Inc. in particular. If use of the Internet and other
online services does not continue to grow or grows more slowly than
expected, if the infrastructure for the Internet and other online
services does not effectively support growth that may occur, or if the
Internet and other online services do not become a viable commercial
marketplace, the Company's business, results of operations and financial
condition would be adversely affected.
(e) Risk of System Failures
The Company's ability to facilitate trade successfully and provide high
quality customer service, depends on the efficient and uninterrupted
operation of its computer and communications through its designated
Internet Service Provider (ISP). These systems and operations are
vulnerable to damage or interruption from earthquakes, floods, fires,
power loss, telecommunication failures, break-ins, sabotage, intentional
acts of vandalism and similar events. The Company does not have fully
redundant systems, a formal disaster recovery plan or alternative
providers of hosting services and does not carry business interruption
insurance to compensate it for losses that may occur. Despite any
precautions taken by, and planned to be taken by the Company, the
occurrence of a natural disaster or other unanticipated problems with
its ISP could result in interruptions in the services provided by the
Company.
In addition, the failure by the ISP to provide the data communications
capacity required by the Company, as a result of human error, natural
disasters other operational disruption, could result in interruptions in
the Company's service. Any damage to or failure of the systems of the
Company could result in reductions in, or terminations of, the Stock
Watch Man service, which could have a material adverse effect on the
Company's business, results of operations and financial condition. In
the case of frequent or frequent or persistent system failures, the
Company's reputation and name brand could be materially adversely
affected. Although the Company has implemented certain network security
measures, the Company and its IPS are also vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions,
which could lead to interruptions, delays, loss of data or the inability
to complete customer auctions. In addition, although the Company works
to prevent unauthorized access to Company data, it is impossible to
eliminate this risk completely. The occurrence of any and all of these
events could have a material adverse effect on the Company's business,
results of operations and financial condition.
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(f) Competition:. The market for providing financial services and
information to consumers over the Internet is relatively new, rapidly
evolving and intensely competitive, and the Company expects competition
to intensify further in the future. Barriers to entry are relatively
low, and current and new competitors can launch new sites at a
relatively low cost using commercially-available software. The Company
will potentially compete with a number of other companies marketing
their financial products/services over the Internet. This would not
preclude other companies from taking the same approach to market similar
products and services in the same manner, if this did happen, it could
have a material adverse effect on the Company's business, results of
operations and financial condition.
The Company believes that the principal competitive factors in its
market are pertinent and reliable financial data, which is easily
accessible, customer service, interactive Internet technology, WEB site
convenience, price, quality of search tools and system reliability.
Some of the Company's potential competitors offer online trading
services which may be acquired by, receive investments from or enter
into other commercial relationships with larger, well-established and
well-financed companies as use of the Internet and other online services
increases.
Therefore, certain of the Company's competitors with other revenue
sources may be able to devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing policies and devote
substantially more resources to Web site and systems development than
the Company or may try to attract traffic by offering services for free.
Increased competition may result in reduced operating margins, loss of
market share and diminished value in the Company's brands. There can be
no assurance that the Company will be able to compete successfully
against current and future competitors. Further, as a strategic response
to changes in the competitive environment, the Company may, from time to
time, make certain pricing, service or marketing decisions or
acquisitions that could have a material adverse effect on its business,
results of operations and financial condition. New technologies and the
expansion of existing technologies may increase the competitive
pressures on the Company by enabling the Company's competitors to offer
a lower-cost service. Certain Web-based applications that direct
Internet traffic to certain Web sites may channel users to trading
services that compete with the Company. Although the Company plans to
establish arrangements with online services and search engine companies,
there can be no assurance that these arrangements will be renewed on
commercially reasonable terms or that they will otherwise bring traffic
to the Stockwatchman.com WEB site. In addition, companies that control
access to transactions through network access or Web browsers could
promote the Company's competitors or charge the Company substantial fees
for inclusion. Any and all of these events could have a material adverse
effect on the Company's business, results of operations and financial
condition.
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(g) Potential Fluctuations in Operating Results; Quarterly Fluctuations
The Company's operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside
the Company's control. See "--Limited Operating History." As a
strategic response to changes in the competitive environment, the
Company may from time to time make certain pricing, marketing decisions
or acquisitions that could have a material short-term or long-term
adverse effect on the Company's business, results of operations and
financial condition.
In particular, in order to accelerate the promotion of www.StockWatchMan.com.,
the Company intends to heavily market it Web site. The Company believes that
it may experience seasonality in its business, with use of the Internet and
StockWatchMan.com being somewhat lower during the summer vacation and year-
end holiday periods. Advertising impressions (and therefore revenues) may be
expected to decline accordingly in those periods. Additionally, seasonality
may affect significantly any potential advertising revenues during the first
and third calendar quarters, as advertisers historically spend less
during these periods.
There can be no assurance that such patterns will not have a material
adverse effect on the Company's business, results of operations and
financial condition. In addition to selling its brands, it is the
Company's strategy is to generate additional revenues through e-Commerce
arrangements including for other companies to advertise on the company's
Web site. There can be no assurance that the Company will receive any
material amount of revenue under these agreements in the future. The
foregoing factors, in some future quarters, may lead the Company's
operating results to fall below the expectations.
(h) Risk Of Capacity Constraints And Systems Failures
A key element of the Company's strategy is to generate a volume of user
traffic to its Web site. The Company's ability to attract customers and
to achieve market acceptance of its products depends significantly upon
the performance of the Company and its network infrastructure (including
its server, hardware and software). Any system failure that causes
interruption or slower response time of the Company's products and
services could result in less traffic to the Company's Web site and, if
sustained or repeated, could reduce the attractiveness of the Company's
products. An increase in the volume of user traffic could strain the
capacity of the Company's technical infrastructure, which could lead to
slower response time or system failures, and could adversely affect the
delivery of the number of impressions that are owed to advertisers and
thus the Company's advertising revenues. In addition, as the number of
Web pages on and users of StockWatchMan.com increase, there can be no
assurance that the Company and its technical infrastructure will be able
to grow accordingly, and the Company faces risks related to its ability
to scale up to its expected customer levels while maintaining superior
performance. Any failure of the Company's server and networking systems
to handle current or higher volumes of traffic would have a material
adverse effect on the Company's business, results of operations and
financial condition. The Company is also dependent upon third parties
to provide potential users with Web browsers and Internet and online
services necessary for access to the site. In the past, users have
occasionally experienced difficulties with Internet and online services
due to system failures, including failures unrelated to the Company's
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systems. Any disruption in Internet access by third parties could have a
material adverse effect on the Company's business, results of operations and
financial condition. Furthermore, the Company is dependent on hardware
suppliers for prompt delivery, installation and service of equipment used to
deliver the Company's products and services. The Company's operations
are dependent in part upon its ability to protect its operating systems
against damage from human error, fire, floods, power loss,
telecommunications failures, break-ins and similar events. The Company
does not presently have redundant, multiple-site capacity in the event
of any such occurrence. The Company's servers are also vulnerable to
computer viruses, break-ins and similar disruptions from unauthorized
tampering with the Company's computer systems. The occurrence of any of
these events could result in the interruption, which could have a
material adverse effect on the Company's business, results of
operations and financial condition. In addition, the Company's
reputation could be materially and adversely affected.
