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As filed with the Securities and Exchange Commission on January 5, 2001
Registration Statement No. 333-__________
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form SB-2
Registration Statement under the Securities Act of 1933
TRADEAWAY.COM, INC.
(Name of small business issuer in its charter)
Nevada
(State or jurisdiction of Incorporation or Organization)
54189
(Primary Standard Industrial Classification Code Number)
81-0532061
(I.R.S. Employer of incorporation No.)
112 South Broadway, Manhattan, Montana, 59715
Phone (406) 284-6546
(Address and telephone number of principal executive offices
and principal place of business)
Mr. Thomas H. Langel, President
TradeAway.Com, Inc.
112 South Broadway
Manhattan, Mt, 59715
Phone (406) 284-6546
(Name, address and telephone number of agent for service)
Copies to:
Mr. John T. Tansey, Esq.
1730 K Street, NW, Suite 304
Washington, DC, 20006
Phone (202) 508-1459
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
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As soon as practicable and from time to time
after the effective date of this Registration Statement
(Approximate date of proposed sale to the public)
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities
Act"), please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462 (c.) under
the Securities Act registration statement number of the earlier effective
registration statement number of the earlier effective registration statement
for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434 under
the Securities Act, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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Common Stock, $0.001 par value
(Title of each class of securities to be registered)
(Dollar amount to be registered)..................................... $3,000,000
(Proposed maximum offering price per unit)........................... $3.00
(Proposed maximum aggregate offering price).......................... $3,000,000
(Amount of registration fee)......................................... $750
=====================================================================
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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 said Section 8(a),
may determine.
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Table of Content
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Page Number
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Summary of Prospectus 1
Risk Factors 2
Use of Proceeds 7
Determination of Offering Price 8
Dilution 8
Selling Security Holders 8
Plan of Distribution 8
Legal Proceedings 9
Directors, Executive Officers, Promoters & Controlling Persons 9
Security Ownership of Certain Beneficial Owners & Management 12
Description of Securities 12
Interest of Named Experts and Counsel 13
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities 14
Organization Within Last Five Years 14
Description of Business 14
Management's Discussion of Analysis or Plan of Operation 19
Description of Property 20
Certain Relationships & Related Transactions 20
Market for Common Equities and Related Stockholder Matter 20
Executive Compensation 21
Financial Statements 21
Changes in and Disagreement with Accountants 21
Indemnification of Directors and Officers 21
Other Expenses of Issuance and Distribution 22
Recent Sale of Unregistered Securities 22
Exhibits 22
Undertakings 23
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ITEM 1. FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER PAGE OF
PROSPECTUS.
Attached
ITEM 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGES OF PROSPECTUS.
Attached.
ITEM 3. SUMMARY INFORMATION AND RISK FACTORS.
**************************************
SUMMARY OF PROSPECTUS
**************************************
This summary provides an overview of selected information contained in this
prospectus. It does not contain all the information you should consider before
making a decision to purchase the shares we are offering. You should very
carefully and thoroughly read the more detailed information in this prospectus,
and particularly the "Risk Factors" section, review our financial statements and
review other information that is incorporated by reference in this prospectus.
PROSPECTUS
TradeAway.Com, Inc. has its administrative office and mailing address located at
112 South Broadway, Manhattan, Montana, 59715, telephone (406) 284-6546, Fax
(406) 284-6678, e-mail [email protected]. The fiscal year ends December 31.
The date of this prospectus is January 15, 2001.
SUMMARY INFORMATION ABOUT THE COMPANY
Prior to this offering, there has been no public market for the common stock. We
are offering up to a total of 1,000,000 shares of common stock, on a best
efforts, 35,000 shares minimum ($105,000), 1,000,000 shares maximum. The
offering price is $3.00 per share. The funds will be placed in an escrow account
until the minimum subscription amount has been received at which the funds will
be released to the Company. If the minimum subscription amount is not received
by May 31, 2001, all amounts collected by that date will be returned to the
investor, unless extended by the Company. All subsequent subscriptions will be
made available to the Company as they are received and there will be no refunds.
The offering will be for a period of six months and may be extended at the
discretion of the Company. Investing in the common stock involves certain risks.
See "Risk Factors".
The Company was incorporated in the State of Nevada on May 19, 2000 as
TradeAway.Com, Inc. In November 9, 2000 it was qualified to do business in the
State of Montana. The Company has been in the development stage since inception
and has generated small amounts of revenues from operations. TradeAway is a
person-to-person e-commerce venue that provides the means for a business or
person to acquire goods or services through a medium where cash is not a
requirement for a transaction to occur. See the "Business" section for a more
detailed description of business operations.
On May 19, 2000 the Company issued 8,453,067 shares of common stock at par value
$0.001 per share to Thomas H. Langel, founder and director. On May 25, 2000 the
Company issued 33,333 shares of common stock at $0.333 per share to Michael
Langel, brother of Thomas Langel, in exchange for $10,000 advanced against
pre-incorporation expenses and on June 5, 2000 the Company issued 5,000 shares
of common stock
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at $0.50 per share each to Everett and Rose Lay, in-laws of Thomas Langel in
exchange for $5,000 advanced against pre-incorporation expenses. On June 15,
2000 Thomas Langel gifted 4,582,500 shares of common stock to 28 family members,
employees, advisory board members and tithing to the church. On September 15,
2000 the Company issued 500,000 shares to consultants for services rendered at
$0.10 per share, total value $50,000. On October 25, 2000 the Company issued
3,600 shares of common stock at $2.778 per share to a local radio station in
exchange for $10,000 in advertising. All transactions were pursuant to the
exemption from registration contained in Section 4(2) of the Securities Act of
1933.
THE OFFERING
The following is a brief description of this offering. Please see the "Plan of
Distribution; Terms of the Offering" in this prospectus for a more detailed
description of the terms of the offering.
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Securities Being Offered Up to 1,000,000 shares of common stock, par value $0.001.
Offering Price per Share $3.00
Offering Period The shares are being offered for a period up to 180 days from
Effective date unless extended by the Company.
Net Proceeds to the Company Approximately $2,700,000.
Use of Proceeds See "Use of Proceeds"
Number of Shares Outstanding
Prior to the Offering 9,000,000
Number of Shares Outstanding
After the Offering 10,000,000
</TABLE>
ELECTRONIC FORMAT OF OFFERING CIRCULAR.
An electronic version of this Offering Circular is available on the Company's
Internet World Wide Web Site at http:// WWW.TRADEAWAY.COM. The paper format of
this Offering Circular contains descriptions and/or transcripts of material and
graphic images that are included in the electronic format of this Offering
Circular. The Shares may be purchased electronically at such time as the
registration statement filed with the Securities and Exchange Commission is
effective.
*********************************
RISK FACTORS
*********************************
AN INVESTMENT IN THE SHARES OFFERED BY THE COMPANY IN THIS OFFERING INVOLVES A
HIGH DEGREE OF RISK, SHOULD BE REGARDED AS SPECULATIVE, AND SHOULD NOT BE MADE
BY ANY INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.
IF ANY OF THE FOLLOWING RISKS OCCUR, THE COMPANY'S FINANCIAL CONDITION OR
RESULTS OF OPERATIONS COULD BE MATERIALLY AFFECTED. THE RISKS AND UNCERTAINTIES
DESCRIBED BELOW ARE NOT THE ONLY ONES FACING THE COMPANY. ADDITIONAL RISKS AND
UNCERTAINTIES NOT PRESENTLY KNOWN TO THE COMPANY OR THAT THE COMPANY CURRENTLY
DEEMS IMMATERIAL MAY ALSO IMPAIR ITS BUSINESS OPERATIONS OR FINANCIAL CONDITION.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, IN
ADDITION TO THE OTHER INFORMATION CONCERNING THE COMPANY AND ITS BUSINESS,
BEFORE PURCHASING THE SHARES OFFERED.
