As filed with the Securities and Exchange Commission on October 20, 2000
File No.
---------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FREEWILLPC.COM, INC.
(Exact name of registrant as specified in its charter)
Nevada 522200 75-2877111
------------------------------ ------------------------- ------------------
(State or jurisdiction of (Primary Industrial I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.
709-B West Rusk, Suite 500, Rockwall, Texas 75087 (972) 772-5930
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(Address, including the ZIP code & telephone number, including area code of
Registrant's principal executive office)
David McCune
709-B West Rusk, Suite 500, Rockwall, Texas 75087 (972) 772-5930
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(Name, address, including zip code, and telephone number, including area code
of agent for service)
Copies to: Lamberth & Stewart, PLLC
---------
Attorneys at Law
2840 Lincoln Plaza, 500 N. Akard Street
Dallas, Texas 75201
(214) 740-4270
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
Title of Each Amount Proposed Maximum Proposed Amount of
Class of Securities To be Offering Price Maximum Aggregate Registration
to be Registered Registered Per Share (1) Offering Price (1) Fee
--------------------------------------------------------------------------------
Common stock,
$0.001 par value
Minimum 200,000 $0.25 $ 50,000 $269
Maximum 2,000,000 $0.25 $ 500,000 $269
--------------------------------------------------------------------------------
Total maximum 4,200,000 $0.25 $ 525,000 $269(2)
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the registration statement
shall hereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
(1) Estimated solely for the purpose of calculating the registration fee.
(2) These shares are being registered for resale by selling security holders.
(3) Represents minimum fee.
<PAGE>
Initial public offering
prospectus
FreewillPC.com, Inc.
Minimum of 200,000 shares of common stock, and a
Maximum of 2,000,000 shares of common stock
$0.25 per share
We are making a best efforts offering to sell common stock in our company. The
common stock will be sold by our sole officer and director, David McCune. The
offering price was determined arbitrarily and we will raise a minimum of $50,000
and a maximum of $500,000. The funds will be held in escrow by an attorney until
the minimum amount is sold, at which time the funds will be released to the
company and stock certificates issued. The offering will end on April 30, 2001
and should we not sell the minimum amount, the funds will promptly be returned
to investors, and no interest will be paid on these funds.
The Offering:
Per Share Minimum Maximum
--------- -------- --------
Public Offering Price . . . $0.25 $ 50,000 $500,000
There is currently no market for our securities and no market may ever develop
for our securities.
----------------------------
This investment involves a high degree of risk. You should purchase shares only
if you can afford a complete loss. See "Risk Factors" Beginning on Page 3.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of the
prospectus. Any representation to the contrary is a criminal
offense.
-----------------------------
This Prospectus is dated October 20, 2000
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PROSPECTUS SUMMARY
OUR COMPANY
We were incorporated on June 13, 2000 in the State of Nevada. Our
executive offices are located at 709-B West Rusk, Suite 500, Rockwall, Texas
75087. We are engaged in the sale of computers and computer peripheral products
over the internet. The funds from this offering will allow us to advertise, make
strategic marketing alliances and make agreements with other suppliers in order
to increase sales. The minimum funds raised in this offering will take us to a
point where we reach the operating stage.
As well as being a newly formed company, we:
o are controlled by one individual;
o rely on our sole officer and director to manage the business, this
offering and continuing operations to see us through to profitability;
o have limited operating history with little revenue from operations;
o operate in an industry with low barriers of entry which could add to
our competition, and one in which there are many competitors already,
many of which have much greater resources than we do; and
o received a report from our independent certified public accountant who
gave us a 'going concern' opinion which states that we do not have
sufficient capital or operations to show that we can continue as a
viable business for the coming year.
THE OFFERING
Minimum Maximum
--------- ---------
Common stock offered 200,000 2,000,000
Total shares outstanding after this offering 4,400,000 6,200,000
Officers, directors and their affiliates will not be able to purchase shares in
this offering.
USE OF PROCEEDS
Most of the money you invest will represent proceeds to the company. We will use
the proceeds from this offering to:
o pay expenses of this offering
o develop our website to offer more products and better service
o marketing and general working capital
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RISK FACTORS
You should carefully consider the risks described below and all other
information contained in this prospectus before making an investment decision.
We are a recently formed company, formed in the State of Nevada on June 13,
2000, with limited activity and losses that may continue for the foreseeable
future.
We have not achieved profitability and expect to continue to incur net
losses for the foreseeable future. We expect to incur significant operating
expenses and, as a result, will need to generate significant revenues to achieve
profitability, which may not occur. Even if we do achieve profitability, we may
be unable to sustain or increase profitability on a quarterly or annual basis in
the future. If we are unable to achieve profitability, your investment in our
common stock may decline or become worthless.
We rely on our sole officer for decisions and he will retain substantial control
over our business after the offering and may make decisions that are not in the
best interest of all stockholders.
Upon completion of this offering, our sole officer will, in the
aggregate, beneficially own approximately 90.9% (or 64.5% if maximum is sold) of
the outstanding common stock. As a result, our sole officer will have the
ability to control substantially all the matters submitted to our stockholders
for approval, including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of our assets. He will also
control our management and affairs. Accordingly, this concentration of ownership
may have the effect of delaying, deferring or preventing a change in control of
us, impeding a merger, consolidation, takeover or other business combination
involving us or discouraging a potential acquirer from making a tender offer or
otherwise attempting to take control of us, even if the transaction would be
beneficial to other stockholders. This in turn could materially cause the value
of our stock to decline or become worthless.
