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REGISTRATION NO. _______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VIRALMARKETS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE
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(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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47 Mall Drive, Unit 5
Commack, New York 11725
(631) 864-1515
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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PAUL STEO
VIRALMARKETS, INC.
47 MALL DRIVE, UNIT 5
COMMACK, NEW YORK 11725
(631) 864-1515
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(Name, Address Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
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Copies of all communications, including all communications sent to the agent
for service, should be sent to:
ALAN C. EDERER, ESQ.
WESTERMAN SHAPIRO DRAGHI & MILLER, LLP
600 OLD COUNTRY RD., SUITE 502
GARDEN CITY, NEW YORK 11530
TEL: (516) 622-9200
FAX: (516) 977-3056
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Approximate date of proposed sale to the public: At such time or times after the
effective date of this Registration Statement that the selling stockholders
shall determine.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box X
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If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering
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If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering
---
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities Amount Proposed Proposed Amount of
to be Registered to be Maximum Maximum Registration
Registered Offering Aggregate Fee
Price Per Offering
Security(1) Price
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<S> <C> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 2,152,546 $2.25 $4,843,229 $1,278.62
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of
1933, as amended.
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER __, 2000
ViralMarkets, Inc.
2,152,546 Shares
Common Stock, par value $.01 per share
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This prospectus relates to 2,152,546 shares of our common stock, which
may be offered and sold, from time to time, by the selling stockholders named in
this prospectus. We will not receive any proceeds from the sale of the shares by
the selling stockholders.
Our common stock is not listed on any national securities exchange, and
the NASDAQ stock market does not list the securities offered. We intend to apply
for listing of our shares of common stock on the Over the Counter Bulletin Board
maintained by the National Association of Securities Dealers, Inc. (the
"OTCBB"). There is no assurance that we will obtain listing on the OTCBB. This
offering consists of securities offered by selling stockholders only. The
selling stockholders may offer their shares at any price. By agreement with the
selling stockholders, we will pay all of the expenses incident to the
registration of the securities under the Securities Act. THESE SECURITIES
INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN
AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE
__.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this preliminary prospectus is ________ , 2000
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU
SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING "RISK FACTORS" AND THE
FINANCIAL STATEMENTS, BEFORE MAKING AN INVESTMENT DECISION.
OUR COMPANY
We are a New York-based development stage Internet company. We intend
to produce "turn-key" customizable marketing solutions for small and medium
sized businesses. Our business strategy is to enable these businesses to create
their own e-mail advertising campaigns on our web site. We intend to be
self-promoting, or "viral" in nature since the promotions will always invite (or
encourage) recipients to forward the e-mail to friends.
ABOUT US
We were incorporated in the State of Delaware under the name
ViralMarkets, Inc. on January 12, 2000. Our principal executive offices are
located at 47 Mall Drive, Unit 5, Commack, New York 11725. Our phone number is
631-864-1515. Our web site address is www.viralmarkets.com. The information in
our website is not a part of this prospectus.
THE OFFERING
As of December, 2000, we had 2,152,546 shares of our common stock
outstanding. This offering is comprised of securities offered by selling
stockholders only. Although we have agreed to pay all offering expenses, we will
not receive any proceeds from the sale of the shares of common stock offered
hereby.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully review and consider the risks discussed under "Risk Factors" as
well as the other information set forth in this prospectus before buying our
common stock.
SUMMARY FINANCIAL DATA
The following summary financial information is derived from our
financial statements. You should read this summary financial information in
conjunction with "Management's Plan of Operation" and the financial statements
and related notes.
[TO BE PROVIDED BY AUDITORS]
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY REVIEW AND CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW
AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE INVESTING
IN OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION, OR OPERATING RESULTS COULD BE MATERIALLY ADVERSELY
AFFECTED. IN SUCH CASE, YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATED TO OUR BUSINESS
DUE TO OUR LIMITED OPERATING HISTORY, IT WILL BE DIFFICULT FOR YOU TO EVALUATE
OUR BUSINESS.
We very recently commenced business operations. Accordingly, we have
only a limited operating history upon which you can evaluate our business and
prospects. An investor in our common stock must consider the risks, expenses and
difficulties frequently encountered by early stage companies in new and rapidly
evolving markets, including web-based entertainment. These risks and
difficulties include our ability to:
-- attract a larger audience of users to our web based offerings;
-- increase awareness of our brand;
-- strengthen user loyalty and increase the number of registered users;
-- offer compelling on-line content, services and e-commerce opportunities;
-- develop affiliate relationships;
-- attract a large number of advertisers who desire to reach our users;
-- respond effectively to the offerings of competitive entertainment
providers on the Internet;
-- continue to develop and upgrade our technology; and
-- attract, retain and motivate qualified personnel.
We also depend on the growing use of the Internet for advertising,
commerce and communication, and on general economic conditions. Our business
model is not proven. We cannot assure you that our business strategy will be
successful or that we will successfully address these risks or difficulties. If
we fail to address adequately any of these risks or difficulties our business
would likely suffer.
WE HAVE NOT HAD ANY REVENUES AND ANTICIPATE CONTINUED LOSSES
We have not generated any revenues and expect to continue to incur net
losses in 2001 and subsequent fiscal periods. We have not achieved profitability
and expect to continue to incur operating losses for the foreseeable future as
we fund operating and capital expenditures in areas such as expansion of our
network, advertising, brand promotion, content development, sales and marketing;
and operating infrastructure. We will need to generate even more substantial
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.
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IF WE ARE UNABLE TO ATTRACT ADDITIONAL CAPITAL, OUR GROWTH WILL BE LIMITED.
Our ability to implement our business plan will depend on a number of factors,
including our ability to raise substantial additional capital. If additional
funds are raised through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders will be reduced, and these
newly-issued securities may have rights, preferences or privileges senior to
those of existing stockholders. We cannot assure you that additional financing
will be available on terms favorable to us, or at all. If adequate funds are not
available or are not available on acceptable terms, our ability to fund our
operations, take advantage of unanticipated opportunities, develop or enhance
content, features or services, or otherwise respond to competitive pressures
would be significantly limited. We have no commitments with respect to any
additional financing and there can be no assurance that any such funds will be
available on acceptable terms or otherwise.
DIFFICULTIES IN DEVELOPING NEW AND ENHANCED CONTENT AND PRODUCTS FOR OUR WEB
SITE COULD HARM OUR BUSINESS
We provide content and other features that consumers demand in order to
continue to attract and retain our audience of users. We expect that competitive
factors will create a continuing need for us to retain, improve and add to our
content and other features. We will not only have to expend significant funds
and other resources to continue to improve our network, but we must also
properly anticipate and respond to consumer preferences and demands. The
addition of new features will also require that we continue to improve the
technology underlying our web site. These requirements are significant, and we
may fail to execute on them quickly and efficiently. If we fail to expand the
breadth of our offerings quickly, or these offerings fail to achieve market
acceptance, our business will suffer significantly. Even if we succeed in
expanding our offerings in a timely manner, this expansion may cause us to spend
more on creating this content than we can charge to our customers.