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RISKS RELATING TO FORWARD-LOOKING STATEMENTS
Information provided concerning this Offering and the Company and its business
may contain forward-looking statements, which reflect management's current view
with respect to future events and the Company's performance. Such
forward-looking statements may include projections with respect to market size
and acceptance, revenues and earnings, marketing and sales strategies and
business operations. These forward-looking statements are subject to certain
risks and uncertainties, including, but not limited to, acceptance of the
Company's products and services, the ability to price products and services
competitively, the ability to attract additional capital, the establishment of
an effective marketing plan, and the other risks identified herein. Due to such
uncertainties and the risk factors set forth herein, prospective investors are
cautioned not to place undue reliance upon forward-looking statements.
ANTICIPATED LOSSES
As a developmental stage company, the Company must invest heavily in
infrastructure, applications development, Internet site and related hardware and
software, and sales and marketing. Currently, listings and transactions through
the Internet web site are available free of charge. The Company does not intend
to charge for its services until 10,000 members are signed up. Currently, there
are approximately 6,000 members. As a result, the Company expects to incur
losses for the foreseeable future. The Company cannot assure that it will ever
achieve or maintain profitability or generate cash from operations.
FLUCTUATIONS IN OPERATING RESULTS
Given the current developmental status of the Company and the rapidly evolving
nature of the markets in which the Company will be competing, the Company
expects to experience significant fluctuations in its future operating results
due to a variety of factors, many of which are outside its control. Factors that
may adversely affect the Company's future operating results include the
following:
* The continued overall acceptance and use of the Internet and online
services and increasingly consumer acceptance of the Internet as a
medium for commerce;
* The level of traffic on the Company's web site;
* The Company's ability to continually upgrade its systems and
infrastructure and attract new personnel in a timely and effective
manner;
* The announcement or introduction of new sites, services and
products by the Company and its competitors;
* Technical difficulties and system downtime or Internet brownouts;
* The amount and timing of operating costs and capital expenditures
relating to expansion of the Company's business, operations and
infrastructure;
* General economic conditions and economic conditions specific to the
Internet and online commerce; and
* Lack of operating experience in Internet commerce.
Due to the above factors, the Company's operating results may fall below the
expectations of management and its business could suffer significantly.
MANAGEMENT OF GROWTH
In order to maximize potential growth in the Company's market opportunities, the
Company believes that it must expand rapidly and significantly in the market
place. This impetus for expansion will place a significant strain on the
Company's management, operational and financial resources. In order to manage
growth, the Company must implement and continually improve its operational and
financial systems, expand operations, attract and retain superior management and
train, manage and expand its employee base. The Company can give no assurance
that it will effectively manage the rapid expansion of its operations, that its
systems, procedures or controls will adequately support its operations or that
the company's management will successfully implement the plan described in this
Offering Circular. If the
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Company cannot effectively manage its growth, business and financial condition,
then the results of operations could suffer a material adverse effect.
INVESTORS WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION
The offering price of the Shares offered hereby is higher than the tangible book
value per share of Common Stock. Because prior purchasers of Common Stock paid
less than the offering price of the Shares, purchasers of the Shares offered
hereby will be subject to immediate and substantial economic dilution in the net
tangible book value attributable to the Common Stock of $2.75 per share. (See
"Dilution").
BROAD DISCRETION IN THE USE OF PROCEEDS
The Board of Directors and management of the Company will have broad discretion
in allocating the net proceeds of the Offering, which creates uncertainty for
shareholders and could adversely affect the Company's financial condition and
future results of operations.
ARBITRARY OFFERING PRICE
The offering price of the Shares offered hereby was arbitrarily determined by
the Company and bears no relationship to earnings, asset value, book value or
any other recognized criteria of value.
FUNDS WILL BE AVAILABLE FOR THE COMPANY'S USE.
The offering minimum established by the Company is $105,000 (35,000 Shares). As
a result, upon reaching the minimum, all subscriptions accepted by the Company
will be made available for the Company's immediate use. Should the Company fail
to raise the total amount of the Offering, the Company may be unable to
implement the plan described in this Offering Circular.
NEED FOR ADDITIONAL FINANCING
The Company expects that it may require additional financing in subsequent years
to complete its necessary capitalization. The additional financing will be used
primarily for online and offline marketing to establish brand name recognition.
The Company can give no assurance that it will successfully negotiate or obtain
additional financing, or that it will obtain financing on terms favorable or
acceptable to the Company. The Company does not have any commitments for
additional financing. The Company's ability to obtain additional capital depends
on market conditions, the global economy and other factors outside its control.
If the Company does not obtain adequate financing or such financing is not
available on acceptable terms, the Company's ability to finance its expansion,
develop or enhance products or services to respond to competitive pressure would
be significantly limited. The Company's failure to secure necessary financing
could have a material adverse effect on its business, prospects, financial
conditions and results of operations.
DEVELOPMENT OF THE INTERNET INFRASTRUCTURE
The Company's business model depends on the Internet infrastructure. This
dependence on the Internet infrastructure may prove problematic for a number of
reasons, including:
* Inadequate development of the necessary infrastructure for
communication speed, access and server reliability;
* Security and confidentiality concerns;
* Lack of development of complementary products, such as high-speed
modems, and high-speed communication lines;
* Implementation of competing technologies;
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* Delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; and
* United States and foreign governmental regulation.
The Company expects Internet use to grow in number of users and volume of
traffic. The Internet infrastructure may be unable to support the demands placed
on it by this continued growth. If these factors limit the acceptance or
effectiveness of Internet products, the Company's business could suffer
dramatically.
UNCERTAIN ACCEPTANCE OF THE INTERNET
The market for the Company's services has only recently begun to develop and
will continue to evolve rapidly. As a result, demand and market acceptance of
products and services over the Internet remain uncertain. Moreover, since the
market for its services is new and evolving, the Company cannot accurately
predict the size of this market or its future growth rate, if any. The success
of the Company's services will depend substantially upon the widespread
acceptance and use of the Internet by a broad base of consumers. Rapid growth in
the use of the Internet is a recent phenomenon. For the Company to succeed,
consumers who have historically used other means must accept and utilize novel
ways of conducting business and exchange information. The Company cannot assure
you that a broad base of consumers will accept the Internet as an effective way
of conducting business and exchanging information or selecting credit and
insurance products. If the Company's online services do no achieve market
acceptance or if the Internet does not become a viable way of conducting
business and exchanging information, the Company's business, results of
operations and financial condition would suffer a material adverse effect and
the Company may be unable to sustain its operations.
DEVELOPING MARKET - UNPROVEN ACCEPTANCE OF THE COMPANY'S SERVICES
The markets for the Company's services have only recently begun to develop, and
are rapidly evolving and are characterized by an increasing number of market
entrants who have introduced or developed various business and services sites on
the Internet and on the World Wide Web. As is typical in the case of a new and
rapidly evolving industry, demand and market acceptance for recently introduced
products and services are subject to a high level of uncertainty and risk. If
the market fails to develop, develops more slowly than expected or becomes
saturated with competitors, or if the Company's services do not achieve or
sustain market acceptance, the Company's business, operating results and
financial condition will be materially and adversely affected.