We may have to raise additional capital which may not be available or may be too
costly.
Our capital requirements are and will continue to be more than our
operating income. We do not have sufficient cash to indefinitely sustain
operating losses. Our potential profitability depends on our ability to generate
and sustain substantially higher net sales while maintaining reasonable expense
levels. We cannot assure you that we will be able to operate on a profitable
basis or that cash flow from operations will be sufficient to pay our operating
costs. We anticipate that the funds raised in this offering will be sufficient
to fund operations through September 2001. Thereafter, if we do not achieve
profitability, we will need to raise additional capital to finance our
operations. We anticipate seeking additional financing through debt or equity
offerings. We cannot assure you that additional financing will be available to
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us, or, if available, any financing will be on terms acceptable or favorable to
us. If we need and cannot raise additional funds, further development of our
business, upgrades in our technology, additions to our product lines may be
delayed and we otherwise may not be able to execute our business plan, all of
which may have a material adverse effect on our operations; if this happens, the
value of your investment will decline and may become worthless.
We may experience difficulties with our suppliers, we may experience delays, be
forced to purchase elsewhere at higher prices or lose customers.
We are dependent on one supplier for 100% of our custom built products
and others to drop ship peripheral products and are dependent on them to supply
them to us on a timely basis. We do not produce our own products and purchase
inventory to ship only after we have received an order. It is possible that
events beyond our control may affect the ability of our supplier(s) to deliver
merchandise to us or to our customers. Any such event could negatively affect
our business since customer orders are often time-sensitive and any delays by
our suppliers could cause us to lose customers. If this happens, the value of
your investment will decline or could become worthless.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
forward-looking statements are not historical facts but rather are based on
current expectations, estimates and projections about our industry, our beliefs
and our assumptions. Words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks" and "estimates", and variations of these words and similar
expressions, are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control, are
difficult to predict and could cause actual results to differ materially from
those expressed, implied or forecasted in the forward-looking statements. In
addition, the forward-looking events discussed in this prospectus might not
occur. These risks and uncertainties include, among others, those described in
"Risk Factors" and elsewhere in this prospectus. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus.
DILUTION
If you purchase common stock in this offering, you will experience an
immediate and substantial dilution in the projected book value of the common
stock from the price you pay in this initial offering.
The projected book value of our common stock as of September 30, 2000
was $9,055 or $0.01 per share. Projected book value per share is equal to our
total assets, less total liabilities, divided by the number of shares of common
stock outstanding.
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After giving effect to the sale of common stock offered by us in this
offering, and the receipt and application of the estimated net proceeds (at an
initial public offering price of $0.25 per share, after deducting estimated
offering expenses), our projected book value as of September 30, 2000 would be
approximately $42,286 or $0.02 per share, if the minimum is sold, and $475,286
or $0.11 per share, if the maximum is sold.
This means that if you buy stock in this offering at $0.25 per share,
you will pay substantially more than our current shareholders. The following
represents your dilution:
o if the minimum of 200,000 shares are sold, an immediate decrease in
book value to our new shareholders from $0.25 to $0.02 per share and an
immediate increase in book value per common share to our current
stockholders.
o if the maximum of 2,000,000 shares are sold, an immediate decrease in
book value to our new shareholders from $0.25 to $0.11 per share and an
immediate increase in book value per common share to our current
stockholders.
The following table illustrates this per share dilution:
--------------------------------------------------------
Minimum Maximum
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Assumed initial public offering price $0.25 $0.25
Projected book value as of September 30, 2000 $0.01 $0.01
Projected book value after this offering $0.02 $0.11
Increase attributable to new stockholders: $0.01 $0.10
Projected book value
as of September 30, 2000 after this offering $0.02 $0.11
Decrease to new stockholders ($0.23) ($0.14)
Percentage dilution to new stockholders 92 % 56 %
The following table summarizes on a projected basis as of September 30,
2000, shows the differences between the number of shares of common stock
purchased, the total consideration paid and the total average price per share
paid by the existing stockholders and the new investors purchasing shares of
common stock in this offering:
Minimum offering
----------------
Number Percent Average
of shares of shares Amount price per
owned owned paid share % paid
--------------------------------------------------------------------------------
Current
shareholders 4,200,000 95.5 $ 14,000 $ 0.006 18.9
New investors 200,000 4.5 $ 50,000 $ 0.25 81.1
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Total 4,400,000 100.0 $ 74,000 100.0
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Maximum offering
----------------
Number Percent Average
of shares of shares Amount price per
owned owned paid share % paid
--------------------------------------------------------------------------------
Current
shareholders 4,200,000 67.7 $ 14,000 $ 0.003 2.7
New investors 2,000,000 32.3 $ 500,000 $ 0.25 97.3
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Total 6,200,000 100.0 $ 514,000 100.0
PLAN OF DISTRIBUTION
This is a direct participation offering of our common stock and is
being sold on our behalf by our sole officer and director, who will receive no
commission on such sales. All sales will be made by personal contact by our sole
officer and director, David McCune. We will not be mailing our prospectus to
anyone or soliciting anyone who is not personally known by Mr. McCune,
introduced to Mr. McCune and personally contacted by him or referred to him.