(i) Risks Associated With New Services, Features and Functions
There can be no assurance that the Company would be able to expand its
operations in a cost-effective or timely manner or that any such efforts
would maintain or increase overall market acceptance. Furthermore, any
new business launched by the Company that is not favorably received by
consumers could damage the Company's reputation and diminish the value
of its brand name. Expansion of the Company's operations in this manner
would also require significant additional expenses and development,
operations train the Company's management, financial and operational
resources. The lack of market acceptance of the Company's products
would result in the Company's inability to generate satisfactory
revenues and its inability to offset their costs could have a material
adverse effect on the Company's business, results of operations and
financial condition.
(j) Online Commerce Security Risks
A significant barrier to online commerce and communications is the
secure transmission of confidential information over public networks.
Stock Watch Man, Inc. plans to accept credit cards for purchases of its
products. The Company will rely on encryption and authentication
technology licensed from third parties to provide the security and
authentication technology to effect secure transmission of confidential
information, including customer credit card numbers. There can be no
assurance that advances in computer capabilities, new discoveries in the
field of cryptography, or other events or developments will not result
in a compromise or breach of the technology used by the Company to
protect customer transaction data.
If any such compromise of the Company's security were to occur, it could
have a material adverse effect on the Company's reputation and,
therefore, on its business, results of operations and financial
condition. Furthermore, a party who is able to circumvent the Company's
security measures could misappropriate proprietary information or cause
interruptions in the Company's operations. The Company may be required
to expend significant capital and other resources to protect against
such security breaches or to alleviate problems caused by such breaches.
Concerns over the security of transactions conducted on the Internet and
other online services and the privacy of users may also inhibit the
growth of the Internet and other online services generally, and the Web
in particular, especially as a means of conducting commercial
transactions. To the extent that activities of the
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Company involve the storage and transmission of proprietary information,
such as credit card numbers, security breaches could damage the
Company's reputation and expose the Company to a risk of loss or
litigation and possible liability. There can be no assurance that the
Company's security measures will prevent security breaches or that
failure to prevent such security breaches will not have a material
adverse effect on the Company's business, results of operations and
financial condition.
(k) Risks Associated with Acquisitions
If appropriate opportunities present themselves, the Company would
acquire businesses, technologies, services or product(s) that the
Company believes are strategic.
The Company currently has no understandings, commitments or agreements
with respect to any other material acquisition and no other material
acquisition is currently being pursued. There can be no assurance that
the Company will be able to identify, negotiate or finance future
acquisitions successfully, or to integrate such acquisitions with its
current business. The process of integrating an acquired business,
technology, service or product(s) into the Company may result in
unforeseen operating difficulties and expenditures and may absorb
significant management attention that would otherwise be available
for ongoing development of the Company's business. Moreover, there can
be no assurance that the anticipated benefits of any acquisition will be
realized. Future acquisitions could result in potentially dilutive
issuances of equity securities, the incurrence of debt, contingent
liabilities and/or amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect the Company's
business, results of operations and financial condition. Any future
acquisitions of other businesses, technologies, services or product(s)
might require the Company to obtain additional equity or debt financing,
which might not be available on terms favorable to the Company, or at
all, and such financing, if available, might be dilutive.
(l) Risks Associated With International Operations
A component of the Company's strategy is to offer its products online to
international customers. Expansion into the international markets will
require management attention and resources. The Company has limited
experience in localizing its service, and the Company believes that many
of its competitors are also undertaking expansion into foreign markets.
There can be no assurance that the Company will be successful in
expanding into international markets. In addition to the uncertainty
regarding the Company's ability to generate revenues from foreign
operations and expand its international presence, there are certain
risks inherent in doing business on an international basis, including,
among others, regulatory requirements, legal uncertainty regarding
liability, tariffs, and other trade barriers, difficulties in staffing
and managing foreign operations, longer payment cycles, different
accounting practices, problems in collecting accounts receivable,
political instability, seasonal reductions in business activity and
potentially adverse tax consequences, any of which could adversely
affect the success of the Company's international operations.
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To the extent the Company expands its international operations and has
additional portions of its international revenues denominated in foreign
currencies, the Company could become subject to increased risks relating
to foreign currency exchange rate fluctuations. There can be no
assurance that one or more of the factors discussed above will not have
a material adverse effect on the Company's future international
operations and, consequently, on the Company's business, results of
operations and financial condition.
2) Distribution Methods of the Products and Services
The Company will be significantly dependent on a number of third-party
relationships to supply data and information to Stock Watch Man, Inc.
The Company is generally dependent on other Web site operators that
provide links, data and Web site content to StockWatchMan.com.
The Company has been working with Web site operators that provide links,
data and Web site content to StockWatchMan.com. These Web site operators,
and or any future Web site operators may terminate such links at any time
without notice to the Company. There can be no assurance that third parties
will regard their relationship with the Company as important to their own
respective businesses and operations.
There can be no assurance that the Company will continue to develop
relationships with third parties that supply the Company with links to
their Web site. In particular, the elimination of a pre-installed
bookmark on a Web browser that directs traffic to the Company's Web site
could significantly reduce traffic on the Company's Web site, which
would have a material adverse effect on the Company's business, results
of operations and financial condition. Additionally, at this time, the
Company has not entered into any agreements with any suppliers to ship
and provide products.
3) Status of Any Announced New Product or Service
The Company does not have any announced new product or service.
4) Industry Background
Global commerce and the online exchange of information is new and
evolving, it is difficult to predict with any assurance whether the Web
will prove to be a viable commercial marketplace in the long term. The
Web has experienced, and is expected to continue to experience,
significant growth in the numbers of users and amount of traffic. To the
extent that the Web continues to experience increased numbers of users,
frequency of use or increased bandwidth requirements of users, there can
be no assurance that the Web infrastructure will continue to be able to
support the demands placed on it by this continued growth or that the
performance or reliability of the Web will not be adversely affected.
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Industry estimates that spending on Internet advertising in the United
States will grow from $940 million in 1997 to $7.7 billion in 2002. The
Internet has become a compelling advertising vehicle that provides
advertisers with targeting tools not available from traditional
advertising media. The interactive nature of the Internet and the
development of "click-through" advertising banners and other feedback
tools enable advertisers to measure impression levels, establish a
dialogue with users and receive "real-time" direct feedback from their
target markets.