COMPETITION
The online commerce market for product and service exchanging over the Internet
is new, evolving and may become intensely competitive. While, to the best of
management's knowledge, no entity is currently active in the non-cash barter
auction Internet format, the Company's current or potential competitors include
WebSwap, Inc., Swap.com, Swaprat.Com qswap.com and swapvillage.com in addition
to others. Certain of the Company's competitors may devote greater resources to
marketing and promotional campaigns and devote substantially more resources to
web site and development. Increased competition may result in reduced operating
margins and a diminished brand franchise. The Company cannot assure potential
investors that the Company will compete successfully against future competitors.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company's success depends substantially upon its proprietary technology,
including its patent pending Barter Auction software. The Company will rely on a
combination of trademark, copyright and trade secret laws, as well as
confidentiality agreements and technical measures to protect its proprietary
rights. Much of the Company's proprietary information may not be patentable, and
the Company cannot assure you that it will develop other proprietary products or
technologies that are patentable and that any patent, if issued,
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would give it a competitive advantage, or that such patent will not be
challenged by third parties, or that the patent of others may not have a
material adverse effect on the Company's ability to do business. The Company
will apply to register certain trademarks, or claim certain trademark rights, in
the United States and/or foreign jurisdictions. The Company cannot assure you
that its means of protecting its proprietary rights will suffice or that the
Company's competitors will not independently develop competitive technology or
duplicate our services or design around patents or other intellectual property
rights issued to the Company.
RAPID TECHNOLOGY CHANGE
The Internet and online commerce industries typically experience rapid
technological change, changing market conditions and customer demands and the
emergence of new industry standards and practices that could render the
Company's web site and proprietary technology obsolete. The Company's future
success will substantially depend on its ability to enhance its services and
proprietary technology and respond to technological advances in a timely and
cost-effective manner. The development of the web site and other proprietary
technology entails significant technical and business risk. The Company cannot
assure you that it will succeed in developing and using new technologies or in
adapting its proprietary technology and systems to meet emerging industry
standards and customer requirements. If the Company is unable, for technical,
legal, financial or other reasons, to adapt in a timely manner in responding to
changing market conditions or customer requirements, or if its new products and
services do not achieve market acceptance, its business, prospects, results of
operations and financial condition would suffer a material adverse effect.
RELIANCE ON KEY MANAGEMENT PERSONNEL.
The Company's performance depends substantially on the continued services and
performance of its senior management and other key personnel. The Company's
performance also depends on its ability to retain and motivate its other
qualified officers and key employees. The loss of services of any of its
executive officers or other key employees could have a material adverse effect
on the Company's business, prospects, financial condition and results of
operation. The Company's future success also depends on its ability to identify,
attract, hire, train, retain and motivate other highly skilled technical,
managerial and marketing personnel. Competition for such personnel is intensive,
and the Company's failure to attract and retain the necessary technical,
managerial and marketing personnel could have a material adverse effect on its
business, prospects, financial condition and results of operations.
RISK OF SYSTEM FAILURE
The Company's success depends substantially on its ability to deliver high
quality, uninterrupted Internet hosting. This requires that the Company protect
its computer equipment and the information stored in its servers. The Company's
systems will be vulnerable to damage by fire, natural disasters, power loss,
telecommunications failures, unauthorized intrusion and other catastrophic
events. Any substantial interruption in the Company's systems would have a
material adverse effect on its business, prospects, financial condition and
results of operations. Although the Company intends on carrying a cyber policy,
property and business interruption insurance, its coverage may not adequately
compensate for the losses that may occur. In addition, the Company's system may
be vulnerable to computer viruses, physical or electronic break-ins and other
similar disruptive events. Computer viruses, break-ins or other problems caused
by third parties could lead to interruptions, delays, and loss of data or
cessation in service to users of the Company's services. The occurrence of any
of these risks could have a material adverse effect on the Company's business,
prospects, financial condition or results of operations.
GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES
The Company is subject to various laws and regulations applicable to trade,
barter, sell or purchase goods and services. Moreover, although currently there
are only a few laws and regulations that directly apply to access the Internet,
it is possible that a number of laws and regulations may be adopted with respect
to the
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Internet, covering issues such as user privacy, pricing and characteristics and
quality of products and services. The adoption of any such laws or regulations
may decrease the growth of the internet, which in turn, could decrease the
demand for the Company's services and increase its cost of doing business or
otherwise have a material adverse effect on our business, prospects, financial
condition and results of operation. Any new legislation or regulation that is
directed at the Internet, or the application of existing laws and regulations to
the Internet or other online services could have a material adverse effect on
our business, customers, financial condition and results of operation.
LIMITED PUBLIC MARKET
Even if a registration of the Shares becomes effective, there can be no
assurance that a public market will develop in the future, nor can the Company
give any assurance that any public offering it might undertake in the future
will be successful.
USE OF PROCEEDS
ITEM 4. USE OF PROCEEDS.
The net proceeds to the Company from the sale of all of the Shares offered
hereby are estimated to be $2,700,000.
The Company intends to use the net proceeds from the Offering to:
* To fund daily operations of the Company until cash flow from
business operation is self-sustaining. The Company estimates this
amount to be $1,100,000;
* to complete development of additional barter/exchange software
and to expand the Internet web site. The Company estimates this
amount to be $200,000;
* to implement a major advertising and promotion program which is
anticipated to develop name recognition and expand business; The
Company estimates this amount to be $1,000,000;
* to complete the process of public registration of all issued and
outstanding Shares of common stock with the goal to be publicly
trading. The Company estimates this amount to be $50,000;
* to maintain a cash reserve of $350,000 to meet unanticipated
factors.
The amount and timing of working capital expenditures may vary significantly
depending upon numerous factors including: the costs involved in implementing
and expanding the Company's business model; competing technological and market
developments; the development of marketing and sales capabilities; and
administrative and legal expenses.
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The Company's management expects that it will require additional equity
financing in calendar year 2002 to complete the capitalization of its business
plan.
Until used, the net proceeds of the Offering will be invested in interest
bearing accounts. While the net proceeds are so invested, the interest earned on
such proceeds will be limited by available market rates. The Company intends to
invest and use such proceeds so as not to be considered an "investment company"
under the Investment Company Act of 1940, as amended.
........
DETERMINATION OF OFFERING PRICE
ITEM 5. DETERMINATION OF OFFERING PRICE.
The offering price of the Shares offered hereby was arbitrarily determined by
the Company in order to raise up to a total of $3,000,000 in this offering. The
offering price bears no relationship whatsoever to earnings, asset value, book
value or any other recognized criteria of value. Among the factors considered
were:
* our limited operating history;
* the proceeds to be raised by the offering;
* the amount of capital to be contributed by purchasers in this
offering in proportion to the amount of stock to be retained by
our existing Stockholders, and our relative cash requirements.
See "Plan of Distribution; Terms of the Offering."
ITEM 6. DILUTION.
As of October 31, 2000, there were 9,000,000 shares of Common Stock issued and
outstanding. Net tangible book value per share, which represents the amount of
the Company's total tangible assets less its total liabilities, divided by the
number of shares of the Common Stock outstanding, was approximately $(0.02) per
share.
After giving effect to the sale of the 1,000,000 shares of Common Stock under
this Offering at a price of $3.00 per share, and the application of the net
proceeds there from, there will be a total of 10,000,000 shares of Common Stock
outstanding with a tangible book value of approximately $0.25 per share. This
would represent an immediate dilution of $2.75 per share to new investors.