We may also experience difficulties that could delay or prevent us from
introducing new content and products. These difficulties may include the loss
of, or inability to obtain or maintain, third-party technology license
agreements. Our business, results of operations and financial condition could be
materially adversely affected if we experience difficulties in introducing new
content and products or if these new content and products are not accepted by
our users.
WE FACE A RISK OF SYSTEM FAILURE THAT MAY RESULT IN REDUCED TRAFFIC, REDUCED
REVENUE AND HARM TO OUR REPUTATION
Our ability to attract loyal users depends on the efficient and uninterrupted
operation of our computer and communications hardware and software systems.
Similarly, our ability to track, measure and report the delivery of
advertisements on our site depends on the efficient and uninterrupted operation
of a tracking system. These systems and operations are vulnerable to damage or
interruption from human error, natural disasters, telecommunication failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. Any system
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failure, including network, software or hardware failure, that causes an
interruption in our service or a decrease in responsiveness of our web site
could result in reduced traffic, reduced revenue and harm to our reputation,
brand and our relations with our advertisers. Any disruption in the Internet
access to our web site could materially adversely affect our business, results
of operations and financial condition. Our insurance policies may not adequately
compensate us for any losses that we may incur because of any failures in our
system or interruptions in our delivery of content. Our business, results of
operations and financial condition could be materially adversely affected by any
event, damage or failure that interrupts or delays our operations.
FAILURE TO PROTECT OUR INTELLECTUAL, PROPERTY RIGHTS COULD HARM OUR
BRAND-BUILDING EFFORTS AND ABILITY TO COMPETE EFFECTIVELY
We regard our intellectual property as critical to our success. To
protect our rights to our intellectual property, we intend to rely on a
combination of trademark and copyright law, trade secret protection,
confidentiality agreements and other contractual arrangements with our
employees, consultants, affiliates, clients, strategic partners and others. The
protective steps we have taken may be inadequate to deter misappropriation of
our proprietary information. We may be unable to detect the unauthorized use of,
or take appropriate steps to enforce, our intellectual property rights.
Effective trademark, copyright and trade secret protection may not be available
in every country in which we offer or intend to offer our services. Failure to
adequately protect our intellectual property could harm our brand, devalue our
proprietary content and affect our ability to compete effectively. Further,
defending our intellectual property rights could result in the expenditure of
significant financial and managerial resources, which could materially adversely
affect our business, results of operations and financial condition.
WE MAY HAVE TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH
MAY CAUSE SIGNIFICANT OPERATIONAL EXPENDITURES
Other parties may assert infringement claims against us or claims that
we have violated a patent or infringed a copyright, trademark or other
proprietary right belonging to them. We incorporate licensed third-party
technology in some of our services. In these license agreements, the licensors
have generally agreed to defend, indemnify and hold us harmless with respect to
any claim by a third party that the licensed software infringes any patent or
other proprietary right. We cannot assure you that these provisions will be
adequate to protect us from infringement claims. Any infringement claims, even
if not meritorious, could result in the expenditure of significant financial and
managerial resources on our part, which could materially adversely affect our
business, results of operations and financial condition.
ANY FUTURE ACQUISITIONS WE HAKE OF COMPANIES OR TECHNOLOGIES MAY RESULT IN
DISRUPTIONS TO OUR BUSINESS AND/OR THE DISTRACTION OF OUR MANAGEMENT, DUE TO
DIFFICULTIES IN ASSIMILATING ACQUIRED PERSONNEL AND OPERATIONS
We may acquire or make investments in complementary businesses,
technologies, services or products if appropriate opportunities arise. From time
to time we may engage in discussions and negotiations with companies regarding
our acquiring or investing in such
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companies' businesses, products, services or technologies, and we regularly
engage in such discussions and negotiations in the ordinary course of our
business. Some of those discussions also contemplate the other party making an
investment in our company. we cannot assure you that we will be able to identify
future suitable acquisition or investment candidates, or if we do identify
suitable candidates, that we will be able to make such acquisitions or
investments on commercially acceptable terms or at all. If we acquire or invest
in another company, we could have difficulty in assimilating that company's
personnel, operations, technology and software. In addition, the key personnel
of the acquired company may decide not to work for us. If we make other types of
acquisitions, we could have difficulty in integrating the acquired products,
services or technologies into our operations. These difficulties could disrupt
our ongoing business, distract our management and employees, increase our
expenses and adversely affect our results of operations. Furthermore, we may
incur indebtedness or issue equity securities to pay for any future
acquisitions. The issuance of equity securities would be dilutive to our
existing stockholders. As of the date of this prospectus, we have no agreement
to enter into any material investment or acquisition transaction.
RISKS RELATED TO OUR INDUSTRY
OUR ABILITY TO MAINTAIN AND INCREASE OUR USER BASE DEPENDS ON THE CONTINUED
GROWTH IN USE AND EFFICIENT OPERATION OF THE WEB
The web-based entertainment market is new and rapidly evolving. Our
business would be materially adversely affected if web usage does not continue
to grow or grows slowly. Web usage may be inhibited for a number of reasons,
such as:
- inadequate network infrastructure;
- security concerns;
- inconsistent quality of service; and
- unavailability of cost-effective, high-speed access to the Internet.
Our users depend on Internet service providers, online service
providers and other web site operators for access to our web site. Many of these
services have experienced significant service outages in the past and could
experience service outages, delays and other difficulties due to system failures
unrelated to our systems. These occurrences could cause our members to perceive
the web in general or our web site in particular as an unreliable medium and,
therefore, cause them to use other media, which could materially adversely
affect our business, results of operations and financial condition.
A GENERAL DECLINE IN ONLINE ADVERTISING OR OUR INABILITY TO ADAPT TO TRENDS IN
ONLINE ADVERTISING COULD HARM OUR ADVERTISING REVENUES
No standards have been widely accepted to measure the effectiveness of
web advertising. If standards do not develop, existing advertisers may not
continue or increase their levels of web advertising. If standards develop and
we are unable to meet these standards, advertisers may not continue advertising
on our site. Furthermore, advertisers that have traditionally relied upon other
advertising media may be reluctant to advertise on the web. Our business,
results of
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operations and financial condition could be materially adversely affected if the
market for web advertising declines or develops more slowly than expected.
Different pricing models are used to sell advertising on the web. It is
difficult to predict which, if any, will emerge as the industry standard. This
uncertainty makes it difficult to project our future advertising races and
revenues. We cannot assure you that we will be successful under existing or
alternative pricing models that may emerge. Moreover, "filter" software programs
that limit or prevent advertising from being delivered to a web user's computer
are available. Widespread adoption of this software could materially adversely
affect the commercial viability of web advertising, which could materially
adversely affect our advertising revenues and, as a result, our business,
results of operations and financial condition.