Such feedback provides advertisers with an effective means to measure
the attractiveness of their offerings among targeted audiences and make
modifications to their advertising campaigns on short notice. Community
sites are generally able to provide advertisers significantly more
information regarding consumers than other Web sites because they
collect detailed demographic data and facilitate the development of
user-created affinity groups. The ability to target advertisements to
broad audiences, specific regional populations, affinity groups or
individuals makes community Web site advertising a highly versatile and
effective tool for delivering customized and cost-effective messages.
One indicator of the Internet's popularity as an advertising medium is
the growing number and diversity of Internet advertisers.
Most early Internet advertisers were technology and Internet-related
companies. Today, a growing number of Internet advertisers consist of
traditional, consumer product and service companies. The diverse
audience of users accessing community sites has made such sites
especially attractive to consumer product and service companies
advertising on the Internet. The Company believes that this trend should
continue, and that a wide variety of companies outside the technology
and Internet industries, such as financial services, consumer goods,
automotive and pharmaceutical companies, are or will be increasingly
using the Internet, and community sites in particular, to advertise.
Furthermore, the Web has experienced a variety of outages and other
delays as a result of damage to portions of its infrastructure, and
could face such outages and delays in the future, including outages and
delays resulting from the inability of certain computers or software to
distinguish dates in the 21st century from dates in the 20th century.
These outages and delays could adversely affect the level of Web usage
and also the level of traffic for Stock Watch Man, Inc. In addition,
the Web could lose its viability due to delays in the development or
adoption of new development or adoption of new standards and protocols
to handle increased levels of activity or due to increased governmental
regulation.
The Internet allows marketers to collect meaningful demographic
information and feedback from consumers, and to rapidly respond to this
information with new messages. This offers a significant new opportunity
for businesses to increase the effectiveness of their direct marketing
campaigns. In traditional media, a significant portion of all
advertising budgets are spent on direct marketing because of its
effectiveness. However, the effectiveness of direct marketing campaigns
is dependent upon the quality of consumer data used to develop and place
complementary products, services or facilities are developed and the Web
becomes a viable commercial marketplace in the long term, the Company
might be required to incur substantial expenditures in order to adapt
its products to changing Web technologies, which could have a material
adverse effect on the Company's business, results of operations and
financial condition.
13
<PAGE>
(a) e-Commerce and Direct Marketing.
The Internet has become a significant marketplace for buying and selling
goods and services. Industry estimates that the amount of goods or
services purchased in online consumer transactions will grow from
approximately $2.6 billion in 1997 to approximately $37.5 billion in
2002. Improvements in security, interface design and transaction-
processing technologies have facilitated an increase in online consumer
transactions. Early adopters of such improvements include online
merchants offering broad product catalogs (such as books, music CDs and
toys), those seeking distribution efficiencies (such as PCs, flowers and
groceries) and those offering products and services with negotiable
pricing (such as automobiles and mortgages). The Company believes that
as the volume of online transactions increases, traditional retailers
will offer a wide variety of products and services online. The Company
believes that online companies provide businesses an opportunity
to link Internet customers with like interests. The Internet allows
marketers to collect meaningful demographic information.
The Company's business strategy relies on advertising by and agreements
with other Internet companies. Any significant deterioration in general
economic conditions that adversely affected these companies could also
have a material adverse effect on the Company's business, results of
operations and financial condition.
5) Raw Materials and Suppliers
The Company is an Internet e-Commerce business, and thus does not use
any raw materials or have any principal suppliers of raw materials.
6) Customers
The Company believes that establishing and maintaining brand identity is
a critical aspect of its efforts to attract new customers, Internet
traffic and advertising and commerce relationships. In order to attract
new customers, advertisers and commerce vendors, and in response to
competitive pressures, the Company intends to make a commitment to the
creation and maintenance of brand loyalty among these groups. The
Company plans to accomplish this, although not exclusively, through
advertising its Web site through the various search engines, through
other Web sites, marketing its site to businesses/customers through e-
mail, online media, and other marketing and promotional efforts.
There can be no assurance that brand promotion activities will yield
increased revenues or that any such revenues would offset the expenses
incurred by the Company in building its brands. Further, there can be
no assurance that any new users attracted to Stock Watch Man will conduct
transactions over StockWatchMan.com on a regular basis. If the
Company fails to promote and maintain its brand or incurs substantial
expenses in an attempt to promote and maintain its brand or if the
Company's existing or future strategic relationships fail to promote the
Company's brand or increase brand awareness, the Company's business,
results of operations and financial condition would be materially
adversely affected.
14
<PAGE>
7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements, or Labor Contracts
The Company regards substantial elements of its future Web site and
underlying infrastructure and technology as proprietary and attempts to
protect them by relying on trademark, service mark, copyright and trade
secret laws and restrictions on disclosure and transferring title and
other methods. The Company plans to enter into confidentiality
agreements with its future employees, future suppliers and future
consultants and in connection with its license agreements with third
parties and generally seeks to control access to and distribution of its
technology, documentation and other proprietary information. Despite
these precautions, it may be possible for a third party to copy or
otherwise obtain and use the Company's proprietary information without
authorization or to develop similar technology independently.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses
are uncertain and still evolving, and no assurance can be given as to
the future viability or value of any of the Company's proprietary
rights. There can be no assurance that the steps taken by the Company
will prevent misappropriation or infringement of its proprietary
information, which could have a material adverse effect on the Company's
business, results of operations and financial condition. Litigation may
be necessary in the future to enforce the Company's intellectual
property rights, to protect the Company's trade secrets or to
determine the validity and scope of the proprietary rights of others.
Such litigation might result in substantial costs and diversion of
resources and management attention. Furthermore, there can be no
assurance that the Company's business activities will not infringe upon
the proprietary rights of others, or that other parties will not assert
infringement claims against the Company, including claims that by
directly or indirectly providing hyperlink text links to Web sites
operated by third parties. Moreover, from time to time, the Company may
be subject to claims of alleged infringement by the Company or service
marks and other intellectual property rights of third parties. Such
claims and any resultant litigation, should it occur, might subject the
Company to significant liability for damages, might result in
invalidation of the Company's proprietary rights and, even if not
meritorious, could result in substantial costs and diversion of
resources and management attention and could have a material adverse
effect on the Company's business, results of operations and financial
condition.
8) Regulation
The law relating to the liability of online companies is currently unsettled.
It is possible that claims could be made against online e-Commerce companies
under both United States and foreign law for defamation, libel, invasion of
privacy, negligence, copyright or trademark infringement, or other theories
based on the nature and content of the materials disseminated through their
Web site. Several private lawsuits seeking to impose such liability upon
other online companies are currently pending.
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<PAGE>
9) Effect of Existing or Probable Government Regulations
Government legislation has been proposed that imposes liability for or
prohibits the transmission over the Internet of certain types of
information. The imposition upon the Company and other online providers
of potential liability for information carried on or disseminated
through their services could require the Company to implement measures
to reduce its exposure to such liability, which may require the Company
to expend substantial resources and/or to discontinue certain service
offerings. In addition, the increased attention focused upon liability
issues as a result of these lawsuits and legislative proposals could
impact the growth of Internet use.