Dilution is determined by subtracting net tangible book value after the Offering
from the amount paid by new investors per share of Common Stock.
See audited financial statements attached for computation.
ITEM 7. SELLING SECURITY HOLDERS.
There are no selling security holders.
ITEM 8. PLAN OF DISTRIBUTION.
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SUBSCRIPTION PROCEDURE
A subscriber for the Common Shares hereunder shall be required to deliver to the
Company the following documents:
(a) A Subscription Agreement;
(b) A Check payable to "TradeAway.Com, Inc." in the amount of $3.00
times the number of shares subscribed for. The Common Shares will
not be issued until the total subscription amount ids paid in
full;
(c) The proceeds will be placed in escrow with Manhattan State Bank,
124 S. Broadway, Manhattan, Mt, 59741, and will not be released
to the Company until the minimum number of shares are subscribed
for. If that minimum number is not achieved, the proceeds will be
returned back to the subscriber.
PLAN OF DISTRIBUTION
The Shares are offered for sale by the Company pursuant to an exemption from
registration under Regulation A promulgated by the Commission under the
Securities Act of 1933. The Company is offering the shares on a "best efforts,
35,000 Common Shares minimum; maximum of 1,000,000 Common Shares. No one has
made any commitments to purchase or take down any of the offered Common Shares,
and there is no assurance that any or all of the shares will be sold, or that
the proceeds will be available to accomplish the Company's proposed business as
described herein.
ITEM 9. LEGAL PROCEEDINGS.
To the best knowledge of the Company, its officers and directors, neither the
Company nor any of its officers or directors are a party to any material legal
proceedings or litigation involving the Company or any securities matters, and
such persons are not aware of any contemplated or threatening legal proceedings
or litigation as of the effective date of this Offering Circular.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Our directors, executive officers and key personnel and their ages and positions
as of December 31, 2000 are:
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NAME AGE POSITION
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Thomas H. Langel President, Chief Executive Officer, Director
Dudley Lutton VP, Business Development
Rod Moser Chief Financial Officer
Linda Roffe VP Marketing
Elizabeth Ann Beauchaine VP, MIS
Diana Papili VP Sales
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THOMAS H. LANGEL is an established real estate developer and exchangor. He
started his barter career in 1975, trading for horses, tack, livestock and
hunting access rights during his early outfitting career in Montana. In 1978, he
founded First Exchange Systems which was a platform from which its members would
barter with one another for their real estate, goods and services using a form
or barter currency we called "Futures" or barter dollars. In 1980, Mr. Langel's
company created a computer program to do multi-legged exchanges on an IBM System
32. When the Internet came along in the 90's, he began exploring new ways to use
barter within this new medium and in February 1999 he conceived the TradeAway
concept.
Over the past 25 years, Mr. Langel has been involved in a significant amount of
personal and real property sales and exchanges and has built personal and
working relationships with hundreds of individuals involved in barter.
DUDLEY LUTTON Brings over 20 years of experience in the areas of project
development and communications. The range of work includes organizations and
projects from universities, political campaigns, nonprofit, capital projects and
businesses. The focus of his work has been to design positioning and
implementation strategies needed to connect resources required for success.
Principal of Strategies Inc.; Co-founder of the Cold Water Group, LLC; formerly
Fund Raising Consultant for two Montana Governors and an Attorney General;
formerly, Development Director of the Montana Nature Conservancy; organized an
investment group called the Friends of Montana; organized an advisory board from
companies such as IBM, McKensey Company, US West, Sprint, Rockwell
International, Microsoft, Netscape, Oracle, Med-Tel International, and Qualcomm
for the Burns Telecommunications Center/Montana State University.
ROD MOSER, 47, is a graduate of Montana State University with a B.S. degree in
Accounting. Moser began his professional career in 1976 as a CPA with Peat,
Marwick, Mitchell & Company with whom he worked for five years. Following PMM &
Co., Moser held the position of Controller and later Chief Financial Officer of
a publicly-traded oil company in Denver. Mr. Moser was the founder of a
successful real estate brokerage and investment company that he operated until
it was sold in the late 1980's. For the past twelve years, Moser has primarily
provided financial consulting services to a broad range of resort development
clients, including the golf design and development companies operated by the
Gary Player Group and Robert Trent Jones, Jr.
LINDA ROFFE, brings 25 years experience in marketing and advertising. She worked
as an Art Director, Marketing Director, and Account Executive for marketing and
advertising firms including her own in Madison, Wisconsin where she serviced a
variety of national and international accounts. Her background includes web
design, and traditional Offline advertising such as TV, radio, catalogs,
publications, packaging, direct mail, PR and outdoor advertising. She has won
numerous Addy Awards for categories "Best of Show" and "National Ad Campaigns".
Ms. Roffe taught layout and design classes at Madison Area Technical College.
She then moved to Bozeman in 1996 where she supervised the graphic arts
department at Montana State University.
ELIZABETH ANN BEAUCHAINE has a Bachelor's in Computer Information Systems, and
has worked as a Web Administrator/Programmer over the past few years. She has
received awards for "Honor Roll Member MSU-Northern" and "Havre Business and
Professional Women's Scholarship." After working with Zoot Enterprises in
Bozeman, Ms. Beauchaine brings her PHP, HTML, Java Script, Oracle, MySQL and
many other program and database language expertise to TradeAway.
DIANA PAPILI is the Advertising Sales Manager for Tradeaway. She holds a
Bachelor's Degree in Communications and has over 25 years experience in
marketing, advertising, public relations, and sales. She has been a free-lance
writer, an account executive for an advertising agency and an advertising
manager for a savings institution. She has a broad range of experience in the
media, including sales, award-winning writing, media buying and placement, and
some graphic design.
THE TRADEAWAY ADVISORY BOARD
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JULIAN GOLDBERG - BUSINESS DEVELOPMENT - Julian Goldberg headed an international
bond department for Shearson Hamill & Company, and Upham Harris. President of
Los Angeles based Goldberg, Allen, Lane & Lothrop, Inc., a real estate
investment firm specializing in the purchase of single tenant triple net leased
real estate worldwide. The firm is the second largest purchaser of Wal-Marts in
the United States. Mr. Goldberg is also a managing partner of Lease Back
Partners. Mr. Goldberg communicates on a regular basis with his Wall Street
Investment banking colleagues on a Senior Managing Director's level. Some of
these firms include Lehman Brothers, Bear Stearns, Solomon Brothers, Prudential
Securities, Goldman Sachs, William Blair and Company, William R. Hough and
Company, GMAC, First Boston, and Montgomery Securities.
CYNTHIA TAYLOR - BUSINESS DEVELOPMENT - Cindy Taylor brings 25 years of
practical business experience to the Advisory Board. From her first sales job a
IBM to the last as a division manager at Oracle, Cindy's career has focused on
the technology sector. After 14 years at IBM where she moved into management
ranks and helped start IBM's alternate channels business, Cindy moved to Silicon
Valley and became Director of OEM Sales at Ingres. She then became VP of Sales
and Marketing of two startups, an object database company and a desktop
videoconferencing company. Her last stop was as Senior Director and Division
Manager at Oracle in the New Media Division. Cindy started a consulting
business, The Improved Proformance Group, 2 years ago and consults with
technology companies to improve sales productivity. She is currently Vice
President of Alliances for Right Now Technologies, Inc., and serves on the Board
of Directors for Montana State University's Burns Telecommunications Center.
PAUL MANGANIELLO - BRAND DEVELOPMENT/MARKETING/COMMUNICATIONS - Paul Manganiello
is a marketing communications specialist, with an emphasis upon media placement.