We compete with other web sites, television, radio and print media for
a share of advertisers' total advertising budgets. If advertisers perceive the
web in general or our web site in particular to be a limited or an ineffective
advertising medium, they may be reluctant to devote a portion of their
advertising budget to online advertising or to advertising on our web site.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES RELATING TO THE WEB COULD INCREASE
OUR COSTS OF TRANSMITTING DATA AND INCREASE OUR LEGAL AND REGULATORY
EXPENDITURES AND COULD DECREASE OUR USER BASE
Existing domestic and international laws or regulations specifically
regulate communications or commerce on the web. Further, laws and regulations
that address issues such as user privacy, pricing, online content regulation,
taxation and the characteristics and quality of online products and services are
under consideration by federal, state, local and foreign governments and
agencies. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
services providers in a manner similar to the regulation of long distance
telephone carriers and to impose access fees on such companies. This regulation,
if imposed, could increase the cost of transmitting data over the web. Moreover,
it may take years to determine the extent to which existing laws relating to
issues such as intellectual property ownership and infringement, libel,
obscenity and personal privacy are applicable to the web. The Federal Trade
Commission and government agencies in certain states have been investigating
certain Internet companies regarding their use of personal information. We could
incur additional expenses if any new regulations regarding the use of personal
information are introduced or if these agencies chose to investigate our privacy
practices. Any new laws or regulations relating to the web, or certain
application or interpretation of existing laws, could decrease the growth in the
use of the web, decrease the demand for our web site or otherwise materially
adversely affect cur business.
CONCERNS ABOUT WEB SECURITY COULD REDUCE OUR ADVERTISING REVENUES, DECREASE OUR
USER BASE AND INCREASE OUR WEB SECURITY EXPENDITURES
Concern about the transmission of confidential information over the
Internet has been a significant barrier to electronic Commerce and
communications over the web. Any well-publicized compromise of security could
deter more people from using the web or from using it
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to conduct transactions that Involve the transmission of confidential
information, such as signing up for a paid subscription or purchasing goods or
services. Because many of our advertisers seek to advertise on our web site to
encourage people to use the web to purchase goods or services, our business,
results of operations and financial condition could be materially adversely
affected if Internet users significantly reduce their use of the web because of
security concerns. We may also incur significant costs to protect ourselves
against the threat of security breaches or to alleviate problems caused by these
breaches.
CONTROL BY PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS COULD ADVERSELY AFFECT
OUR STOCKHOLDERS
At December __, 2000, our officers, directors and
greater-than-five-percent stockholders (and their affiliates), in the aggregate,
beneficially owned approximately 50.7% of the outstanding common stock. As a
result, these persons, acting together, will have the ability to control
substantially all 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) and to 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 obtain control of us, which in turn could materially adversely
affect the market price of the common stock.
ANTI-TAKEOVER PROVISIONS COULD PREVENT OR DELAY A CHANGE OF CONTROL
Provisions of our Certificate of Incorporation and Bylaws and Delaware
law could make it more difficult for a third party to acquire us, even if doing
so would be beneficial to our stockholders. Furthermore, some of our
securityholders have the right to approve any change of control.
WE DO NOT INTEND TO PAY DIVIDENDS
We have never declared or paid any cash dividends on our common stock.
We currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed under the captions "Risk Factors" and "The
Company" and elsewhere in this prospectus or in the information incorporated by
reference constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
215 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") Some
of the forward-looking statements can be identified by the use of
forward-looking words such as "believes," "expects," "may," "will," "should,"
"seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or
the negative of those words
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or other comparable terminology. The discussion of financial trends, strategy,
plans or intentions may also include forward-looking statements. Forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those projected.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise, Readers are cautioned not to rely too heavily on these
forward-looking statements. The forward-looking statements by their nature are
not intended to be definitive predictions of future events.
USE OF PROCEEDS
All net proceeds from the sale of the shares of our common stock will
go to the stockholders who offer and sell their shares. Accordingly, we will not
receive any of the proceeds from the sales of the shares of our common stock by
the selling stockholders.
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THE COMPANY
OVERVIEW
We were incorporated in January, 2000 as a Delaware corporation under
the name ViralMarkets, Inc. We are a development stage company and have had very
limited operations to date. We have not yet generated any revenues. Our intended
plan of operation will require us to either generate revenues or raise capital
(through private placements or otherwise) of at least $1 Million for the next
twelve months.
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BUSINESS
OUR BUSINESS
We are a New York-based development stage Internet company. We intend
to produce "turn-key" customizable marketing solutions for small and medium
sized businesses. Our business strategy is to enable these businesses to create
their own e-mail advertising campaigns on our web site. We intend to be
self-promoting, or "viral" in nature since the promotions will always invite (or
encourage) recipients to forward the e-mail to friends.
INDUSTRY BACKGROUND
GROWTH OF THE INTERNET, E-COMMERCE AND ONLINE ADVERTISING. The Internet
has emerged as a significant global communications medium, enabling millions of
people to share information, communicate and conduct business electronically.
Both the number of Internet users and the amount of time they spend online are
growing. This growth is the result of a number of factors, including: increase
in the number of computes in the home, schools and workplace; improvements in
computer network infrastructure; more convenient, faster and less expensive
Internet access; advances in computer and modem technology; an increase in
public awareness of the benefits of using the Internet; and the development of
easy-to-use interfaces. The rapid adoption of the Internet represents a
significant opportunity for businesses to market and sell products and services
online and for advertisers and businesses to capitalize on the Internet's
interactive nature by marketing their products to highly targeted audiences. The
success of Internet advertising can be attributed to the following factors:
Internet advertising offers advertisers a flexible way to target their messages
and measure their results; Internet advertisers an tailor their messages to
specific groups of consumers; Internet advertisers can change advertising
content frequently in response to market factors, current events and consumer
feedback; and advertisers can more accurately track the effectiveness of their
advertising messages based on the rate at which consumers directly respond to
their advertisements through `click-throughs" that their advertisements receive.
GROWTH OF TARGETED ONLINE CONTENT AND COMMUNITY SITES. As the Internet
has grown, users and advertisers have started seeking more targeted and
compelling content, information, expression and interaction. Just as cable
television channels, such as MTV and ESPN, have become more popular by
aggregating content targeted towards a specific audience, online content and
community sites that provide a demographically targeted environment have
emerged. Like the major television networks that provide programming across many
demographic segments, the major online portals typically provide a broad range
of content and services without a specific demographic focus. Targeted online
communities provide users with the ability to access relevant content and to
interact directly with other people with similar interests. Registered users, or
members, are often eligible for additional services from a site, such as
customization options or access to premium content. As a site learns more about
its members as they register and spend more time online, it can tailor its
features to meet the needs and preferences of its users and members. This
information also provides advertisers and merchants with more focused
demographic and psychographic information that can be used to maximize direct
marketing opportunities.
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THE VIRALMARKETS STRATEGY
We are a New York-based development stage Internet company. We intend
to produce "turn-key" customizable marketing solutions for small and medium
sized businesses. Our business strategy is to enable these businesses to create
their own e-mail advertising campaigns on our web site. We intend to be
self-promoting, or "viral" in nature since the promotions will always invite (or
encourage) recipients to forward the e-mail to friends.
PRODUCT STRATEGY
We intend to target our web site to the small to medium size business
owner. Our web site will be designed to load quickly, and will be
straightforward and easy-to-use. It will not be bogged down with graphics or
animations, but will contain very powerful tools. We expect that we will not
have a consumer side web site for ViralMarkets. The e-mail message will be our
end product, and the consumer will not interface with our web site, but will
instead follow the links or other contacts on the promotion itself.