The Company does not believe that such regulations, which were adopted
prior to the advent of the Internet, govern the operations of the
Company's business nor have any claims been filed by any state implying
that the Company is subject to such legislation. There can be no
assurance, however, that State government will not attempt to impose
these regulations upon the Company in the future or that such imposition
will not have a material adverse effect on the Company's business,
results of operations and financial condition. Several States have also
proposed legislation that would limit the uses of personal user
information gathered online or require online services to establish
privacy policies. The Federal Trade Commission has also recently settled
a proceeding with one online service regarding the manner in which
personal information is collected from users and provided to third
parties. Changes to existing laws or the passage of new legislation,
could create uncertainty in the marketplace that could reduce demand for
the services of the Company or increase the cost of doing business as a
result of litigation costs or increased service delivery costs, or could
in some other manner have a material adverse effect on the Company's
business, results of operations and financial condition. In addition,
because the Company's services are accessible worldwide, and the Company
may facilitate sales of goods to users worldwide, other jurisdictions
may claim that the Company is required to qualify to do business as
foreign corporation in particular state or foreign country.
Due to the increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations may be
adopted with respect to the Internet or other online services
covering issues such as user privacy, freedom of expression, pricing,
content and quality of products and services, taxation, advertising,
intellectual property rights and information security.
16
<PAGE>
Any new legislation or regulation, or the application of laws or
regulations from jurisdictions whose laws do not currently apply to the
Company's business, for third-party activities and jurisdiction. The
adoption of new laws or the application of existing laws may decrease
the growth in the use of the Internet, which could in turn decrease the
demand for the Company's services, increase the Company's cost of doing
business or otherwise have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company does not believe that such regulations, which were adopted
prior to the advent of the Internet, govern the operations of the
Company's business nor have any claims been filed by any state implying
that the Company is subject to such legislation. There can be no
assurance, however, that State government will not attempt to impose
these regulations upon the Company in the future or that such imposition
will not have a material adverse effect on the Company's business,
results of operations and financial condition.
10) Research and Development Activities
The Company, among other things, plans to develop and market its Web
site, enhance its services, implement and execute its business and
marketing strategy successfully, continue to develop and upgrade its
technology and information-processing systems, meet the needs of a
changing market, provide superior customer service, respond to
competitive developments and attract, integrate, retain and motivate
qualified personnel provided the company can generate sales and profit.
The Company also needs to develop and identify financial services and
perhaps ultimately products that achieve market acceptance by its users
and e-Commerce customers. There can be no assurance that any Internet
company, including StockWatchMan.com, will achieve market acceptance.
Accordingly, no assurance can be given that the Company's business model
will be successful or that it can sustain revenue growth or be
profitable. The market for Internet products is new, rapidly developing
and characterized by an increasing number of market entrants. As is
typical of any new and rapidly evolving market, demand and market
acceptance for recently introduced products are subject to a high level
of uncertainty and risk. Moreover, because this market is new and
rapidly evolving, it is difficult to predict its future growth rate, if
any, and its ultimate size. If the market fails to develop, develops
more slowly than expected or becomes saturated with competitors, or if
the Company's products do not achieve or sustain market acceptance, the
Company's business, results of operation may be materially and adversely
affected.
There can be no assurances the Company will be successful in accomplishing
all of these things, and the failure to do so could have a material adverse
effect on the company's business, results of operations and financial
condition.
11) Impact of Environmental Laws
The Company is not aware of any federal, state or local environmental
laws which would effect is operations.
17
<PAGE>
12) Employees
The bulk of the Company's work at this developmental stage is being
performed by the President of the company, who is working on developing
the web site to provide research information and Chat rooms through
the Internet. He is utilizing the services of outside consultants to help
with technical issues and development. Therefore, the Company expects
actual staffing needs to be minimal.
The Company currently has two (2) employees. One (1) President and Chief
Executive Officer (Steve Yeich); and one (1) Vice President, Tracy Yeich.
In order to implement the aggressive business plan of the Company, management
recognizes that some additional staff may be required.
Until the Company can generate a profit on a regular basis, the Company
does not plan to pay its Officers.
There can be no assurance that the Company will be able to retain its
key managerial and technical personnel or that it will be able to
attract and retain additional highly qualified technical and managerial
personnel in the future. The inability to attract and retain the
technical and managerial personnel necessary to support the growth of
the Company's business, due to, among other things, a large increase in
the wages demanded by such personnel, could have a material adverse
effect upon the Company's business, results of operations and financial
condition.
13) Year 2000 Implications
The Year 2000 issue is the potential for system and processing failures
of date-related data and the result of computer-controlled systems using
two digits rather than four to define the applicable year. For example,
computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could
result in system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to
process transaction The Company may be affected by Year 2000 issues
related to non-compliant information technology ("IT") systems or non-IT
systems operated by the Company or by third parties.
18
<PAGE>
14) The Industry & Potential Effect on the Company's Plan of Operations
The rapid adoption of the Internet as a means to gather information,
communicate, interact and be entertained, combined with the vast
proliferation of Web sites, has made the Internet an important new mass
medium. Industry estimates that the number of Web users exceeded 68
million in 1997, and will grow to over 319 million by 2002. The Internet
enables advertisers to target advertising campaigns utilizing
sophisticated databases of information on the users of various sites. As
a result, the Internet has become a compelling means to advertise and
market products and services. With the volume of sites and vast
abundance of information available on the Internet, users are
increasingly seeking an online home where they can interact with others
with similar interests and quickly find information, products and
services related to a particular interest or need.
These community sites offer a single location where users can build
their personal Web sites and place them among the sites of others having
similar interests. In addition, community sites generally offer
services including access to e-mail accounts, chat rooms, news, and
entertainment services, among other features. By satisfying the needs of
its users, communities seek to establish a close relationship with their
audience. As a result, the Company believes that users tend to be loyal
to and spend more time online at community sites. The Company hopes to
advertise their products at these community sites.
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer
demands, and frequent new product introductions and enhancements. These
market characteristics are exacerbated by the emerging nature of the
market and the fact that many companies are expected to introduce new
Internet products and services in the near future. The Company's future
success will depend in part on its ability to continually improve the
performance, features and reliability of the site in response to both
evolving demands of the marketplace and competitive product and service
offerings; and, there can be no assurance that the Company will be
successful in doing so. Accordingly, the Company's future success will
depend on its ability to adapt to rapidly changing technologies, to
adapt to evolving industry standards and to continually improve the
performance, features and reliability of its service in response to
competitive service and product offerings and evolving demands
of the marketplace. The failure of the Company to adapt to such changes
would have a material adverse effect on the Company's business, results
of operations and financial condition. In addition, the widespread
adoption of new Internet, networking or telecommunications technologies
or other technological changes could require substantial expenditures by
the Company to modify or adapt its services or infrastructure, which
could have a material adverse effect on the Company's business, results
of operations and financial condition.