He is currently consulting in that capacity for a number of corporations
including advertising agencies and media companies. He spent ten years as the
Global Media Director for Wieden & Kennedy, responsible for over $750 million of
media spending around the world for brands like Nike and Microsoft. Specific
areas of expertise: sports television, internet advertising, organic media,
event marketing and international media. Paul is a graduate of the University of
Notre Dame and a member of the New York State Bar. Twenty years of experience
across a variety of advertising and marketing disciplines on almost one hundred
brands - from Nike to Cole Haan, from Coke to Miller, and from Microsoft to
Xerox. He currently resides in Portland, Oregon.
PAT DILLON - CONTENT DEVELOPMENT - Mr. Dillon is an Author/Journalist, currently
director for Quokka.com. He was formerly with San Jose Mercury News, shared in
two Pulitzer Prizes, and writer for numerous business publications including
Fast Company Magazine. Recently, his novel Lost At Sea was named by the LA Times
as one of the top ten Non-fiction books of 1999. A newly appointed Senior Editor
for Forbes ASAP and contributing Editor for Forbes Magazine Inc.
RONALD D. COLEMAN - BUSINESS DEVELOPMENT - Mr. Coleman is Chairman, CEO and
CO-founder of Med-Tel International Corporation, a company engaged in the
provision of Tele-medicine Services. Mr. Coleman is also the Founder and
Chairman of International Televent, Inc. This is a non-profit corporation that
conducts an annual conference on recent development in the telecommunications
and finance world. Since its inception in 1981; INTELEVENT conference has been
one of the premiere events in the telecommunications industry. In 1980 Mr.
Coleman served on President Reagan's Presidential Transition Team for
telecommunications issues, and in 1988 he served in the same capacity for
President Bush. Previously Mr. Coleman co-founded and served as Chairman of the
Board, President and CEO of (formerly Tel-Optic), PTAT system, Inc. This
corporation was the first privately owned Trans-Atlantic fiber optic
telecommunications cable that served to link the continent of North America with
Europe. This was a joint effort with Cable and Wireless of the UK. The first
cable PTAT-1 was operation in July, 1989. Mr. Coleman and his partners
(including E.F. Hutton & Company) sold PTAT to Sprint on August 15, 1989.
DIRECTOR COMPENSATION
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The Company does not currently provide cash compensation to its directors for
their services as members of the Board of Directors, although the Company does
reimburse the directors for certain expenses in connection with attendance at
board and committee meetings
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
At December 31, 2000, the Company had 9,000,000 Common Shares issued and
outstanding. The following tabulates holdings of Common Shares of the Company by
each person who, at the date of this Offering Circular, is known by management
of the Company to own beneficially more than 5% of the common Shares. The table
includes Common Shares of the Company held or controlled by all directors and
officers of the Company individually and as a group. The table assumes that all
shares authorized by this Offering Circular are sold and none of the Shares
offered hereby are purchased by officers, directors or principal shareholders as
listed herein.
The Company is not aware of any arrangements, including the pledge by any person
of securities of the Company, which may at a subsequent date result in a change
in control of the Company.
<TABLE>
<CAPTION>
SHARES OWNED SHARES OWNED PERCENTAGE PERCENTAGE
NAME OF BENEFICIAL OWNER BEFORE OFFERING AFTER OFFERING BEFORE AFTER
------------------------- --------------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
DIRECTORS AND NAMED EXECUTIVE
OFFICERS
Thomas H. Langel(1) 7,913,900 7,913,900 87.93 79.14
Dudley Lutton 5,000 5,000 0.01 0.01
Rod Moser 5,000 5,000 0.01 0.01
Linda Roffe 5,000 5,000 0.01 0.01
Elizabeth Ann Beauchaine 5,000 5,000 0.01 0.01
Diana Papili 5,000 5,000 0.01 0.01
--------- --------- ----- ----
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (6) 7,938,900 7,938,900 88.21 79.39
--------- --------- ----- -----
</TABLE>
(1) Consists of 3,870,567 shares owned by Thomas H. Langel; 1,600,000 shares
owned by DeeAnn Langel (wife of Thomas); 1,400,000 shares owned by LLF, LLP
(Langel Family Trust); 100,000 shares owned by Wayne Langel (son of Thomas);
100,000 shares owned by Ronya Langel (daughter-in-law of Thomas); 200,000 shares
owned by Kelly Powell (Daughter of Thomas); 100,000 shares owned by Kimberly
Brainard (Daughter of Thomas); 100,000 shares owned by J.R. Brainard (son-in-law
of Thomas); 200,000 shares owned by Kohlby Langel (son of Thomas); 200,000
shares owned by Regan Langel (daughter of Thomas); 33,333 shares owned by
Michael Langel (brother of Thomas who paid $10,000 cash for his shares); and
5,000 shares owned by Everett Lay and 5,000 shares owned by Rose Lay (in-laws of
Thomas who paid $5,000 cash for their shares).
ITEM 12. DESCRIPTION OF SECURITIES.
The Company, a Nevada Corporation, has an authorization of 10,000,000 shares of
Common Stock, par value $0.001. On May 19, 2000, the Company issued 8,453,067
shares of Common Stock to Thomas H. Langel in exchange for cash, reimbursement
of expenses and for services rendered to the Company. On May 25, 2000 the
Company issued 33,333 shares of Common Stock to Michael Langel, brother of
Thomas H. Langel for $10,000 in cash. On June 5, 2000 the Company issued 5,000
shares of Common Stock to Everett Lay and 5,000 shares of Common Stock to Rose
Lay, In-Laws of Thomas H. Langel, in exchange for $5,000 cash. On June 15, 2000
Thomas H. Langel gifted 4,582,500 share of Common Stock to family members,
employees, consultants and tithing to his church. On September 15, 2000 the
Company issued
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500,000 to consultants for services rendered valued at $50,000. On October 25,
2000 the Company issued 3,600 shares of Common Stock to a local radio station in
exchange for advertising valued at $10,000. No additional shares of common stock
have been issued.
COMMON SHARES
All shares, when issued, will be fully paid and non-assessable. All shares are
equal to each other with respect to voting, liquidation and dividend rights.
Special shareholder meetings may be called by the officers or directors, or upon
the request of holders of at least one-tenth of the outstanding shares. Holders
of shares are entitled to one vote at any shareholder's meeting for each share
they own as of the record date by the Board of Directors. There are no quorum
requirements for shareholder meetings. There are no conversion, pre-emptive, or
other subscription rights or privileges with respect to any share. Reference is
made to the Company's Articles of Incorporation and its By Laws as well as to
the applicable statutes of the State of Nevada for a more complete description
of the rights and liabilities of holders of shares.
PREFERRED SHARES
There are no preferred shares of stock authorized.
DIVIDENDS
The Company is a new business and no assurance can be given that it will
generate earnings from which cash dividends can be paid. However, if earnings
are generated, management may follow a policy of retaining some earnings for the
expansion of its business. Such a policy could be maintained so long as
necessary to provide funds for the Company's business. Earnings in excess of
amounts necessary for expansion may be paid to shareholders as dividends. Such
dividends that may be paid in the future will be dependent upon earnings and
financial requirements of the Company and all other relevant factors.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL.
LEGAL MATTERS
The validity of the issuance of the shares offered hereby will be passed upon
for the Company by Mr. John T. Tansey, Esq., 1730 K Street, NW, Suite 304,
Washington, D.C., 20006, phone (202) 508-1459.