The money we raise in this offering before the minimum amount is sold
will be held under an escrow agreement with T. Alan Owen & Associates, P.C.,
Attorneys at Law. Such funds will be refunded immediately, without interest, if
the minimum amount is not sold by April 30, 2001.
Certificates for shares of common stock sold in this offering will be
delivered to the purchasers by Signature Stock Transfer, Inc., the stock
transfer company chosen by the company as soon as the minimum subscription
amount is raised.
USE OF PROCEEDS
The total cost of the minimum offering is estimated to be $16,769, or
$33,769 if the maximum is sold consisting primarily of legal, accounting and
blue sky fees.
The following table sets forth how we anticipate using the proceeds
from selling common stock in this offering, reflecting the minimum and maximum
subscription amounts:
$50,000 $500,000
Minimum Maximum
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Legal, Accounting & Printing Expenses 9,500 26,500
Other Offering Expenses 7,269 7,269
Net Proceeds to Company 33,231 466,231
--------- ---------
TOTAL $ 50,000 $ 500,000
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The following describes each of the expense categories:
o legal, accounting and printing expense is the estimated costs
associated with this offering;
o other offering expenses includes SEC registration fee, blue sky fees
and miscellaneous expenses with regards to this offering.
The following table sets forth how we anticipate using the net proceeds
to the company:
$50,000 $500,000
Minimum Maximum
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Development of website $ 10,000 $ 50,000
Office equipment 4,000 46,000
Salaries -0- 78,000
Internet security -0- 27,000
Advertising our website 19,000 215,000
Expenses in adding new products/services 5,000 30,000
General corporate overhead 5,231 20,231
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Proceeds to company $ 33,231 $466,231
We have a fully operational website which is our main asset. To date,
our internet activity is limited and we have little revenue from operations.
DESCRIPTION OF BUSINESS
We were incorporated in Nevada on June 13, 2000. Our founder, David
McCune is our sole director, officer and employee and broker of record and holds
4,000,000 shares of common stock which we issued to him for $4,000, composed of
$500 cash and $3,500 of his services.
We currently operate the website http//:www.freewillpc.com. We are a
web-based retailer of built-to-order personal computers and brand name related
peripherals, software, accessories and networking products. Our primary target
customers are individual end users (IEU) and home based business (HBB) owners.
Through an interactive web site, customers have the ability to browse the
products offered by Freewill PC and order. We offer a broad selection of
approximately 15,000 products targeted for business/home use at competitive
prices.
For custom built computers we depend upon one supplier who we can
purchase all the parts for on an as needed basis and therefore we have no
inventory for these items. We purchase them as we receive an order, build the
computer and then ship the computer. For these computers, we will book the sale
when it is shipped and the cost of sales for the amount we pay for the parts to
build the computer. For all the peripheral items, we have them drop shipped and
record only the profit as revenue for our financial reporting purposes.
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Principal Products or Services and Their Markets.
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Freewill has two primary product delivery systems:
o For those customers desiring basic technological peripherals and
computer related items, they can choose from an on-line catalogue
(under development) which we will have drop shipped from a supplier,
receiving a "margin" or fee for originating the order.
o We will custom build a computer to the specifications of a customer.
The customer "points and clicks" the desired component and we contract
for the unit to be built at a negotiated wholesale price. We then
purchase the computer and re-sell it at our posted order price.
We believe the majority of IEU's and HBB's are technologically literate
and not only capable but also more disposed to ordering needful technological
products over the Internet. This allows the purchaser to transact orders on a
24-hour-a-day, seven-day-a-week basis. We do not incur the overhead expenses
generally associated with traditional storefront operations, thus allowing for
lower operating costs.
Customers enter FreewillPC.com through its home page
www.freewillpc.com, which contains a listing of product categories that allows
for easy exploration of current products and prices. We believe that price,
product selection and availability, and service and support are the most
important competitive factors in its industry.
Competitive Business Conditions.
-------------------------------
The direct marketing and sale of personal computers and related
products is highly competitive. FreewillPC.com competes with PC Connection, CDW
Computer Centers, Inc., Insight Enterprises, Inc. and Micro Warehouse, Inc. We
also compete with certain product manufacturers that sell directly to customers,
such as Dell Computer Corporation and Gateway 2000, Inc., and more recently
Compaq, IBM and Apple; distributors that sell directly to certain customers,
such as MicroAge, Inc. and Vanstar Corporation; various cost-plus aggregators,
franchisers, and national computer retailers, such as CompUSA, Inc. and Computer
City; and companies with an Internet Web site and commercial on-line networks.
Additional competition may arise if other new methods of distribution, such as
broadband electronic software distribution, emerge in the future.
We compete not only for customers, but will also in the future compete
for favorable product allocations and cooperative advertising support from
product manufacturers. Several of our competitors are larger and have
substantially greater financial resources than we.
Method of distribution of products and services.
------------------------------------------------
E-business Strategy:
--------------------
Our marketing strategy is to promote the name FreewillPC and attract
buyers to the FreewillPC.com website. To attract users to our website, we have
relied on word of mouth and being one of many PC supply companies that come up
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on search engines. Going forward, we are contemplating sponsorship relationships
with high traffic websites and agreements with search engines so that our site
will be near the top/front of searches for our products. Future proposed
marketing programs include the use of strategic purchases of online advertising
to place advertisements in areas in which we believe we can reach our target
audience
In addition to the foregoing, we anticipate sales and revenues can be
increased by:
o increase in outbound telemarketing and email marketing campaigns;
o increased buying prowess of computer users;
o increase in catalog (proposed and under development) circulation; and
o improvements in inbound telemarketing and email marketing service
productivity.