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<PAGE>
15) Present Licensing Status
None -- Not Applicable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
All statements, trend analysis and other information contained in this
Registration relative to markets for the Company's products and trends
in revenues, gross margin and anticipated expense levels, as well as
other statements including words such as "believe," "anticipate,"
"expect," "estimate," "plan" and "intend" and other similar expressions,
constitute forward-looking statements. Those forward-looking statements
are subject to business and economic risks, and the Company's actual
results of operations may differ from those contained in the forward-
looking statements. The following discussion of the financial condition
and results of operations of the Company should also be read in
conjunction with the Financial Statements and Notes related thereto
included elsewhere in this Registration.
20
<PAGE>
Item 2
Item 2. Management's Discussion and Analysis or Plan of Operation
A. Management's Plan of Operation
Since its inception on February 27, 1997 through September 30, 2000, the
Company incurred a net loss of $29,159 from operations. It has yet to
receive any revenues from operations.
(A) The Company is not having any current cash flow problems.
(B) The Company needs to pay for professional fees for securities registration
and financial audits.
(C) The Company's management believes its cash requirements would be adequate
to begin its operations, develop and market a web site, and become an Internet
financial information company.
As of September 30, 2000, the Company had working capital of $13,196. The
Company anticipates that they have enough capital to implement the Company's
initial plans over the next twelve (12) months. The Company recognizes to
remain a going concern, it will need to raise additional capital through
a Regulation D, 505 or 506 offering, or the Company will be required to seek
other sources of financing. No guarantee can be given that the Company will
be able to obtain other financing will that it will be available, if
required, or if available, will be available on terms and conditions
satisfactory to management. The Company has prepared audited financial
statements as of September 30, 2000, reporting that the Company is
in the development stage and its ability to establish itself as a growing
concern is dependent upon the Company obtaining sufficient financing to
continue its development activities and, ultimately, to achieve profitable
operations. There is no guarantee that any financing will be available to
the Company, or if available, will be available on terms and conditions
satisfactory to management.
Stock Watch Man, Inc. is a developmental stage company. It does not
anticipate any revenues until it can find clients and/or advertisers to
promote and market their products through the Company's Web site
(www.StockWatchMan.com).
21
<PAGE>
2) No engineering, management or similar report has been prepared or
provided for external use by the Company in connection with the offer of
its securities to the public.
3) Management believes that the Company's future growth and success will
depend on its ability to find products and service providers who will
permit financial products to be sold over the Internet, and to find
customers for these products and services. The Company expects to
continually evaluate its potential products to determine what additional
products or enhancements are required by the Internet marketplace. The
Company does not plan to develop products internally, but find suppliers
who would be willing to sell, market or license their products through
the Company. This can help avoid the time and expense involved in
developing actual products.
4) The Company currently does not expect to purchase or sell any of its
equipment, since it owns no equipment. The computer equipment to be
utilized is equipment owned by the Officers of the Company.
B. Segment Data
As of September 30, 2000, no sales revenue has been generated by the
Company. Accordingly, no table showing percentage breakdown of revenue
by business segment or product line is included.
Item 3. Description of Property
A. Description of Property
The Company has a primary contact office in Nevada. The Nevada address
is: 1016 Howard Avenue, Las Vegas, Nevada 89104. The Company office
facilities at this address is provided by one of the Officers of the
Company at not cost to the Company.
Item 4. Security Ownership of Management and Certain Security Holders
A. Security Ownership of Management and Certain Beneficial Owners
The following table sets forth information as of the date of this
Registration Statement certain information with respect to the beneficial
ownership of the Common Stock of the Company concerning stock ownership by
(i) each director, (ii) each executive officer, (iii) the directors and
officers of the Company as a group, (iv) and each person known by the
Company to own beneficially more than five (5%) of the Common Stock.
Unless otherwise indicated, the owners have sole voting and investment
power with respect to their respective shares.
22
<PAGE>
<TABLE>
<CAPTION>
No. of
Date Shares %of
Name(1) Type Title Acquired Now Held Total
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Steve Yeich(2) Common President 03/01/97 600,000 28.2%
Steve Yeich(2) Common President 08/02/99 400,000 18.8%
Tracy Yeich Common Secretary 03/01/97 100,000 4.7%
Doug Davidson Common Consultant 09/27/00 200,000 9.4%
------------------------------------------------------------------------
All Executive Officers and
Directors as a Group (2 persons) 1,100,000 51.7%
</TABLE>
(1) Stock Watch man, Inc., 1016 Howard Avenue, Las Vegas, Nevada.
(2) Mr. Yeich received 600,000 shares for services at a value of $0.001 and
purchased 400,000 at a price of $0.005 per share.
Steven and Tracy Yeich are husband and wife.
B. Persons Sharing Ownership of Control of Shares
No persons other than Steven Yeich, President/CEO and Tracy Yeich, Corporate
Secretary, Doug Davidson, Consultant, own shares or the power to vote
five percent (5%) or more of the Company's securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
There are no options, warrants or rights to purchase securities of the Company.
E. Parents of Issuer
Under the definition of parent, as including any person or business entity
who controls substantially all (more than 80%) of the issuers of common
stock, the Company has no parents.
23
<PAGE>
Item 5. Directors, Executives, Officers and Significant Employees
The names, ages and positions of the Company's directors and executive
officers are as follows:
<TABLE>
<CAPTION>
Name Age Position
-------- ------ ----------
<S> <C> <C>
Steve Yeich 46 President, CEO
Director,
& Chairman of the Board
Tracy Yeich 45 Vice-President
</TABLE>
B. Work Experience
The company is led by Steve Yeich, President and CEO of Stock Watch Man, Inc.,
Inc. 46 years old, he is a 1975 graduate of West Chester State University with
a degree in Education He founded the company and has acted as management since
inception. He has worked with several companies in the area of investor
relations and as sales agent in several initial public offerings. He has
worked in the entertainment industry off and on since 1982. He has been a
freelance writer for 15 years. His credits are varied and include writing
jokes for various comedians, most notably Joan Rivers and Jay Leno. He has
also freelanced for numerous advertising agencies in the writing of radio and
TV commercials, infomercials, industrial and in house videos. Additionally, he
has written several TV scripts and sold an option on a motion picture as well
as the writing of varied articles for newspapers and magazines. Recently he has
written, produced, directed a how to video. Mr. Yeich is involved in several
ventures including; the President and Director of Big Day Productions, a company
that produced and distributes a video on getting married in Las Vegas.
24
<PAGE>
Tracy Yeich is 45 years old. She graduated from UNLV in 1976 where she
achieved "High Distinction" with a degree in Political Science. In 1976 she
also attended George Washington University while serving in a congressional
internship under then Senator Paul Laxalt. From 1977 to 1994 she worked in
the restaurant business, including management of an upscale Las Vegas
restaurant. From 1994 until present she has been the executive director
of a successful, non-profit, private school.