As part of our web site development strategy, we will take into account
that we are targeting business owners who have little or no exposure to this
type of promotional tool. We intend to help them understand what our service can
provide in terms of benefits for their businesses, and also in terms of what
choices are available to them for how to create and present their promotions. To
do this, we will embark on our own promotional campaign to promote our web site.
In addition, our web site will be designed to introduce our promotion
concepts from a marketing perspective, as well as to clearly explain the
functionality of the site itself. We expect that ease of use and understanding
of what tools are available will be of paramount importance.
MARKET ANALYSIS
We believe that our market is not restricted to any specific industry
or type of business. We believe that the potential for its application spans
across Internet based and bricks and mortar based small and medium sized
businesses. We see no boundaries across any of these categories.
Our e-mail based promotion solution will offer an efficient alternative
to other promotional tools including television, radio, direct mail and flyers,
yellow pages, magazines, newspaper and Internet banner advertisements for
businesses to consumers, as well as trade shows, trade magazines and Internet
banner advertisements for businesses-to-businesses.
We believe that some companies may not yet be ready to consider e-mail
promotions as a tool to reach their target markets. We believe that most low
income, less educated market segments have not yet been exposed to the Internet
and its benefits. We anticipate that our target businesses will be businesses
with demographic, psychographic and geographic target markets that are likely to
be Internet-connected.
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CUSTOMER CARE
Users in the future who are unfamiliar with our site will have the
ability to click on the "help" button on our web site, www.viralmarkets.com.
This feature describes all of our features and services and explains to the user
how to use them.
COMPETITION
The market for Internet traffic, registered users and Internet
advertising is new and rapidly evolving, and competition is intense. With no
substantial barriers to entry, we expect that competition will continue to
intensify. We believe that the primary competitive factors in creating community
on the Internet and attracting advertisers are: user receptiveness to branded
content; functionality; brand recognition; user affinity and loyalty; the
ability to target a specific demographic; variety off value-added services;
ease-of-use; quality of service; reliability and critical mass; and the overall
cost-effectiveness of the advertising medium.
Our e-mail based promotion solution will offer an efficient alternative
to other promotional tools including television, radio, direct mail and flyers,
yellow pages, magazines, newspaper and Internet banner advertisements for
businesses to consumers, as well as trade shows, trade magazines and Internet
banner advertisements.
GOVERNMENT REGULATION
We are subject to various laws and governmental regulations relating to
our business. Although there are currently few laws or regulations directly
applicable to online services or the Internet, the increasing popularity and use
of the Internet might cause additional laws and regu1aticns to be adopted. These
laws and regulations current may cover or may cover in the future issues
including the following:
INTERNET PRIVACY. The Children's Online Privacy Protection Act of 1SDS
which was enacted by the United States Congress on October 21, 1398 and for
which the Federal Trade Commission issued its final regulations on October 20,
1939, regulates the collection, use, and/or disclosure of personal information
obtained from children under the age of 13. Under the provisions of this Act,
which becomes effective on April 21, 2000, web sites catering to children will
be required to: provide notice on their web site and to parents of children
under the age of 13 with notice of what information is being collected, how the
site uses the information, and the web site's practices regarding disclosures of
information; obtain verifiable parental consent for the collection, use and/or
disclosure of their children's information, and allow parents to terminate their
consent at any time; provide parents an opportunity to review the information
collected from their children; and refrain from conditioning a child's
participation in a game on the child revealing more information than reasonably
necessary to participate. if we discover that a member about whom we have
collected information has misrepresented his or her age and is in fact under age
13, or that a child under 13 has disclosed personal information on our bulletin
boards or in any other public forum on cur site, we will have to either (1)
remove that person as a member, or (2) comply with the Federal Trade Commission
regulations under the Act. It is
<PAGE>
important to our members that we protect their privacy. We use password
protection and. member ID's to ensure anonymity among our members. While we
believe that we currently adequately provide for cur members' privacy, our
current programs tray not conform to legislation or regulations adopted in the
future by the Federal Trade Commission or other governmental entities. In
addition, it unauthorized persons were able to penetrate our security and gain
access to, or otherwise misappropriate, our members' personal information, we
could be subject to liability. Such liability could include claims for misuses
of personal information, such as for unauthorized marketing purposes or
unauthorized use of credit cards. These claims could result in litigation which
could require us to expend significant financial resources and divert
management's attention from operations.
The European Union adopted a Directive which became effective in
October 1998 that imposes restrictions on the collection and use of personal
data. Under the Directive, European Union citizens are guaranteed the right of
access to their data, the right to know where the data originated, the right to
have inaccurate data corrected, the right to recourse in the event of unlawful
processing of information and the right to withhold permission to use their data
for direct marketing. The Directive could affect U.S. companies that collect
information over the Internet from individuals in European Union member
countries and may impose restrictions that are more stringent than current
Internet privacy standards in the United States or our own privacy policies- The
Directive does not, however, define what standards of privacy are adequate. As a
result, the Directive might adversely affect the activities of entities,
including us, that engage in data collection from meters in European Union
member countries.
INTERNET TAXATION. A number of legislative proposals have been made by
federal, state, local and foreign governments that would impose additional taxes
on the sale of goods and services over the Internet, and some states have taken
measures to tax Internet-related activities. Although in October 1998 Congress
placed a three-year moratorium on state and local taxes on Internet access or on
discriminatory taxes on electronic commerce, existing state or local laws were
excluded from this moratorium. Further, once this moratorium is lifted, some
type of federal or state taxes may be imposed upon Internet commerce. Such
legislation or other attempts at regulating commerce over the Internet may cause
sales at the Stan Store to decrease which might adversely affect advertising
revenues as well since Internet sales generally may decline.
DOMAIN NAMES. Our domain names are our Internet "addresses.' Domain
names have been the subject of significant trademark litigation in the United
States. We have applied for registration of certain domain names in the United
States and foreign countries. Third parties might briny claims for infringement
against us for the use of these domain names. Moreover, because domain names
derive value from the individual's ability to remember such names, it is
possible that our domain names could lose their value if, for example, meters
begin to rely on mechanisms other than domain names to access online resources.
The current system for registering, allocating and managing domain names has
been the subject of litigation and of proposed regulatory reform. Our domain
names might lose their value, and we might have to obtain entirely new domain
names in addition to or instead of our current domain names if such litigation
or reform efforts result in a restructuring of the current system.
<PAGE>
JURISDICTION. Due to the global reach of the Internet, it is possible
that the governments of other states and foreign countries might attempt to
regulate our activities or prosecute us for violations of their laws. This could
seriously affect our business. In addition, because our products and services
are available over the Internet anywhere in the world, multiple jurisdictions
may claim that we are required to qualify to do business as a foreign
corporation in each of those jurisdictions. Our failure to qualify as a foreign
corporation in a jurisdiction where we are required to do so could subject us to
taxes and penalties for the failure to qualify. It is possible that state and
foreign governments might also attempt to regulate our transmissions of content
on our web sites or prosecute us for violations of their laws. State or foreign
governments might allege or charge us with violations of local laws, we might
unintentionally violate these laws, and these laws might be modified, or new
laws might be enacted, in the future.