The key elements of our business strategy includes:
o premium customer service;
o strong brand name and web-based franchise value;
o extensive product selection at competitive prices; and
o enhanced vendor relationships
Growth Strategy:
----------------
Our objective is to be a web-based provider of e-commerce PC related
products. Key elements of our growth strategy include:
o partner with industry leaders to quickly acquire customers;
o increase penetration of our existing customer base;
o broaden our product offerings to include higher margin products such as
network servers and communications equipment.
We plan to target a greater number of existing customers:
o with outbound telemarketing;
o more aggressively pursue first- to-market product offerings;
o provide specialized offerings to targeted segments of our customer
base; and
o increase investments in electronic commerce and Internet related
marketing opportunities.
We believe that the higher projected growth for the direct marketing
channel is primarily based on an increased user familiarity with PCs, coupled
with the emergence of industry standards and component commonality, and the
resultant increase in customer comfort with purchasing products without the need
to "touch and feel" them. In addition, broader product offerings, lower prices
and greater purchasing convenience that direct marketers generally provide over
traditional retail stores and local dealers.
Status of product or services based on public information requiring an
investment or material assets of the issuer.
--------------------------------------------------------------------------------
As we are a new company, we do not have any information that has been
made public or that will require an investment or material asset of ours.
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Sources and Availability of Raw Material.
----------------------------------------
We do not use raw material in the traditional definition of the word.
All products we sell are "finished" or "component" product.
Dependence on One or a Few Major Customers.
------------------------------------------
We are not dependent on any one or a few major customers. Our customers
are individuals ordering from our web site over the internet.
Need for Governmental Approval of Principal Products or Services.
----------------------------------------------------------------
We are not aware of any governmental approval requirements to transact
this type of business.
Effect of Existing or Probable Governmental Regulations on the Business.
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We are not aware of any probable governmental regulations on our
business that would affect our operations.
Research and Development.
------------------------
We have no research and development. We only sell built-to-order
computers and computer peripheral equipment. We are not designing or selling
anything newly created products.
Costs and Effects of Compliance with Environmental Laws.
-------------------------------------------------------
We are not aware of nor do we anticipate any environmental laws with
which we will have to comply.
Number of Employees.
-------------------
We have one employee, the President.
Operations and Technology.
-------------------------
We have built a basic transaction processing system. Our system handles
all aspects of the sales process. The market in which we compete is
characterized by rapidly changing technology, evolving industry standards,
frequent new service and product announcements, introductions and enhancements
and changing customer demands. Accordingly, our future success will depend our
ability to adapt to rapidly changing technologies, to adapt our services to
evolving industry standards and to continually improve the performance, features
and reliability of our service in response to competitive service and product
offerings and evolving demands of the marketplace.
Additional information.
----------------------
We have made no public announcements to date and have no additional or
new products or services. In addition, we don't intend to spend funds in the
field of research and development; no money has been spent or is contemplated to
be spent on customer sponsored research activities relating to the development
of new products, services or techniques; and we don't anticipate spending funds
on improvement of existing products, services or techniques.
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PLAN OF OPERATIONS
Following is our plan of operations based upon the amount of capital we
raise in this offering.
The following table sets forth how we anticipate using the net proceeds from our
offering:
$50,000 $500,000
Minimum Maximum
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Development of website $ 10,000 $ 50,000
Office equipment 4,000 46,000
Salaries -0- 78,000
Internet security -0- 27,000
Advertising for website 19,000 215,000
Expenses in adding new products/services 5,000 30,000
General corporate overhead 5,231 20,231
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Proceeds to company $ 33,231 $ 466,231
Following is a discussion of each anticipated/proposed expense identified above:
o If the minimum amount is raised, we will dedicate 20% of the proceeds to
this purpose. Should the maximum be raised, we will dedicate 10% of the
proceeds for this purpose. The reason for the greater percentage investment
if a lower amount is raised is due to the fact our website is our primary
asset and as such requires full operational functionality immediately for us
to be competitive. Consequently, as time unfolds, we will invest less in our
website both monetarily and as a percentage of revenues as the major
investment would already have been made.
o Office equipment, although needful, will be scrutinized based on functional
need and business application. Obviously, the more money we have the more
flexibility we will have in purchasing office equipment.
o Salaries will not be paid if the minimum amount is raised. Should the
maximum amount be raised, we will acknowledge this as a sign of market
acceptance and therefore employ a seasoned and experienced management group
to grow the company, beginning with a key executive, which we plan to
compensate monetarily.
o Internet security is needful and demanded by consumers. Such security
relates to confidentiality with respect to credit information, securing
credit card transactions, and maintaining absolute privacy in the purchasing
process.
o Typically, in the world of e-commerce, advertising on the "web" and in trade
publications is the medium by which we can raise awareness of our company
and our website. Consequently, advertising on the Internet is extremely
critical to our success and future growth. As a result, we plan to dedicate
significant resources to accomplish brand awareness.
o New products and services will expand proportionate to our free cash flow.