Item 6. Remuneration of Directors and Executive Officers
(1) Compensation of Executive Officers
Until the Company can generate a profit on a regular basis, the Company
does not plan to pay its Officers.
(2) Compensation of Directors
There were no arrangements pursuant to which any director of the Company
was compensated for the period from March 1, 1999 to April 12, 1999 for
any service provided as a director. In addition, no such arrangement is
contemplated for the foreseeable future as the Company's only director
is its CEO, Steve Yeich
Item 7. Interest of Management and Others in Certain Transactions
By Board Resolution, the Company hired the professional services of G. Brad
Beckstead, Certified Public Accountant, to perform audited financials for the
Company. Mr. Beckstead owns no stock in the Company. The company has no
formal contracts its CPA, who is paid on a fee-for-service basis.
25
<PAGE>
Part II
Item 1. Market price of and Dividends on the Registrant's Common Equity and
Other Stockholder matters
A. Market Information
All holders of outstanding Common Shares are equal to each other with respect
to voting and dividend rights and are equal to each other with respect to
liquidation rights. Special meetings of the stockholders may be called by the
officers, directors or upon the request of a majority of the stockholders. In
the event of liquidation, dissolution or winding up of the affairs of the
Company, holders are entitled to receive ratably the net assets of the Company
available to the stockholders. Holders of outstanding Common Shares have no
preemptive, conversion or redemptive rights. All of the issued and outstanding
Common Shares, when offered and sold will be duly authorized, validly issued,
fully paid and non-assessable. To the extent that additional Common Shares of
the Company are issued, the relative interests of the then existing
stockholders may be diluted.
The Company has applied for listing of its Common stock on the National
Quotation Bureau's "Pink Sheets." At the time of this filing, the Company
is still in the review process with the NASD.
The Company has not paid any cash dividends on the Common Shares to
date, and there are no plans for paying cash dividends on the Common
Shares in the near future. Initial earnings that the Company may
realize, if any, will be retained to finance the growth of the Company.
Any future dividends, of which there can be no guarantee, will be
directly dependent upon earnings of the Company, its financial
requirements and other factors.
The Company was formed on February 27, 1997. On March 1, 1997, founding
shareholders purchased 1,000,000 shares of the Company's authorized but
unissued treasury stock for cash and services. The Company re-initiated
operations during September of 1999. In August, 1999 the company sold 400,000
shares of common stock to the Company's president for $2,000.
On March 31, 2000, the Company completed its Rule 504 offering and issued
527,500 shares of its $.001 par value common stock at $.08 per share for
total cash of $42,200. On September 27,2000, the Company issued 200,000 shares
of its $.001 par value common stock for consulting services valued at $200.
There have been no other issuances of common or preferred stock. These are
the Company's only significant capitalization events to date.
(i) On September 30, 2000, the Company had 1,300,000 Common Shares issued
and outstanding that have not been registered with the Commission or any State
securities agency and which are currently restricted pursuant to Rule 144
promulgated by the Commission under the 1933 Act. Rule 144 provides, in
essence, that a person holding restricted securities for one year from the date
the securities were purchased from the issuer, or an affiliate of the issuer,
and fully paid, may sell limited quantities of the securities to the public
without registration, provided there shall be certain public information with
respect to the issuer. Pursuant to Rule 144, securities held by non-affiliates
for more than two years may generally be sold without reference to the current
public information or broker transaction requirements, or the volume
limitations. The sale of some or all of the currently restricted Common Shares
could have a material negative impact upon the market price of the Common
Shares if a market for the Common Shares should develop in the future.
B. Holders
All holders of outstanding Common Shares are equal to each other with
respect to voting and dividend rights and are equal to each other with
respect to liquidation rights. Special meetings of the stockholders may
be called by the officers, directors or upon the request of a majority
of the stockholders. In the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to
receive ratably the net assets of the Company available to the
stockholders. Holders of outstanding Common Shares have no preemptive,
conversion or redemptive rights. All of the issued and outstanding
Common Shares, when offered and sold will be duly authorized, validly
issued, fully paid and non-assessable. To the extent that additional
Common Shares of the Company are issued, the relative interests of the
then existing stockholders may be diluted.
C. Dividend Policy
The Company has not paid any cash dividends on the Common Stock to date,
and there are no plans for paying cash dividends on the Common Stock in
the foreseeable future. Initial earnings that the Company may realize,
if any, will be retained to finance the growth of the Company. Any
future dividends, of which there can be no guarantee, will be directly
dependent upon earnings of the Company, its financial requirements and
other factors.
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<PAGE>
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and such other periodic reports
as the Company may determine to be appropriate or as may be required by
law. Upon the effectiveness of this Registration Statement, the Company
will be required to comply with periodic reporting, proxy solicitation
and certain other requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the Company
is: Standard Transfer & Trust Company, Inc., 9030 W. Sahara, #529,
Las Vegas, NV 89117, (702) 869-5757.
Item 2. Legal Proceedings
The Company does not have any legal liabilities, past or present that
could cause harm to the Company and its shareholders in the future of
which management is aware.
Item 3. Recent sale of Unregistered Securities
On March 1, 1997, founding shareholders purchased 1,000,000 shares of the
Company's authorized but unissued treasury stock for cash and services.
On August 2, 1999 the company sold 400,000 shares of common stock to the
Company's president for $2,000.
The Company was issued a permit to sell securities to the public in the State
of Nevada pursuant to Nevada Revised Statues Chapter 90.490. This offering
(hereinafter referred to as the "Offering") was made in reliance upon an
exemption from the registration provisions of Section 5 of the Securities Act
of 1933 (the "Act"), as amended, pursuant to regulation D, Rule 504, of the
Act. The Company sold five hundred twenty-seven thousand five hundred
(527,500) shares of it $0.001 par value common stock of the Company during the
Offering to approximately 100 shareholders in the State of Nevada at $0.08 per
share for total cash of $42,200 . The Offering was closed March 31, 2000.
The Company filed an original Form D with the Securities and Exchange
Commission.
On September 27, 2000, the Company issued 200,000 shares of its $.001 par value
common stock for consulting services valued at $200. There have been no
other issuances of common or preferred stock. These are the Company's only
significant capitalization events to date.
As of September 30, the Company has 2,127,500 shares of common stock issued
and outstanding held by 106 shareholders of record.
Item 4. Description of Securities
A. Common Stock
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - The holders of outstanding shares of common stock
are entitled to receive dividends out of assets legally available
therefore at such times and in such amounts as the board of directors of
the Company may from time to time determine.
ii. Voting Rights - Each holder of the Company's common stock are entitled to
one vote for each share held of record on all matters submitted to the vote of
stockholders, including the election of directors. All voting is noncumulative,
which means that the holder of fifty percent (50%) of the shares voting for the
election of the directors can elect all the directors. The board of directors
may issue shares for consideration of previously authorized but unissued common
stock without future stockholder action.
iii. Liquidation Rights - Upon liquidation, the holders of the common
stock are entitled to receive pro rata all of the assets of the Company
available for distribution to such holders.