EMPLOYEES
As of December __, 2000, we did not employ any employees. To support
our anticipated future growth, we expect to hire additional employees,
particularly in the areas of content creation and product development.
DESCRIPTION OF PROPERTY
Our principal executive offices are located in Commack, New York. We
occupy approximately 500 square feet on a "free-rent" basis from Imojo, Inc.,
our principal stockholder.
MANAGEMENT'S PLAN OF OPERATION
You should read the following plan of operation in conjunction with the
financial statements and notes thereto contained elsewhere in this prospectus.
The following information contains forward-looking statements which are subject
to risks and uncertainties. If one or more of these risks and uncertainties
materialize, actual results may differ from those expressed or implied by the
forward-looking statements.
We are a development stage company with limited operations and no
revenues to date. We anticipate that over the next 12 months we will require a
minimum of $1 million to fund our operational requirements. We anticipate that
such funds shall be raised through private placements of our securities or by
loans or equity investments from existing investors. We have not yet determined
how we plan to obtain these funds and there is no assurance that we will be able
to obtain financing for our business development. If adequate funds are not
available to us, we believe that our business development will be adversely
affected. We do not expect to purchase or sell any plant and significant
equipment in the next twelve months.
<PAGE>
MANAGEMENT
The following table sets forth the names, ages and positions of our
sole executive officer and director:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES WITH THE COMPANY
<S> <C> <C>
Paul Steo 23 Chairman of the Board of Directors, President and
Secretary
</TABLE>
EXECUTIVE COMPENSATION
No employee of the Company has received any salary and bonus to date.
COMPENSATION OF DIRECTORS
Currently the only member of our Board of Directors does not receive
any compensation for service on our Board. We expect that a compensation plan
for Directors may be adopted in the future.
STOCK OPTION PLAN
We have no stock option plan in place at the present time. However, we
may adopt a stock option plan at our annual meeting of stockholders.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Our certificate of incorporation provides that our directors will not
be personally liable to our company or our stockholders for monetary damages for
breach of their fiduciary duties as directors to the extent permitted by
Delaware law.
Our bylaws provide that we must indemnify our directors, officers and
employees so long as they act in good faith and are not adjudged liable to the
Corporation. Our bylaws also provide for the prepayment of expenses to persons
entitled to indemnification (subject to certain conditions), and permit us to
purchase and maintain insurance on behalf of any director, officer, employee, or
agent against any liability asserted against them in any such capacity, whether
or not our bylaws would permit or require such indemnification.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, certain information, as of December __,
2000, regarding beneficial ownership of our common stock by
- each stockholder known by us to be the beneficial owner of more
than five percent (5%) of the outstanding shares of common stock;
- each of our directors;
- each of the named executive officers; and
- all of our current executive officers and directors as a group.
<TABLE>
<CAPTION>
Name of Number of Shares
Beneficial Owner Beneficially Owned(1) Percent of Class (1)
--------------------- --------------------
<S> <C> <C>
Paul Steo, Chairman of the Board, President and --- ---
Secretary
Imojo Holdings, LLC 558,000 25.0%
Imojo, Inc. 557,850 25.0%
All Directors and Officers as a Group --- ---
</TABLE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
The following table sets forth
- the names and addresses of each of the selling stockholders,
- the number of shares of common stock beneficially owned by
each selling stockholder prior to the offering,
- the number of shares of common stock that may be offered by
each of the selling stockholders pursuant to this prospectus,
and
- the number of shares of common stock beneficially owned by
each selling stockholder after completion of the offering,
assuming all of the shares covered by this prospectus as sold.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES NUMBER OF
SECURITIES OFFERED FOR SECURITIES
BENEFICIALLY SELLING OWNED OF PERCENTAGE
OWNED PRIOR TO STOCKHOLDER'S RECORD AFTER OWNED AFTER
NAME OF SELLING SHAREHOLDER OFFERING ACCOUNT OFFERING OFFERING
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kenneth Neu 1,428 1,428 1,428 *
------------------------------------------------------------------------------------------------
David Nouvini 1,428 1,428 1,428 *
------------------------------------------------------------------------------------------------
Michael Asfour 1,428 1,428 1,428 *
------------------------------------------------------------------------------------------------
Pete Sterling 1,428 1,428 1,428 *
------------------------------------------------------------------------------------------------
Carolyn Ferrante 1,428 1,428 1,428 *
------------------------------------------------------------------------------------------------
Dimitri Kotsiopoulos 572 572 572 *
------------------------------------------------------------------------------------------------
Antonio Cappellino 428 428 428 *
------------------------------------------------------------------------------------------------
Anthony J. Vitale Jr. 214 214 214 *
------------------------------------------------------------------------------------------------
Allison McMarrow 214 214 214 *
------------------------------------------------------------------------------------------------
Steven Wroblewski 142 142 142 *
------------------------------------------------------------------------------------------------
Nazmi 142 142 142 *
------------------------------------------------------------------------------------------------
Todd O'Connell 100 100 100 *
------------------------------------------------------------------------------------------------
WSDM 2000, LLC 430 430 430 *
------------------------------------------------------------------------------------------------
Catherine Fraiser 100 100 100 *
------------------------------------------------------------------------------------------------
Bryan Kaufman 100 100 100 *
------------------------------------------------------------------------------------------------
Theresa Mari 100 100 100 *
------------------------------------------------------------------------------------------------
Debra Hamilton 100 100 100 *
------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Michael Gilbert 100 100 100 *
------------------------------------------------------------------------------------------------
Adrian Mangra 100 100 100 *
------------------------------------------------------------------------------------------------
Suzanne Napoli 100 100 100 *
------------------------------------------------------------------------------------------------
Debra Morsony 100 100 100 *
------------------------------------------------------------------------------------------------
George Gavalos 100 100 100 *
------------------------------------------------------------------------------------------------
Jason Asfour 100 100 100 *
------------------------------------------------------------------------------------------------
Cindy Bermingham 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Robert Brown 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Scott Krauss 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Brenda Caufield 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Diana Chungfen Wang 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Kevin McGoldrich 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Melissa Naeder 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
William Brown 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Lamonte Mitchell 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
Chai Ing Wang 105,000 105,000 105,000 4.9%*
------------------------------------------------------------------------------------------------
IMOJO, Inc. 538,100 538,100 538,100 25.0%*
------------------------------------------------------------------------------------------------
IMOJO Holdings, LLC 553,864 553,864 553,864 25.7%*
------------------------------------------------------------------------------------------------
Rosa Nouvini 100 100 100 *
------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Judith Neu 100 100 100 *
------------------------------------------------------------------------------------------------
Total: 2,152,546 2,152,546 2,152,546
------------------------------------------------------------------------------------------------
</TABLE>
* Under 1%
The selling stockholders are entitled to receive all of the proceeds
from the future sale of their shares.
The selling stockholders, from time to time, depending on market
conditions and other factors, may offer or sell their shares in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
The shares may be sold by various methods, including:
- block trades in which a broker or dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
- purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this
prospectus;
- purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this
prospectus;
- ordinary brokerage transactions and transactions in which the
broker solicits purchases; and
- face to face transactions between sellers and purchasers
without a broker or dealer.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. These
brokers or dealers may receive commissions or discounts from the selling
stockholders in amounts to be negotiated. These brokers, dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with these sales.