ACCOUNTING
The Company's audited financial statements contained herein show the Company's
position as of October 31, 2000. They were prepared by the accounting firm of
Harold Spector, 80 South lake Street, Suite 723, Pasadena, California. Following
completion of the Offering, financial statements for future years will be
audited.
TRANSFER AGENT AND ANNUAL REPORT
The Company intends to act initially as its own transfer agent and will
subsequently obtain the services of an independent transfer agent. Each year the
Company will prepare and distribute to shareholders an Annual Report that
describes the nature and scope of the company's business and operations for the
prior year and contains a copy of the Company's financial statements for its
most recent year.
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ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES.
The Bylaws of the Company provide that directors of the Company will not be
personally liable for monetary damages to the company or its shareholders for
breaches of their duties as directors except in instances of self-dealing,
willful misconduct or recklessness, criminal violations or liabilities involving
the payment of taxes. Such limitations are designed to protect the directors at
the possible disadvantage of shareholders, however management believes such
protection is necessary to induce talented individuals with important advantages
for the Company, to serve on the board.
The Company has included provisions in its Bylaws providing for indemnification
of its directors and officers by the Company to the maximum extent permitted
under applicable law, including the advancement of expenses incurred by a
director or officer in any suit in which the director or officer is involved.
The Company believes that such actions will assist it in attracting and
retaining qualified individuals to serve as directors and officers. Prospective
investors should be aware, however, that the costs associated with indemnifying
a director or officer could be significant and, if not covered by insurance,
could adversely affect the Company's results of operations. Furthermore, in
situations where the Company has advanced litigation expenses to a director
officer and the director or officer is required to repay the expenses because it
is ultimately determined that the director or officer is not entitled to
indemnification, the director or officer may not have sufficient cash or assets
to repay the expenses advanced.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange 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 the payment by the Company of expenses
incurred or paid by a director, officer or controlling person by the Company 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 company will 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 the final adjudication
of such issue.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS.
The Company was incorporated in the State of Nevada on May 19, 2000. On November
9, 2000, the Company was qualified to do business in the State of Montana. There
have been no mergers, acquisitions, name or other organization changes since
inception. Reference is made to the information set forth in Item 11.
ITEM 16. DESCRIPTION OF BUSINESS.
MISSION STATEMENT
To have the most advanced user-friendly Barter-Auction system on the World Wide
Web, and to maintain leadership in the Online Barter and Auction markets.
COMPANY STRUCTURE
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Thomas H. Langel established the business of TradeAway in February 1999,
commenced the business in July 1999 and in May 19, 2000, the Company was
incorporated in the State of Nevada. TradeAway management has a Barter related
background and a large list of contacts through the country.
THE INDUSTRY
Barter is the oldest form of commerce or business in the world. Barter is simply
the exchange of one product or service for another without the exchange of cash.
Described another way -- barter is using what you have to get what you want or
need. The Barter Industry is now officially recognized by the federal government
through the "Tax Equity and Financial Responsibility Act (TEFRA) of 1982" as
third-party record keepers.
A Barter (or Trade) Exchange is a business organization engaged in the exchange
of products and services without the use of cash. A Trade/Barter Exchange acts
in a fiduciary role, facilitating trading between the exchange's clients via a
form of currency, e.g. Trade Dollars (T$), that clients can spend on any of the
products and services available on trade from the other clients.
Barter substantially decreased with the rise of money-backed currency, but it
never disappeared. Developing countries routinely resort to barter in the
absence of cash, and offline trade exchanges have linked small to medium-sized
businesses for decades. In fact, according to the International Reciprocal Trade
Association, roughly $10 billion worth of goods and services were bartered among
North American businesses in 1998. TradeAway believes that figure is likely to
increase exponentially as business-to-business bartering moves online.
THE BUSINESS
TradeAway is a People-to-People e-commerce site. TradeAway will give people the
opportunity, in a barter auction format, to get value out of their unused
merchandise or services with, or without the use of cash, utilizing the Internet
as a medium to trade, barter, sell, or find their merchandise, services, real
estate and other assets of all values. Most people and businesses have something
of value that they are not utilizing that they would trade for something else
they need. TradeAway will use its technology to enable buyers and sellers an
efficient and fun means to interact with each other, exchange goods and do so
using a non-cash auction format.
The Company believes that eBay and its competitors have proven the overwhelming
attractiveness of the auction format to the Internet user. The internet trade
and barter auction concept is dynamic and one which remains undeveloped. Over
the past decade, the barter industry's growth rate has increased substantially.
The Department of Commerce says that barter, in its various forms, accounts for
a large percent of the world's total business. TradeAway believes that it is
well positioned to be a leader in this space by already having an established
site with a significant user base and an estimated $735 million dollars in
listings and over $458 million in offers having been made by its users as of
December 31, 2000.
HOW TRADEAWAY WORKS
The industry leaders in the field of auction sites, principally eBay and Yahoo,
currently limit themselves to a cash only marketplace. In a user-friendly and
fun format, TradeAway intends to utilize the Internet auction site at a
different level of marketing by enabling an exchange of goods to take place
should the user elect not to offer cash as the only medium of exchange. Most
auction sites require cash to participate. The Company believes that this
critical distinction unleashes an enormous pool of pent up demand.
Adding a critical additional dimension to TradeAway's business is that it not
only provides items for sale and trade, but also gives the user the opportunity
to list those items he or she "wants" to acquire right alongside what he or she
lists for trade. In this way, TradeAway provides the user with the possibility
of fulfilling his or her fantasies and dreams by publishing a "wishlist" of
items or services that the person really wants. TradeAway believes that it
offers one of the few places where a person can instantaneously
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reach tens of millions of other people to tell them what it is they really want,
while at the same time making it a realistic possibility by telling the entire
Internet world what they will give to fulfill that desire.
After TradeAway users list their "have" and "want", they are instantly given
matches and potential matches for a trade. With this information, the user can
easily communicate with the other party through "TradeMail". Upon sending
another user an offer or message, the receiving user is sent a TradeMail to
their regular e-mail address. Upon checking their regular e-mail and finding the
message from TradeMail, they simply click on a link which brings them directly
to the message or offer from the TradeAway user that sent the offer or message.
TradeMail gives the user total anonymity keeping the identity and regular e-mail
address confidential until the users agree to share this private information.
To the best of our knowledge, TradeAway's method of doing business is totally
unique and its patent pending technology does not exist anywhere else, online or
off. We are in the process of licensing technology for operation on TradeAway
that automatically does 3 to 5 way exchanges, thus eliminating the need to find
direct trades between two users. We believe that this will have a substantial
impact on the way barter is done.
We further believe that TradeAway possesses everything required and has the
current ability to successfully implement its business model. The company is
currently utilizing the key ingredients, which includes all the software
technology, programming and methods to support each of the following:
o A "barter auction" format that allows offers of bartered items to be tagged
to the listing until accepted, declined or modified. Allowing multiple
offers and tags to the offered item thereby creates an auction. This
offered tag can itself be offered on until accepted or rejected creating an
urgency in the original offeror to accept a good offer.
o An internal e-mail system called "Trademail" that allows users to
communicate with each other anonymously using their TradeAway usernames for
the purpose of asking questions of one another regarding the product,
service or offer.
o An automated matching system that alerts the user of an existing match when
the listing is made.
o An automated notification via TradeMail when an item or service is listed
on TradeAway that was in the user "Wishlist" of items they would trade for
will be implemented.
o A user option which when enabled sends an email to the regular email
address of the user whenever there is an offer from another user on their
listing or if there is Trademail waiting in the internal mail system.