Obviously, the more we raise in the initial offering the more investment we
can make in product offerings.
o General corporate overhead relates to rent and lease expense, utilities, and
basic facility needs.
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As presented, the net proceeds total $33,231 if the minimum offering amount
is raised and at this level of funding, we will be profitable and operationally
self sustaining and will not need to raise additional capital for operations.
The net proceeds total $466,231 if the maximum amount is raised and this would
give us the ability, not only to be profitable and self sustaining, but give us
additional funds to promote, advertise and sell our products.
DESCRIPTION OF PROPERTY
Our corporate facilities are shared with our sole officer and director
which includes the use of telephones and equipment for $100.00 per month. This
arrangement started in July 2000 and will continue until such time as the
Company needs and can afford to lease its own office facilities.
We also lease space on an internet service provider's server based upon the
amount of memory we use.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The directors and officers of the company, their ages and principal
positions are as follows:
Name Age Position
--------------------------------------------------------------------------------
David McCune 52 President; Secretary and Director
Background of Directors and Executive Officers:
David McCune. Mr. McCune graduated from Southwestern University, Waxahachie,
Texas in 1973. Mr. McCune was in the U.S. Air Force for four years 1967-1970 and
spent one year in Vietnam 1968-1969 Public speaker for 20 years and has been in
the computer leasing business for 9 years. Mr McCune was Vice President of Sales
of VAR Resources, Inc., a computer leasing company, from 1991 - 1993. Since that
time, Mr. McCune has been a manager of computer leasing companies, working for
MC Cambridge, Inc. from 1994 - 1995 and for LCS, LLC from 1996 to present.
Initially, Mr. McCune will not spend full time on the activities of the
company since his current activities would take up some of his time. In
addition, the company's activities need very little time since most steps in the
business of the company are automated. Mr. McCune's activities include managing
a computer leasing business but can devote more and more time to the activities
of the company as time goes on since the other employees can take over his
functions at the computer leasing company and Mr. McCune can step aside from
those responsibilities in a short time. Initially, he expects to spend five
hours per week and increase that weekly time as the activities of the company
require. Mr. McCune is prepared to devote himself full time to the success of
the company.
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REMUNERATION OF DIRECTORS AND OFFICERS
Our sole officer and director has received no compensation other than the
3,500,000 shares of common stock he received for services on June 13, 2000 and
has no employment contract with the company.
Name of Person Capacity in which he served Aggregate
Receiving compensation to receive remuneration remuneration
--------------------------------------------------------------------------------
David McCune President, Secretary 3,500,000 shares
and Treasurer of common stock
Mr. McCune received the common stock upon formation of the company and it
is impracticable to determine the cash value. Since the common stock was issued
upon forming of our company for services performed which we cannot estimate the
value since that work continues through the filing and effectiveness of this
registration statement, with no other compensation to be granted for the work
done on this filing.
As of the date of this offering, we have no plans to pay any remuneration
to anyone in or associated with our company. When we have funds and/or revenue,
our board of directors will determine any remuneration at that time.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
On June 13, 2000 (date of inception), the president of the company received
4,000,000 shares of common stock which we issued to him for $4,000, composed of
$500 cash and $3,500 of his services.
On June 15, 2000, we entered into an agreement with a company to develop
and link our website for which the company received a total of 200,000 shares
valued at $10,000 or $0.05 per share.
As of the date of this filing, there are no agreements or proposed
transactions, whether direct or indirect, with anyone, but more particularly
with any of the following:
o a director or officer of the issuer;
o any principal security holder;
o any promoter of the issuer;
o any relative or spouse, or relative of such spouse, of the above referenced
persons.
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PRINCIPAL SHAREHOLDERS
The following table lists the officers, directors and stockholders who, at
the date hereof, own of record or beneficially, directly or indirectly, more
than 10% of the outstanding common stock, and all officers and directors of the
company:
Name and Address Amount owned
Title of Owner before offering Percent
--------------------------------------------------------------------------------
President, Secretary David McCune 4,000,000 95.23%
And Director 709-B West Rusk, Suite 500
Rockwall, Texas 75087
--------- -------
Total 4,200,000 100.00%
After offering: Minimum 4,000,000 90.90%
--------------
Maximum 4,000,000 64.52%
SECURITIES BEING OFFERED
We are offering for sale common stock in our company at a price of $0.25
per share. We are offering a minimum of 200,000 shares and a maximum of
2,000,000 shares. The authorized capital in our company consists of 25,000,000
shares of common stock, $0.001 par value per share. As of September 30, 2000, we
had 2,200,000 shares of common stock issued and outstanding.
Every investor who purchases our common stock is entitled to one vote at
meetings of our shareholders and to participate equally and ratably in any
dividends declared by us and in any property or assets that may be distributed
by us to the holders of common stock in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the company.
The existing stockholders have no preemptive rights to purchase common
stock offered for sale by us, and no right to cumulative voting in the election
of our directors.
RELATIONSHIP WITH ISSUER OF EXPERTS NAMED IN REGISTRATION STATEMENT
The experts named in this registration statement were not hired on a
contingent basis and have no direct or indirect interest in our company. Our
attorney may purchase shares in this offering. Our certified public accountant
may not purchase shares in this offering.
LEGAL PROCEEDINGS
We are not involved in any legal proceedings at this time.