27
<PAGE>
iv. Preemptive Rights - Holders of common stock are not entitled to
preemptive rights.
v. Conversion Rights - No shares of common stock are currently subject
to outstanding options, warrants, or other convertible securities.
vi. Redemption rights - no redemption rights exist for shares of common
stock.
vii. Sinking Fund Provisions - No sinking fund provisions exist.
viii. Further Liability For Calls - No shares of common stock are
subject to further call or assessment by the issuer. The Company has
not issued stock options as of the date of this Registration Statement.
(2) Potential Liabilities of Common Stockholders to State and Local
Authorities
No material potential liabilities are anticipated to be imposed on
stockholders under state statues. Certain Nevada regulations, however,
require regulation of beneficial owners of more than 5% of the voting
securities. Stockholders that fall into this category, therefore, may be
subject to fines in circumstances where non-compliance with these
regulations are established.
B. Debt Securities
The Company is not registering any debt securities, nor are any outstanding.
C. Other Securities To Be Registered
The Company is not registering any security other than its common stock.
Item 5. Indemnification of Directors and Officers
THE ARTICLES TEN AND ELEVEN OF THE ARTICLES OF INCORPORATION AND ARTICLE FOUR
OF THE BY-LAWS OF THE COMPANY PROVIDE FOR INDEMNIFICATION OF EMPLOYEES AND
OFFICERS IN CERTAIN CASES. INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING
UNDER THE SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR
PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE
COMPANY HAS BEEN INFORMED THAT IN THE OPINION OF THE SECURTIES AND EXCHANGE
COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE
ACT AND IS THEREFORE UNENFORCEABLE.
28
<PAGE>
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) Stock Watch Man, Inc.
Report of G. Brad Beckstead, CPA
b) Interim Financial Statements are not provided at this time as they are
not applicable at this time.
c) Financial Statements of Businesses Acquired or to be Acquired are not
provided at this time as they are not applicable at this time.
d) Pro-forma Financial Information is not provided at this time as it is not
applicable at this time.
Item 2. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None--Not Applicable
29
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
Independent Auditor's Report F-1
Balance Sheet F-2
Income Statement F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Footnotes F-6-7
</TABLE>
30
<PAGE>
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877 (efax)
INDEPENDENT AUDITOR'S REPORT
Board of Directors October 12, 2000
Stock Watch Man, Inc.
Las Vegas, NV
I have audited the Balance Sheet of Stock Watch Man, Inc.(the "Company")
(A Development Stage Company), as of September 30, 2000, and the related
Statements of Operations, Stockholders' Equity, and Cash Flows for the
period February 27, 1997 (Date of Inception) to September 30, 2000. These
financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements
based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement
presentation. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Stock Watch Man, Inc., (A
Development Stage Company), as of September 30, 2000, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its
ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
October 12, 2000
/s/ G. Brad Beckstead
---------------------------
G. BRAD BECKSTEAD, CPA
F-1
<PAGE>
Stock Watch Man, Inc.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
BALANCE SHEET
September 30 December 31
ASSETS 2000 2000
------------ ------------
<S> <C> <C>
Cash $ 13,196 $ 670
-------- ---------
Total Current Assets $ 13,196 670
Fixed assets, net 295 -
Organization costs, net - 98
Security deposit 2,250 -
-------- -------
$ 15,741 768
========= ========
Liabilities and Stockholders' Equity
Stockholders' Equity
Preferred stock, $0.001 par value,
10,000,000 shares authorized, zero
shares issued and outstanding - -
Common stock, $0.001 par value,
15,000,000 share authorized;
2,217,500 and 1,400,000 shares
issued and outstanding as of 9/30/00
and 12/31/99, respectively 2,128 1,400
Additional paid-in capital 42,772 1,600
Deficit accumulated during
Development stage (29,159) (2,232)
-------- -------
Total Stockholders' Equity 15,741 768
-------- -------
Total Liabilities and Stockholders' Equity $ 15,741 768
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
Stock Watch Man, Inc.
(A Development Stage Company)
Statement of Operations
<TABLE>
<CAPTION>
INCOME STATEMENT
Period ended February 27, 1997
--------------------------- (Inception) to
September 30 December 31, September 30,
2000 1999 2000
------------ ------------ ------------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
Expenses:
General and
administrative
expenses 26,922 1,330 2,160
Depreciation and
amortization 5 36 72
---------- ------------ ------------
Total expenses 26,927 1,336 2,232
---------- ------------ ------------
Net loss $ (26,927) $ (1,336) $ (2,232)
=========== ============= =============
Weighted average number
of common shares
outstanding 2,127,500 1,400,000 2,127,500
========== ============= ============
Net loss per share $ - $ - $ -
========== ============= ============
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
Stock Watch Man, Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During Total
------------ Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
--------- ------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
March 1, 1997
Issued for services
and organizational
costs 1,000,000 $1,000 $ - $ - $ 1,000
Net Loss
February 27, 1997
(inception to)
December 31, 1997 (830) (830)
-----------------------------------------------------
Balance as of
December 31, 1997 1,000,000 1,000 - (830) 170
Net loss (36) (36)
-----------------------------------------------------
Balance as of
December 31, 1998 1,000,000 1,000 - (866) 134
August 2, 1999
Issued for cash 400,000 400 1,600 (2,000)
Net loss
December 31, 1999 (1,366) (1,366)
--------------------------------------------------------
Balance as of
December 31, 1999 1,400,000 1,400 1,600 (2,232) 768
March 31, 2000
Issued for cash
pursuant to 504
offering 527,500 528 41,172 - 41,700
September 27, 2000
Issued for services 200,000 200 - 200
Net loss
September 30, 2000 (26,927) (26,927)
-------------------------------------------------------
Balance as of
September 30, 2000 2,127,500 $2,128 $42,772 $(29,159) $15,741
=========================================================
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
Stock Watch Man, Inc.
(A Development Stage Company)
Statement of Cash Flows
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Period ended February 27, 1997
--------------------------- (Inception) to
September 30 December 31, September 30,
2000 1999 2000
------------ ------------ ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (26,927) $ (1,366) $ (2,232)
Adjustment to reconcile
net income to net cash
used by operating
activities:
Depreciation and
amortization 5 36 72
(Increase) decrease in:
Organizational
costs, net 98 - -
Security deposit (2,250) (2,250)
----------------------------------------------------
Net cash used by
operating activities (29,074) (1,330) (4,410)
------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixes assets (300) - (300)
-------------------------------------------------------
Net cashed used by
investing activities (300) - (300)
-------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 728 400 2,128
Additional paid-in capital 41,172 1,600 42,700
---------------------------------------------------
Net cash provided by
financing activities 41,900 2,000 44,828
---------------------------------------------------
Net increase in cash 12,526 670 13,196
Cash - beginning 670 - -
---------------------------------------------------
Cash - ending $ 13,196 $ 670 $ 13,196
===================================================
Supplemental disclosures:
Interest paid $ - $ - $ -
=================================================
Income taxes paid $ - $ - $ -
=================================================
Non-cash financing activities:
Stock issued for services
provided to the company $ 200 $ - $ 1,200
Number of shares issued 200,000 - 1,200,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5
<PAGE>
Stock Watch Man, Inc.