Getting where you want to go is just a click away from the TradeAway home page.
Exploring the TradeAway site and its listings does not require registration.
Registering as a TradeAway user is easily accomplished from any page the user
happens to be on while exploring the TradeAway site. The user can simply
register free from wherever they are if the next required function mandates a
user name or ID. Registration is simple, quick and easy and requires no credit
card or payment of any kind at this time. The best and most informative way to
understand how the site operates is to visit, register, list an item and
establish your wish-list. The listings allowed on TradeAway are "FOR SALE", "FOR
TRADE", "SALE or TRADE", "FREE" and "WANTED".
All listings operate on an Auction format, which works as follows: If an item is
listed for "trade or sale" an interested party can make an offer on it directly
on the page the item is listed. The new offer is tagged to the bottom of the
items description page so that whenever the item is viewed by another user, the
offers pending are seen also. A person can receive several offers until they
decide to accept or reject them. During this time between accepting or rejecting
an offer, all the items that were offered for the listed item are available for
anyone else that may be interested. All offers are displayed to everyone that
sees the listed item which creates an urgency to accept a good offer before
someone else makes an offer to acquire an item offered on the original item.
The classified sale portion of the site is unique in the way in which we allow
the buyers and sellers to interact with each other. TradeAway users can
communicate with one another by use of an internal mail system that we call
"TradeMail". You can ask questions via "TradeMail" and receive e-mails when
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somebody lists to buy, sell or trade the item you want to buy, sell or trade.
User names allow TradeAway members total anonymity until they elect to exchange
personal data. We believe that this "Trade-Mail" feature also has the effect of
creating the all important community among TradeAway users. There will be a
strong emphasis on community development once funding is secured. User ratings
such as those used on all the major auction sites may be implemented after more
evaluation. Hosted forums on trade related subjects such as tax free real estate
exchanges will be offered. Message Boards, instant messaging, chat rooms and
other community functions will be offered and nourished. We believe that
community is as important as content and facilitates commerce. It is becoming
more and more apparent that people want to interact on the Internet.
A strong geographic focus will be added to the TradeAway business model and site
as it grows. TradeAway will focus on giving consumers the ability to access
listings and other information, trade and interact regionally by state, city or
zip code. We envision sites within the site for people from every city and
region in the country. In this way, people in Seattle will interact and trade
with people in Seattle if that is what they want while people in Atlanta will do
so with others in Atlanta if that is their preference. The entire site will be
accessible to all users regardless of geographic location if that is how they
choose to conduct business at TradeAway. In addition, TradeAway makes it
convenient to search by product, category, region and method of the transaction,
or by any combination of these attributes.
While the funding we are now seeking will enable numerous visual improvements
and expansions to the site, the basic operation will remain the same as today.
EXAMPLE OF HOW TRADEAWAY WORKS:
(PLEASE NOTE : All names and titles are fictitious and are used for illustrative
purposes only. Any similarity in names and titles are coincidental)
On the auction/barter block: Jewelry
Wayne Parker, electrician, is in the market for a new piece of jewelry for his
wife but he is not exactly flush with cash this month. Solution: He looks on
TradeAway.com for his jewelry and finds Mr. Sparkle's listing of a 1 carat
diamond for $4,500 "SALE or TRADE".
In order for Mr. Parker to offer his electrical services, he must first register
at TradeAway and receive a user name and item number for listing his legal
services. This is easily accomplished in several ways from wherever he is on the
site. His $4,500 in services is now listed on the TradeAway system. Mr. Parker
would probably list these services saying in his "Trader's Wish List" that he is
looking for jewelry. After he lists his services and registers as a TradeAway
user, he can also make offers on listed jewelry. Although many TradeAway users
visit the site on a daily basis, this is not necessary to take full advantage of
the service offered. The automatic e-mail notification services to be installed
upon completion, will allow the user to rest and go about their daily business
knowing that TradeAway is working for him or her at all times without any effort
or time expended on their part after listing their products or services other
than follow up with offers.
Now registered and having an item number, Mr. Parker offers $4,500 in future
electrical services for the diamond easily by clicking on the "Make an offer"
prompt below the listing description. When this button is clicked, it brings up
a new page that allows you to offer anything that you have previously listed on
TradeAway by showing you a drop down window that automatically includes as
options all your TradeAway listings so you can easily and quickly decide what to
offer in exchange for the item you want. You can also go to the next prompt and
"add cash" if you desire. Then you go to the bottom of the "make an offer page"
and there is a box that you can type in your conditions to the offer such as
inspection, shipping, escrow or whatever makes you comfortable. It's simple,
easy and effortless to make an offer. Of course the deal is not final until all
details have been agreed to by all parties. If the diamond would have been
listed for $5,500 Mr. Parker could have offered $4,500 in services and $1,000 in
cash. The options are endless.
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For the duration of time that the $4,500 in electrical services is offered on
the diamond, that offer is posted directly under the diamond listing. Someone
else interested in trading for the diamond can still make an offer on the
diamond and the second offer is posted along with the electrical services as
open offers on the diamond. Thus, the auction has begun. Now the fun begins. Any
user can now make an offer on the diamond, the electrical services or all other
items offered for the diamond or for the items offered under the diamond. This
multi-tiered auction will create the kind of excitement that has helped propel
the cash auction sites to the position they now enjoy.
However, when there is a meeting of the minds between two parties, the game is
over so the motivation to accept the first good offer is high. This fear of
losing a good offer to somebody else creates a frenzy even more exciting than
the cash auction!
After Mr. Parker makes the offer on Mr. Sparkle's diamond, two things have
happened. The offer was immediately posted on Mr. Sparkle's diamond listing
page, Mr. Sparkle has received an e-mail letting him know that he has an offer
waiting for him in TradeMail. Mr. Sparkle now has to make the decision to accept
or reject the offer before somebody else decides to make a better offer to Mr.
Parker and perhaps lose the opportunity. Mr. Sparkle decides to accept the
electrical services as he foresees the need for electrical services due to his
planned business expansion. A few e-mails later, the arrangements are made
between them and the deal is put into "contract" when Mr. Sparkle simply clicks
"Accept Offer" subject to his terms and Mr. Parker's acceptance.
At this point, the electrical services and the diamond listing are removed as
listing. Any other offers that were made on those items are put back into their
respective categories. The closed deal remains available for 7 days so that,
utilizing the item number, the others making offers can go back to see what Mr.
Sparkle or Mr. Parker accepted.
All this activity has taken place automatically with the assistance of
TradeAway's software. It is critical to note that nowhere in these transaction
does a representative of TradeAway get involved.
The personnel costs are staggeringly low in this business model and the
increases in personnel and other expenses necessitated by increased business and
revenue is miniscule. Thus, profitability is assured to be increasing
exponentially with increased sales volume. There are almost no incremental and
variable costs once the infrastructure is in place. This fact stands in dramatic
and attractive contrast to so many other Internet business models and to some
others attempting to occupy the barter space.
This is only one example of how TradeAway.Com Internet site operates. There are
numerous other possibilities for buy/sell/barter/trade within the Internet site.
TAX IMPLICATIONS
There are no tax advantages or disadvantages to barter. The IRS and tax law
treats barter identically to cash. Barter sales are treated as taxable income in
the year they are credited, just like cash sales. Barter purchases for products
and services for your business or personal use, including salaries, are tax
deductible just as if they were cash purchases. Barter Exchanges report the
barter transactions for their clients to the IRS and to the client on a Form
1099-B at the end of the year. You would be responsible for issuing the
appropriate Form 1099-B's for any direct trades in which you participate.