14
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have retained the same accountant, Charles E. Smith, as our independent
certified public accountant since our inception on June 13, 2000. We have had no
disagreements with him on accounting and disclosure issues.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our certificate of incorporation provides that the liability of our
officers and directors for monetary damages shall be eliminated to the fullest
extent permissible under Nevada law, which includes elimination of liability for
monetary damages for defense of civil or criminal actions. The provision does
not affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions,
or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.
We have no underwriting agreement and therefore no provision for
indemnification of officers and directors is made in an underwriting by a broker
dealer.
LEGAL MATTERS
Our attorney has passed upon the legality of the common stock issued before
this offering and passed upon the common stock offered for sale in this
offering. Our attorney is Lamberth & Stewart, PLLC, 2840 Lincoln Plaza, 500 N.
Akard Street, Dallas, Texas 75201.
15
<PAGE>
EXPERTS
The financial statements as of September 30, 2000, and for the period from
inception (June 13, 2000) to September 30, 2000 of the company included in this
prospectus have been audited by Charles E. Smith, independent certified public
accountant, as set forth in his report. The financial statements have been
included in reliance upon the authority of him as an expert in accounting and
auditing.
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our common stock. We
do not intend to declare or pay any dividends on our common stock in the
foreseeable future, but rather to retain any earnings to finance the growth of
our business. Any future determination to pay dividends will be at the
discretion of our board of directors and will depend on our results of
operations, financial condition, contractual and legal restrictions and other
factors it deems relevant.
TRANSFER AGENT
We will serve as our own transfer agent and registrar for the common stock
until such time as this registration is effective and we sell the minimum
offering, then we intend to retain Signature Stock Transfer, Inc., 14675 Midway
Road, Suite 221, Dallas, Texas 75244.
16
<PAGE>
Charles E. Smith
Certified Public Accountant
709-B West Rusk
Suite 580
Rockwall, Texas 75087
------------------------
TELEPHONE (214) 212-2307
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
of Freewillpc.com, Inc.
I have audited the accompanying balance sheets of FrewillPC.com, Inc.
(a development stage company) as of September 30, 2000, and the related
statements of operations, stockholders' equity and accumulated deficit, and cash
flows for the period from inception (June 13, 2000) 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 statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Discount Mortgage
Source, Inc. as of September 30, 2000, and the results of operations and its
cash flows for the period from inception (June 13, 2000) to September 30, 2000
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As described in Note F to the
financial statements the Company is a start up enterprise and presently does not
have capital resources which raises doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustment that might arise from the outcome of this uncertainty.
/s/ Charles E. Smith
---------------------
Charles E. Smith
Rockwall, Texas
October 17, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
FREEWILLPC.COM, INC.
a Development Stage Company
BALANCE SHEETS
September 30, 2000
ASSETS
------
Sept 30, 2000
----------------
<S> <C>
CURRENT ASSETS:
Cash $270
PROPERTY AND EQUIPMENT:
Website (net of $1,111 amortization) 8,889
----------------
TOTAL ASSETS $9,159
================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Accounts payable $104
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 25,000,000 authorized,
4,200,000 shares issued and outstanding 4,200
Additional paid-in-capital 10,100
Deficit accumulated during the development stage (5,245)
----------------
Total Stockholders' Equity 9,055
----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,159
================
</TABLE>
See accompanying notes F-2
<PAGE>
FREEWILLPC.COM, INC.
a Development Stage Company
STATEMENT OF OPERATIONS
Period from inception (June 13, 2000) to September 30, 2000
Period from
Inception
(June 13, 2000)
to
Sept 30, 2000
----------------
REVENUE:
Sales $1,429
COST OF SALES: 1,318
----------------
GROSS PROFIT 111
OPERATING EXPENSE:
Depreciation and amortization 1,111
Consulting - related party 3,500
General and administrative 745
----------------
Total Operating Expense 5,356
----------------
NET LOSS ($5,245)
================
Weighted average shares outstanding 4,198,165
================
Loss per share - basic and diluted ($0.00)
================
See accompanying notes F-3
<PAGE>
<TABLE>
<CAPTION>
FREEWILLPC.COM, INC.
a Development Stage Company
STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from inception (June 13, 2000) to September 30, 2000
Common Stock Paid In
Shares Amount Capital Total
-------------------------------------------------- ----------------
<S> <C> <C> <C> <C>
Balance,
June 13, 2000
(date of inception) -0- -0- -0- -0-
Shares issued on June 13, 2000 for:
Cash 500,000 500 500
Services 3,500,000 3,500 3,500
June 15, 2000 for:
Website development 200,000 200 9,800 10,000
Paid in capital by shareholder 300 300
Net Loss (5,245)
------------------------------------------------ ----------------
Balance
September 30, 2000 4,200,000 $4,200 $10,100 $9,055
================================================ ================
</TABLE>
See accompanying notes F-4
<PAGE>
FREEWILLPC.COM, INC.
a Development Stage Company
STATEMENT OF CASH FLOWS
Period from inception (June 13, 2000) to September 30, 2000
Period from
Inception
(June 13, 2000)
to
Sept 30, 2000
----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($5,245)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Increase in accounts payable 104
Items not requiring
cash:
Stock issued for services 3,500
Amortization 1,111
Paid in capital by shareholder 300
----------------
NET CASH (USED) BY OPERATING ACTIVITIES: (230)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 500
----------------
Total cash flows from financing activities 500
----------------
NET INCREASE IN CASH $270
CASH, BEGINNING OF PERIOD 0
----------------
CASH, END OF PERIOD $270
================
Note:
-----
Non-cash investing activity - the company issued 200,000 shares valued
at $0.05 per share for a total of $10,000 for development of its
website.