We will bear all costs and expenses of the registration of the shares
under the Securities Act and certain state securities laws, other than discounts
or commissions, if any, payable with respect to sales of the shares.
The selling stockholders are not restricted as to the number of shares
that may be sold at any one time, and it is possible that a significant number
of shares could be sold at the same time. Sales of the shares by the selling
stockholders may have an adverse effect on the market price of the common stock.
<PAGE>
CERTAIN TRANSACTIONS
We currently occupy premises on a "rent-free" basis from Imojo, Inc.,
an affiliate of the Company.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 25,000,000 shares of common
stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par
value $.001 per share. As of December __, 2000, there were 2,152,546 shares of
common stock issued and outstanding; no shares of preferred stock were issued.
COMMON STOCK
All holders of common stock have one vote per share on all matters
submitted to a vote of stockholders. Stockholders do not have rights to cumulate
their votes in the election of directors under our certificate of incorporation
or applicable provisions of the General Corporation Law of the State of
Delaware.
The holders of common stock have the right to receive dividends, when,
and if declared, by our Board of Directors out of funds legally available
therefor. We have never paid any cash dividends on our common stock. We
presently intend to retain earnings, if any, to finance our operations, and
therefore do not anticipate paying any cash dividends in the future. If we
liquidate, holders of our common stock would share ratably in any assets
available for distribution to stockholders after payment of all our obligations.
Our common stock is neither redeemable nor has any preemptive,
subscription, sinking fund or conversion rights. All outstanding shares of
common stock are fully paid and non-assessable.
PREFERRED STOCK
Our Board of Directors may authorize the issuance up to 5,000,000
shares of preferred stock without any further stockholder approval. The Board is
expressly authorized to provide for the issuance of shares of preferred stock in
one or more classes or series, and to fix for each such class or series the
powers, rights, privileges, preferences, qualifications, limitations or
restrictions, including dividend rights, dividend rates, conversion rights,
voting rights, redemption rights, redemption prices, liquidation preferences,
and the designation of and the number of shares constituting any class or
series.
TRANSFER AGENT AND REGISTRAR
<PAGE>
_______________________________, serves as transfer agent and registrar
for the common stock.
ANTITAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CHARTER
Provisions of Delaware law and our certificate of incorporation could
discourage takeover attempts. These include:
- DELAWARE ANTITAKEOVER LAW. We are subject to Section 203 of
the Delaware General Corporation Law. In general, Section 203
prohibits a publicly-held Delaware corporation from engaging
in a business combination with an interested stockholders for
a period of three years from the date the stockholder became
an interested stockholder, unless the business combination or
the transaction in which the person became an interested
stockholder is approved in the manner provided in Section 203.
Generally, a business combination includes a merger, asset or
stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. Generally, an
interested stockholder is a person who, together with
affiliates and associates, owns or within three years prior to
the determination of interested stockholder status did own 15%
or more of the corporation's outstanding voting stock.
- OUR RIGHT TO ISSUE PREFERRED STOCK. Our certificate of
incorporation authorizes the issuance of preferred stock with
such designations, rights, and preferences as may be
determined from time to time by our Board of Directors,
without any further vote or action by our stockholders.
Therefore, our Board of Directors is empowered, without
stockholder approval, to issue preferred stock with voting
rights or preferences that could prevent or discourage
unsolicited takeover attempts.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
us by Westerman Shapiro Draghi & Miller, LLP, Garden City, New York ("WSDM"). As
part of our agreement with WSDM, we have agreed to pay a portion of their legal
fee in our common stock. The shares of common stock issued to an affiliate of
WSDM are being registered for sale pursuant to the terms of this Registration
Statement. As of the effective date of this registration statement, the
affiliate of WSDM owned 430 shares of our common stock.
<PAGE>
EXPERTS
The consolidated financial statements as of November 30, 2000 included
in this Prospectus have been so included in reliance on the report of Liebman
Goldberg & Drogin, LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C., a registration statement on Form SB-2 under the
Securities Act of 1933, with respect to the shares to be sold in this offering.
This prospectus, which is part of the registration statement, does not contain
all of the information contained in the registration statement. For further
information with respect to us and the shares of our common stock offered
hereby, we refer you to the registration statement, including the exhibits
thereto, which may be inspected, without charge, at the office of the Securities
and Exchange Commission.
Copies of the registration statement may be obtained from the
Commission in Washington, D.C., upon payment of the requisite fees, or from the
Commission's Website at http://www.sec.gov. Statements contained in this
prospectus as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance we refer you to the copy of such
contract or other document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by the more complete
description of the matters involved.
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FROM JANUARY 12, 2000 (INCEPTION) TO NOVEMBER 30, 2000
WITH
INDEPENDENT AUDITORS' REPORT
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
FROM JANUARY 12, 2000 (INCEPTION) TO NOVEMBER 30, 2000
CONTENTS
<TABLE>
<CAPTION>
PAGE #
<S> <C>
Independent Auditors' Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 8
</TABLE>
<PAGE>
To the Board of Directors
ViralMarkets, Inc.
(A Development Stage Company)
New York, New York
We have audited the accompanying balance sheet of ViralMarkets, Inc. (a
development stage company) as of November 30, 2000, and the related statements
of operations, stockholders' equity, and cash flows for the period, January 12,
2000 (inception) to November 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ViralMarkets, Inc. of November
30, 2000 and their cash flows for the period then ended 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 discussed in Notes 2 and 3 to the
financial statements, the Company is in the development stage and will require a
significant amount of capital to commence its planned principal operations and
proceed with its business plan. As of the date of these financial statements, an
insignificant amount of capital has been raised or committed, and as such there
is no assurance that the Company will be successful in its efforts to raise the
necessary capital to commence its planned principal operations and/or implement
its business plan. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding these
matters also are described in Notes 2 and 3. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Liebman Goldberg & Drogin, LLP
Garden City, New York
December 20, 2000
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
NOVEMBER 30, 2000
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash in bank $ 1,000
--------------
Total assets $ 1,000
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Due to related company $ 1,000
Accrued expenses 9,750
--------------
Total liabilities 10,750
--------------
STOCKHOLDERS' (DEFICIT):
Preferred stock $.001 par value, 5,000,000
shares authoried and $-0- issued and outstanding $ -
Common stock $.001 par value per share, 25,000,000
shares authorized and 1,091,964 shares issued
and outstanding 1,092
Less: stock subscriptions receivable (1,092)
Deficit accumulated during development stage (9,750)
--------------
Total stockholders' (deficit) (9,750)
--------------
Total liabilities and stockholders' deficit $ 1,000
==============
</TABLE>
See notes to financial statements.
-2-
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR JANUARY 12, 2000 (INCEPTION) TO NOVEMBER 30, 2000
<TABLE>
<S> <C>
EXPENSES:
Professional fees $ 9,750
--------------
Total expenses 9,750
--------------
Loss during development stage (9,750)
--------------
Net loss $ (9,750)
==============
Basic and diluted (loss) per share $ (0.01)
==============
Weighted average common shares outstanding 1,091,964
==============
</TABLE>
See notes to financial statements.