(A Development Stage Company)
Footnotes
Note 1 - History and organization of the company
The Company was organized February 27, 1997 (Date of Inception) under the
laws of the State of Nevada. The Company has no operations and in
accordance with SFAS #7, the Company is considered a development stage
company. The Company is authorized to issue 15,000,000 shares of $0.001
par value common stock and 10,000,000 shares of $0.001 par value preferred
stock.
Note 2 - Summary of significant accounting policies
Accounting policies and procedures have not been determined except as follows:
1. The Company uses the accrual method of accounting.
2. 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 revenue and expenses during the
reporting period. Actual results could differ significantly from those
estimates.
3. The Company maintains a cash balance in a non-interest-bearing bank that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with the maturity of
three months or less are considered to be cash equivalents. There are no
cash equivalents as of September 30, 2000.
4. Earnings per share (EPS) is computed using the weighted average number
of shares of common stock outstanding during the period. Diluted EPS is
computed by dividing net income by the weighted average shares outstanding,
assuming all dilutive potential common shares were issued. Since the
Company has no common shares that are potentially issuable, such as stock
options, convertible preferred stock and warrants, basic and diluted EPS
are the same. The Company had no dilutive common stock equivalents such as
stock options as of September 30, 2000.
5. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
6. The Company will review its need for a provision for federal income tax
after each operating quarter and each period for which a statement of
operations is issued.
7. The Company has adopted December 31 as its fiscal year end.
Note 3 - Income taxes
Income taxes are provided for using the liability method of accounting
in accordance with Statement of Financial Accounting Standards No. 109
(SFAS #109) "Accounting for Income Taxes". A deferred tax asset or
liability is recorded for all temporary differences between financial
and tax reporting. Deferred tax expenses (benefit) results from the net
change during the year of deferred tax assets and liabilities.
There is no provision for income taxes for the year ended September 30,
2000, due to the net loss and no state income tax in Nevada.
F-6
<PAGE>
Stock Watch Man, Inc.
(A Development Stage Company)
Footnotes
Note 4 - Stockholders' Equity
The Company is authorized to issue 15,000,000 shares of its $0.001 par
value common stock and 10,000,000 shares of its $0.001 par value preferred
stock.
On March 1, 1997, the Company issued 1,000,000 shares of its $.001 par
value common stock for services and organizational costs of $1,000. Of
the total, $1,000 is considered common stock and there is no additional
paid-in capital.
On August 2, 1999, the Company issued 400,000 shares of its $.001 par
value common stock at $.005 per share for total cash of $2,000. Of the
total, $400 is considered common stock and $1,600 is considered additional
paid-in capital.
On March 31, 2000, the Company completed its Rule 504 offering and issued
527,500 shares of its $.001 par value common stock at $.08 per share for
total cash of $42,200. Of the total, $528 is considered common stock, and
$41,172 is considered additional paid-in capital.
On September 27, 2000, the Company issued 200,000 shares of its $.001 par
value common stock for consulting services valued at $200. Of the total,
$200 is considered common stock and there is no additional paid-in capital.
There have been no other issuances of common or preferred stock.
Note 5 - Going concern
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has not commenced its
planned principal operations. Without realization of additional capital,
it would be unlikely for the Company to continue as a going concern.
Note 6 - Related party transactions
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available,
such persons may face a conflict in selecting between the Company and
their other business interests. The Company has not formulated a policy
for the resolution of such conflicts.
Note 7 - Warrants and options
There are no warrants or options outstanding to acquire any additional
shares of common stock.
F-7
<PAGE>
Part III
Item 1. Index to Exhibits (Pursuant to Item 601 of Regulation SB)
Exhibit Number Name and/or Identification of Exhibit
1. Underwritten agreement
None. Not Applicable
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession.
None. Not Applicable
b) Asset Purchase and Liability Assumption Agreement
None. Not Applicable
c) Interest Purchase Agreement
None. Not Applicable
d) Agreement for Bill of Sale and Assignment of Assets
None. Not Applicable
e) Exchange Stock Agreement
None. Not Applicable
3. Articles of Incorporation & By-Laws
(a) Articles of Incorporation of the Company Filed February 27, 1997
(b) By-Laws of the Company adopted March 1, 1997
4. Instruments Defining the Rights of Security Holders
Those included in exhibit 3, and sample of Stock Certificate
5. Opinion on Legality
None. Not Applicable
6. No Exhibit Required
Not Applicable
7. Opinion on Liquidation Preference
None. Not Applicable
8. Opinion on Tax Matters
None. Not Applicable
9. Voting Trust Agreement and Amendments
None. Not Applicable
10. Material Contracts
None. Not Applicable.
31
<PAGE>
11. Statement Re Computation of Per Share Earnings
None. Not Applicable. Computation of per share earnings can be
clearly determined from the Statement of Operation from the Company's
financial statements.
12. No Exhibit Required
13. Annual or Quarterly Reports - Form 10-Q
None. Not Applicable
14. Material Foreign Patents
None. Not Applicable
15. Letters on Unaudited Interim Financial Information
None. Not Applicable
16. Letter on Change in Certifying Accountant
None. Not Applicable
17. Letter of Director Resignation
None. Not Applicable
18. Letter on Change in Accounting Principles
None. Not Applicable
19. Reports Furnished to Security Holders
None. Not Applicable
20. Other Documents or Statements to Security Holders
None. Not Applicable
21. Subsidiaries of Small Business Issuers
None. Not Applicable
32
<PAGE>
22. Published Report Regarding Matters Submitted to Vote of
None. Not Applicable
23. Consent of Experts and Counsel
Exhibit 23, G. Brad Beckstead, CPA
24. Power of Attorney
None. Not Applicable
25. Statement of Eligibility of Trustee
None. Not Applicable
26. Invitations for Competitive Bids
None. Not Applicable
27. Financial Data Schedule
Exhibit 27
28. Information from Reports Furnished to State Insurance Regulatory
Authorities
None. Not Applicable
99. Additional Exhibits
Notice of Effectiveness issued by Nevada Secretary of State.
33
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Stock Watch Man, Inc.
-------------------
(Registrant)
Date: November 7, 2000
----------------
By: /s/ Steven Yeich
------------------------------------
Steven Yeich, Chairman of the Board,
President, Chief Executive Officer
and Chief Financial Officer
By: /s/ Tracy Yeich
------------------------------------------
Tracy Yeich, Director, Corporate Secretary
34
<PAGE>