See accompanying notes F-5
<PAGE>
FREEWILLPC.COM, INC.
a Development Stage Company
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Note A - Nature of Business and Summary of Significant Accounting Policies:
---------------------------------------------------------------------------
History: The Company was organized June 13, 2000 under the name of
Freewillpc.com, Inc. in the State of Nevada and is in the development stage. The
Company's business plan outlines its plan of operations which is to sell
computers and computer peripheral equipment over the internet. Its development
activities included the setting up of the Company's website and advertising its
website to encourage borrowers to purchase items over the internet.
Basis of Accounting:
--------------------
It is the Company's policy to prepare its financial statements on the accrual
basis of accounting in conformity with generally accepted accounting principles.
Sales are recorded as income in the period in which they are earned and expenses
are recognized in the period in which the related liability is incurred.
Revenue Recognition:
--------------------
Revenue is recognized when products are shipped. The company purchases and
resells computers and records sales and costs of sales. For the peripheral
equipment the Company sells, it records as income the difference between the
price it purchases items for and the amount it sells them for.
Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.
Loss per Common Share:
----------------------
Loss applicable to common share is based on the weighted average number of
shares of common stock outstanding during the period presented.
Accounting Estimates:
---------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Stock based compensation:
-------------------------
The Company accounts for stock based compensation in accordance with FAS 123 and
APB No. 25 and the Financial Accounting Standards Board Interpretation No. 44.
This requires that we base the issuance of stock at the fair value of the
consideration received.
F-6
<PAGE>
FREEWILLPC.COM, INC.
A Development Stage Company
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Note A - Nature of Business and Summary of Significant Accounting Policies
(con't): Software Development Costs: The Company accounts for its software
development costs under the provisions of Statement of Position 98-1 "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use",
which was issued by the AICPA in 1998. This requires the capitalization of the
costs incurred in connection with developing or obtaining internal-use software.
Income Tax:
-----------
The Company is subject to the greater of federal income taxes computed under the
regular system or the alternative minimum tax (ATM) system. The Company uses an
asset and liability approach for the accounting and financial reporting of
income tax as required by SFAS No. 109. Under this method, deferred tax assets
and liabilities are determined based on temporary differences between the
financial carrying amounts and the tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the temporary differences are
expected to reverse.
Note B - Web site:
------------------
The Company's primary asset is its web site which is the center of its
operational and income generating activities for which it paid $10,000. The cost
of the web site is being amortized over three years starting in June 2000, the
first month of operation.
The cost of developing the web site is accounted for under the provisions of
Statement of Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use", which was issued by the AICPA in 1998.
This requires the capitalization of the costs incurred in connection with
developing or obtaining internal-use software.
In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 (FIN No. 44) "Accounting for Certain Transactions Involving Stock
Compensation", an interpretation of APB Opinion No. 25" which was effective July
1, 2000. The website development was paid for by issuing 200,000 shares of
common stock, the value of which was $0.05 per share which was arbitrarily
determined and negotiated since there was no readily determinable market value
for the Company's shares.
F-7
<PAGE>
FREEWILLPC.COM, INC.
A Development Stage Company
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Note C - Stockholders' Equity:
------------------------------
Common Stock:
-------------
The Company is authorized to issue 50,000,000 common shares of stock at a par
value of $0.001 per share. These shares have full voting rights. At September
30, 2000, there were 2,200,000 shares outstanding respectively. The Company has
not paid a dividend to its shareholders.
Common stock issuances
----------------------
On June 13, 2000, the Company issued 4,000,000 shares to the President for
$4,000, comprised of $500 cash and $3,500 of his services. The services were
valued at $3,500 and the stock issued at par.
On June 15, 2000, the Company issued to unrelated parties 200,000 shares for the
development of its website valued at $10,000. The value assigned of $0.05 per
share was arbitrarily determined and negotiated by the Company and the
developers of the website since there was no readily determinable market value
for the shares.
Note D - Income Taxes:
----------------------
The Company had a net operating loss of $5,245 for the period presented. The
Company's year end is December 31. No deferred tax asset has been recognized for
the operating loss as any valuation allowance would reduce the benefit to zero.
Operating losses expire: 2020 $5,245
The Company has adopted the asset and liability method of accounting for income
taxes as required by SFAS No. 109. In accordance with SFAS No. 109, the Company
has recorded a valuation allowance equal to the deferred tax asset as a result
of the Company's "going concern" opinion referred to in Note F and the
uncertainty that it will be realized.
F-8
<PAGE>
FREEWILLPC.COM, INC.
A Development Stage Company
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
Note D - Income Taxes (con't):
------------------------------
The components of the provision (benefit) for income taxes included in the
financial statements as of September 30, 2000 are as follows:
Deferred tax assets:
Net operating loss carryforwards $ (1,783)
Valuation allowance 1,783
-----------
Total deferred income tax assets -0-
Total deferred income tax liabilities -0-
-----------
Net deferred income tax assets $ -0-
The Company's effective tax rate on a pre-tax income (loss) from continuing
operations differs from the U.S federal statutory rate as follows:
U.S. federal statutory rate ( 34)%
Increase (decrease) in rates resulting from:
Change in valuation allowance for deferred tax asset 34 %
----------
Effective tax rate 0 %
Note E - Related Party Transactions:
-----------------------------------
In June 2000, the Company issued to its President 4,000,000 shares in
consideration for $4,000, comprised of $500 cash and $3,500 of his services. The
services were valued at $3,500 and the stock was issued at par.