-3-
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR JANUARY 12, 2000 (INCEPTION) TO NOVEMBER 30, 2000
<TABLE>
<CAPTION>
DEFICIT
CAPITAL IN ACCUMULATED
COMMON STOCK EXCESS OF DURING DEVELOPMENT
SHARES AMOUNT PAR VALUE STAGE
--------------- --------------- --------------- ------------------
<S> <C> <C> <C> <C>
Common stock issuance 1,091,964 $ 1,092 $ - $ -
Less: stock subscriptions
receivable
- (1,092) - -
Net loss for the period
- - - (9,750)
--------------- --------------- --------------- ------------------
Balance - November 30, 2000 1,091,964 $ - $ - $ (9,750)
=============== =============== =============== ==================
</TABLE>
See notes to financial statements.
-4-
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR JANUARY 12, 2000 (INCEPTION) TO NOVEMBER 30, 2000
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (9,750)
ADJUSTMENTS TO RECONCILE NET (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Increase in current liabilities 10,750
------------------
Net cash provided by operating activities 1,000
Cash - January 12, 2000 (Inception) -
------------------
Cash - November 30, 2000 $ 1,000
==================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Taxes paid $ -
==================
Interest paid $ -
==================
</TABLE>
See notes to financial statements.
-5-
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
NOTE 1 - NATURE OF OPERATIONS:
ViralMarkets, Inc. ("the Company") was incorporated on January 12,
2000 under the business laws of the State of Delaware. It originally
was incorporated as ViralTrends.Com, Inc. and on September 14, 2000
filed an amendment with the State of Delaware changing its name to
ViralMarkets, Inc. The Company is a New York based development stage
company that intends to produce "turn key" customizable marketing
solutions for small medium sized businesses. The business strategy is
to enable these businesses to create their own e-mail advertising
campaigns on the Company's web-site. The Company will be
self-promoting as "viral" in nature since the promotions will always
invite (encourage) recipients to forward the e-mail to friends,
business associates, etc. As of November 30, 2000, the Company has
not yet commenced any formal business operations, and all activity to
date relates to the Company's formation and proposed fund raising.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEVELOPMENT STAGE ACTIVITIES AND OPERATIONS:
The Company is in its initial stages of formation and for the period
ended November 30, 2000 had no revenues. While its website is now
active, the Company is still in early stages of revenue production
and completion of website participation refinement, thus remaining in
the development stage.
WEB SITE DEVELOPMENT COSTS:
All costs incurred in the acquisition and development of software for
the Company's website will be capitalized. These costs will be
written off over three years on a straight line basis. Costs incurred
to operate the website such as maintenance, training and
administration will be expensed as incurred.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those amounts.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments", requires disclosure of the fair value information,
whether or not recognized in the balance sheet, where its is
practicable to estimate that value. Presently, the Company has no
receivables and payables represent monies owed for professional fees
relating to the formation of the Company and its initial fund
raising.
-6-
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
IMPAIRMENT OF LONG-LIVED ASSETS:
The Company has not yet adopted FASB Statement No. 121 (SFAS 121),
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of". SFAS 121 requires that
impairment losses are to be recorded when long-lived assets to be
held and used are reviewed for impairment whenever events or changes
in circumstances indicate that the related carrying amount may not be
recoverable. When required, impairment losses on assets to be held
and used are recognized based on the fair value of the asset.
Long-lived assets to be disposed of, if any, are reported at the
lower of carrying amount or fair value less cost to sell. There have
been no material adjustments for impairments of long-lived assets.
REVENUE RECOGNITION:
The Company has not set up policies of revenue recognition for the
areas being developed for revenue streams such as advertising
commerce, memberships, merchandise and etc.
CASH AND CASH EQUIVALENTS:
The Company will consider all highly liquid temporary cash
investments with original maturities of three months or less to be
cash equivalents.
CONCENTRATION OF CREDIT RISK:
Financial instruments that potentially subject the Company to
significant concentrations of credit risk could consist primarily of
cash and cash equivalents. The Company's cash management and
investment policies will restrict investments to low risk,
highly-liquid securities and the Company will perform periodic
evaluations of the credit standing of the finanical institutions with
which it deals.
INCOME TAXES:
The Company intends to account for income taxes under the Financial
Accounting Standards Board of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. There were no
current or deferred income tax expense or benefits due to the
Company's not having any material operations for the period ending
November 30, 2000.
RECENT ACCOUNTING PRONOUNCEMENTS:
The Company is subject to the provisions of Statement of Financial
Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income" and Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information". Neither statement had any impact on the
Company's financial statements as the company does not have any
"comprehensive income" type earnings (losses) and its financial
statements reflect how the "key operating decisions makers" view the
business. The Company will continue to review these statements over
time, in particular SFAS 131, to determine if any additional
disclosures are necessary based on evolving circumstances.
-7-
<PAGE>
VIRALMARKETS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
NET LOSS PER SHARE:
Net loss per share is computed in accordance with SFAS No. 128,
"Earnings per Share" ("SFAS No. 128") and SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS No. 128 and
SAB 98, basic net loss per share is computed by dividing the net loss
available to common stockholders for the period by the weighted
average number of common shares outstanding during the period.
Diluted net loss per share is computed by dividing the net loss for
the period by the number of common and common equivalent shares
outstanding during the period.
Since all the prospective shareholders other than related parties (as
discussed in Notes 4 and 5) are to remit payment for stock
subscriptions receivable and full payment is not yet complete, no
actual common shares have been issued to those shareholders. Common
"stock subscribed" shares do not have the same rights and
responsibilities of actual outstanding stock; including shares other
than those issued to related parties.
NOTE 3 - GOING CONCERN:
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As a development
stage company, the Company has no revenue and limited financing.
These conditions raise doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that
might result from this uncertainty.
NOTE 4 - DUE TO RELATED PARTY:
On November 14, 2000, the Company received a loan from Imojo, Inc. to
open a bank account. Imojo, Inc. and Imojo Holdings, LLC; another
related party are subscribers of the Company's common stock and
initially have a controlling interest of over 50%.
NOTE 5 - SUBSEQUENT EVENTS:
On November 29, 2000, the Company filed a certificate of amendment
with the State of Delaware to change its authorized shares from 1,000
common $.01 par value to 25,000,000 $.001 par value. Additionally,
there will be 5,000,000 $.001 par value preferred shares authorized.
The Company issued 538,100 and 553,864 common shares to Imojo, Inc.
and Imojo Holdings LLC respectively at par value. It also intends to
issue an additional 1,060,582 common shares to 33 investors at $.01
par share. The amount of common shares to be issued will be
2,152,546. The 1,091,964 common shares owned by Imojo, Inc. and Imojo
Holdings, LLC will represent 50.7% of the total common shares
outstanding after all stock subscriptions have been paid.
NOTE 6 - COMMITMENTS AND CONTINGENCIES:
Presently the Company has no commitments or contingencies. However,
rental space has been made available to the Company at no charge by
Imojo; a related party.
-8-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................................
Risk Factors..................................................
The Company...................................................
Business......................................................
Management's Plan of Operation................................