Note F - Going Concern:
-----------------------
The Company has minimal capital resources available to meet obligations expected
to be incurred given that it is a start up enterprise. Accordingly, the
Company's continued existence is dependent upon the successful operation of the
Company's plan of operations, selling common stock in the Company, or obtaining
financing. Unless these conditions among others are met, the Company may be
unable to continue as a going concern.
F-9
<PAGE>
No dealer, salesman or any other person has been authorized to give any
quotation or to make any representations in connection with the offering
described herein, other than those contained in this prospectus. If given or
made, such other information or representation must not be relied upon as having
been authorized by the company or by any underwriter. This prospectus does not
constitute an offer to sell, or a solicitation of an otter to buy any securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such an offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
Prospectus Summary 2
Corporate Information 2
Risk Factors 3
Forward Looking Statements 4
Dilution 4
Plan of Distribution 6
Use of Proceeds 6
Description of Business 7
Plan of Operations 11
Description of Property 12
Director's, Executive Officers and Significant Employees 12
Remuneration of Officers and Directors 13
Interest of Management and Others in Certain Transactions 13
Principal Shareholders 14
Securities Being Offered 14
Relationship with Issuer of Experts Named in Registration Statement 14
Legal Proceedings 14
Selling Security Holders 15
Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure 15
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities 15
Legal Matters 15
Experts 15
Dividend Policy 16
Transfer Agent 16
Financial Statements F-1
Until the (90th day after the later of (1) the effective date of the
registration statement or (2) the first date on which the securities are offered
publicly), all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Indemnification of Directors and Officers
Not applicable.
Item 14. Other Expenses of Issuance and Distribution
All expenses, including all allocated general administrative and overhead
expenses, related to the offering or the organization of the Company will be
borne by the Company.
The following table sets forth a reasonable itemized statement of all
anticipated out-of-pocket and overhead expenses (subject to future
contingencies) to be incurred in connection with the distribution of the
securities being registered, reflecting the minimum and maximum subscription
amounts.
Minimum Maximum
-------- --------
SEC Registration Fee $ 269 $ 269
Printing and Engraving Expenses 2,000 19,000
Legal Fees and Expenses 5,000 5,000
Edgar Fees 1,800 1,800
Accounting Fees and Expenses 2,500 2,500
Blue Sky Fees and Expenses 5,000 5,000
Miscellaneous 200 200
-------- --------
TOTAL $ 16,769 $ 33,769
Item 15. Recent Sales of Unregistered Securities
The Company sold on June 13, 2000 to its founder 4,000,000 shares of
common stock which was issued to him for $4,000, composed of $500 cash and
$3,500 of his services. This stock was issued under the exemption under the
Securities Act of 1933, section 4(2); this section states that transactions by
an issuer not involving any public offering is an exempted transaction. The
company relied upon this exemption because in a private transaction during June
2000, the founder, sole officer and director purchased stock for a combination
of $500 cash and $3,500 of services.
The Company issued 200,000 shares on June 15, 2000 to a company in
consideration for building and developing the website. This stock was valued at
$10,000 or $0.125 per share. This stock was issued under the exemption under the
Securities Act of 1933, section 4(2); this section states that transactions by
an issuer not involving any public offering is an exempted transaction. The
company relied upon this exemption because in a private transaction on June 15,
2000, this company developed the web site in exchange for 200,000 shares of
stock valued at $0.125 per share or a total of $25,000 with no broker dealer
involved in the transaction. The purchasers were sophisticated investors who
purchased the stock for their own account and not with a view toward
distribution to the public. The certificates evidencing the securities bear
legends stating that the shares may not be offered, sold or otherwise
transferred other than pursuant to an effective registration statement under the
Securities Act, or an exemption from such registration requirements.
<PAGE>
Item 16. Exhibits
The following Exhibits are filed as part of the Registration
Statement:
Exhibit No. Identification of Exhibit
3.1 - Articles of Incorporation
3.2 - By Laws
4.2 - Specimen Stock Certificate
10.4 - Subscription Escrow Agreement
10.6 - Form of Subscription Agreement
23.1 - Opinion of Lamberth & Stewart, PLLC, Attorneys at Law
23.2 - Consent of Lamberth & Stewart, PLLC, Attorneys at Law
23.3 - Consent of Charles E. Smith, Certified Public Accountant
Item 17. Undertakings
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act; and (ii) Reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the information in the Registration Statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form SB-1 and authorizes this Registration Statement
to be signed on its behalf by the undersigned, being duly authorized, in the
City of Rockwall, State of Texas, on the date indicated below.
FreewillPC.com, Inc.
By: /s/ David McCune, President
---------------------------
David McCune, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity and on
the date indicated:
Signature Title Date
------------------------- --------------------- -----------------
President, Secretary,
/s/ David McCune, President Treasurer; Director October 20, 2000
---------------------------
David McCune, President