Management....................................................
Principal Stockholders........................................
Selling Stockholders and Plan of Distribution.................
Certain Transactions..........................................
Description of Securities.....................................
Legal Matters.................................................
Experts.......................................................
Where You Can Find More Information...........................
Index to Financial Statements.................................
</TABLE>
-----------
Until __________, 2000, all dealers that effect transactions in our
common stock, whether or not participating in this offering, may be required to
deliver a prospectus. This requirement is in addition to the dealer's obligation
to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
ViralMarkets, Inc.
2,152,546 Shares of Common Stock
-----------
PROSPECTUS
__________ , 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Article IX of the Registrant's Bylaws provides for indemnification by
the Registrant of its directors, officers and employees to the extent that they
act in good faith and are not adjudged liable to the Corporation.
Article IX of the Registrant's Bylaws also provides for the prepayment
of expenses to persons entitled to indemnification (subject to certain
conditions), and permits the Registrant to purchase and maintain insurance on
behalf of any director, officer, employee, or agent against any liability
asserted against or incurred by them in any such capacity, or arising out of
their status as such, whether or not the Registrant would have the power or
obligation to indemnify them against such liability under the Registrant's
Bylaws.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchase, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. Article SIXTH of the Registrant's Certificate of
Incorporation provides for such limitation of liability.
The general effect of the foregoing provisions is to reduce the
circumstances in which an officer, director, agent, or employee may be required
to bear the economic burdens of the foregoing liabilities and expenses.
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the Registrant in connection with the
issuance and distribution of the securities being registered hereby (other than
underwriting discounts and commissions) are as follows:
<TABLE>
<CAPTION>
ITEM Amount
----
<S> <C>
Registration Fee (Securities and Exchange Commission)...... $
Accounting Fees and Expenses .............................. $
Legal Fees and Expenses.................................... $
Transfer Agent's Fees...................................... $
Miscellaneous Expenses .................................... $
-------------
Total...................................................... $
-------------
</TABLE>
The Registrant will bear all costs and expenses of the registration of the
shares under the Securities Act and certain state securities laws, other than
any discounts or commissions payable with respect to sales of the shares.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In November of 2000, we sold 553,864 shares of Common Stock to IMOJO,
Inc. (Affiliate) and 538,100 shares of Common Stock to IMOJO Holdings, LLC
(Affiliate) at $.001 per share for an aggregate purchase price of $1,091.96. In
December of 2000, we sold an aggregate of 1,060,582 shares of Common Stock to
the individuals below at a purchase price of $.01 per share for an aggregate
purchase price of $10,605.82 to the individuals and entities below.
<TABLE>
<CAPTION>
NAME OF SELLING SHAREHOLDER NUMBER OF SHARES
-------------------------------------------------------------------------
<S> <C>
Kenneth Neu 1,428
-------------------------------------------------------------------------
David Nouvini 1,428
-------------------------------------------------------------------------
Michael Asfour 1,428
-------------------------------------------------------------------------
Pete Sterling 1,428
-------------------------------------------------------------------------
Carolyn Ferrante 1,428
-------------------------------------------------------------------------
Dimitri Kotsiopoulos 572
-------------------------------------------------------------------------
Antonio Cappellino 428
-------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Anthony J. Vitale Jr. 214
-------------------------------------------------------------------------
Allison McMarrow 214
-------------------------------------------------------------------------
Steven Wroblewski 142
-------------------------------------------------------------------------
Nazmi 142
-------------------------------------------------------------------------
Todd O'Connell 100
-------------------------------------------------------------------------
WSDM 2000, LLC 430
-------------------------------------------------------------------------
Catherine Fraiser 100
-------------------------------------------------------------------------
Bryan Kaufman 100
-------------------------------------------------------------------------
Theresa Mari 100
-------------------------------------------------------------------------
Debra Hamilton 100
-------------------------------------------------------------------------
Michael Gilbert 100
-------------------------------------------------------------------------
Adrian Mangra 100
-------------------------------------------------------------------------
Suzanne Napoli 100
-------------------------------------------------------------------------
Debra Morsony 100
-------------------------------------------------------------------------
George Gavalos 100
-------------------------------------------------------------------------
Jason Asfour 100
-------------------------------------------------------------------------
Cindy Bermingham 105,000
-------------------------------------------------------------------------
Robert Brown 105,000
-------------------------------------------------------------------------
Scott Krauss 105,000
-------------------------------------------------------------------------
Brenda Caufield 105,000
-------------------------------------------------------------------------
Diana Chungfen Wang 105,000
-------------------------------------------------------------------------
Kevin McGoldrich 105,000
-------------------------------------------------------------------------
Melissa Naeder 105,000
-------------------------------------------------------------------------
William Brown 105,000
-------------------------------------------------------------------------
Lamonte Mitchell 105,000
-------------------------------------------------------------------------
Chai Ing Wang 105,000
-------------------------------------------------------------------------
IMOJO, Inc. 538,100
-------------------------------------------------------------------------
IMOJO Holdings, LLC 553,864
-------------------------------------------------------------------------
Rosa Nouvini 100
-------------------------------------------------------------------------
Judith Neu 100
-------------------------------------------------------------------------
Total: 2,152,546
-------------------------------------------------------------------------
</TABLE>
All such shares were sold in private transactions exempt from registration
pursuant to Section 4(2) of the Securities Act.
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1 Certificate of Incorporation
</TABLE>
<PAGE>
<TABLE>
<S> <C>
3.2 Bylaws
4.1 Form of Common Stock Certificate
5* Opinion of Counsel
23.1* Consent of Auditors
23.2* Consent of Counsel (contained in opinion of counsel filed as Exhibit 5)
</TABLE>
* Filed herewith.
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by final adjudication of
such issue.
THE UNDERSIGNED REGISTRANT HEREBY UNDERTAKES THAT IT WILL:
(1) For purposes of determining any liability under the
Securities Act, treat the information omitted from the form of
Prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of Prospectus filed by the
Registrant pursuant to Rule 424(b)(1), or (4) or 497(h) under the
Securities Act as part of this Registration Statement as of the time
the Commission declared it effective.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form of Prospectus
as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at that
time as the initial bona fide offering of those securities.
(3) 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;
<PAGE>
(ii) Reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or together, represent a fundamental change in
the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) Include any material information with respect
to the plan of distribution not previously discussed in the
registration statement or any material change to such
information in the registration statement.
(4) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of Commack,
State of New York on December 20, 2000.
VIRALMARKETS, INC.
------------------
By: /S/ PAUL STEO
-------------
Paul Steo
CHIEF EXECUTIVE OFFICER, PRESIDENT (PRINCIPAL
EXECUTIVE OFFICER) AND INTERIM CHIEF FINANCIAL
OFFICER (PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ PAUL STEO
-------------
Paul Steo Director December 20, 2000
</TABLE>
<PAGE>
VIRALMARKETS, INC.
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
3.1 Certificate of Incorporation
3.2 Bylaws
4.1 Form of Common Stock Certificate
5* Opinion of Counsel
23.1* Consent of Auditors
23.2* Consent of Counsel (contained in opinion of counsel
filed as Exhibits)
</TABLE>