TradeAway serves only as a facilitator to the transaction, much the same way as
a classified advertisement in a newspaper or magazine. Buyer and seller are
responsible to any appropriate governmental agency for reporting and paying any
applicable taxes on the transactions. At such time as TradeAway is a party to
any transaction, all filings required by law will be made
COMPETITIVE ENVIRONMENT
18
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A number of online auction and barter web-sites exist today. The existing sites
fall into three broad categories. The auction sites such as eBay and Yahoo sell
goods exclusively for cash. The trade dollar web-sites are primarily attracting
businesses that are bartering their products and services by using barter
script. The third group is the "swap" sites. WebSwap.com, Swap.com, Swaprat.com,
qswap.com, swapvillage.com and others trade primarily in small items such as
CD's, videos, DVD's, beanie babies, small household goods, sporting goods and
similar items. All of these sites are very different than TradeAway.
The cash auction market is dominated by eBay and TradeAway does not intend to
compete in eBay's space. eBay targets consumers and businesses that are trying
to sell their merchandise and services to others in an auction format.
Transactions are concluded for cash. The primary difference between
TradeAway.com and eBay.com is that TradeAway allows consumers to acquire
merchandise or services without cash or a combination of cash, services and
products.
TradeAway also does not intend to compete in the "trade dollar site" marketplace
at this time. Top sites include BigVine with more than 26,435 members, more than
9,000 listings and charge a fee of 3 to 4 percent of trade value;
BarterTrust.com with more than 9,500 members, more than 10,000 listings, and
charge a fee of 5 percent of trade value; and Ubarter.com with more than 9,000
members, more than 7,000 listings and charge a fee of 5 percent of trade value
TradeAway believes that non-cash barter sites will have advantages over a cash
auction web-site due to the large number of potential users who have items or
services to trade, but elect, for any number of reasons, not to use all cash in
order to participate on an auction web-site.
MARKETING PROGRAM
The TradeAway plan is to market to the general public, business and personal,
not niches. By doing so, we are bringing the TradeAway concept to owners of
large and small corporations and consumers all at the same personal level.
Marketing and advertising will be a critical component for TradeAway's success.
TradeAway will align itself with several high profile companies and high traffic
website companies to develop and implement an aggressive marketing plan to build
its user base and its trade name.
The Company will launch a substantial ongoing national advertising campaign,
both in traditional media and online, that will specifically be designed to
attract new TradeAway users. The company has had significant success testing the
concept through a telemarketing campaign growing to over 6,600 members in less
than eight months. An important segment of the campaign will include advertising
in targeted publications that cater to trading and bartering. Additional
awareness will be created through traditional off line advertising, and online
marketing including distribution of press releases. TradeAway personnel will
attend appropriate regional/national trade shows and special events. A portion
of the proceeds from this Offering Circular will be used for advertising and
marketing to implement its business plan. (See "Use of Proceeds")
TradeAway's Internet home page is intended to create a strong global presence,
offering a full variety of special display and classified listings for both
private party users and businesses. Display ads include a Moving Marquee, Home
Page Picture Display, Search Ad, Category Banner Ad, and Subcategory Banner Ad.
Classified ads include Top of the List Ad, Home Page Featured Classified,
Classified Ad with Picture, and Classified Ad. Our intent is to create a
personal experience for TradeAway users. The site is designed to be inviting,
fun, easy, resourceful, and efficient for all users.
ITEM 17. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
19
<PAGE>
The Company currently has a membership Internet web site operational, offering a
venue for barter and exchange of items by members. Currently there are
approximately 6,000 members. Membership currently is at no charge. Once
membership reaches 10,000, the Company plans to charge for membership, for
listings and on larger items, a percentage of the sales price. The Company
currently has only nominal income and has relied on the founder for working
capital. The Company anticipates that the proceeds from this offering will be
sufficient to establish name recognition, to increase membership sufficient to
generate positive cash flow and to greatly increase the number of listings for
both buyers and sellers.
The Company is currently negotiating to license software that will enable the
website to handle multi-legged trade transactions involving three, four and even
five different buyers and sellers.
Once sufficient cash flow is generated, the Company anticipates becoming a
participant in strategic transactions, both as buyer and seller. This should
generate additional income for the Company, by acquiring properties at nominal
cost and re-marketing at a higher price.
(See Item 16, "Company Business" for additional information)
ITEM 18. DESCRIPTION OF PROPERTY.
The Company does not own any property. It shares approximately 1,500 square feet
of office space at 112 South Broadway, Manhattan, Montana. Upon funding, the
Company will expand into its own facility.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
From inception May 19, 2000 to October 31, 2000 the Company entered into an
agreement with Amerimont, Inc., a real estate development firm controlled by the
founding shareholder, wherein Amerimont would finance the operations of the
Company until the Company had adequate cash flow from operations or outside
financing so that the Company no longer required funds from Amerimont. The
Company has signed a note at October 31, 2000 in the amount of $183,589. The
note bears interest at 10% and is payable monthly and amortized over a maximum
of 10 years. This note may continue to increase until the Company is
sufficiently funded. Payments will commence when cash flow is available for such
payments.
In the opinion of the disinterested members of the Board of Directors, the above
transaction was fair and was made in terms that were no less favorable to the
Company than would have been obtained if negotiated with unaffiliated third
parties.
As part of the agreement between the Company and members of the Board of
Directors for their services on the board, the members were gifted 5,000 shares
of common stock each by the Company founder.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.
There is currently no market existing for the issued and outstanding shares of
common stock of the Company. There are no outstanding options or warrants to
purchase, or securities convertible into, common equity of the Company. There
are currently no shares that could be sold pursuant to Rule 144 under the
securities Act. The Company intends to pursue a publicly trading market for the
shares registered under this Prospectus.
There are currently 40 shareholders of the outstanding common stock of the
Company.
20
<PAGE>
The Company is a new business and no assurance can be given that it will
generate earnings from which cash dividends can be paid. However, if earnings
are generated, management may follow a policy of retaining some earnings for the
expansion of its business. Such a policy could be maintained so long as
necessary to provide funds for the Company's business. Earnings in excess of
amounts necessary for expansion may be paid to shareholders as dividends. Such
dividends that may be paid in the future will be dependent upon earnings and
financial requirements of the Company and all other relevant factors.
ITEM 21. EXECUTIVE COMPENSATION.
To date there has been no executive compensation paid or accrued. Upon
completion of funding, a compensation plan for executives will be initiated at
an amount to be determined.
ITEM 22. FINANCIAL STATEMENTS.
Financial Statements attached.
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no changes in or disagreements with accountants on accounting
and financial disclosures.
21
<PAGE>
HAROLD Y. SPECTOR
CERTIFIED PUBLIC ACCOUNTANT
80 SOUTH LAKE AVENUE, SUITE 723
PASADENA, CALIFORNIA 91101
(888) 584-5577
FAX (626) 584-6447
[email protected]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of TradeAway.com, Inc.
I have audited the accompanying balance sheet of TradeAway.com, Inc. (a Nevada
corporation in the development stage) as of October 31, 2000, and the related
statements of operations, stockholders' equity, and cash flows for the period
from Inception May 19, 2000 to October 31, 2000. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted this 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 provided 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 TradeAway.com, Inc. as of October
31, 2000, and the results of its operations and its cash flows for the period
from Inception May 19, 2000 to October 31, 2000, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred net losses since its inception, and has a net capital
deficiency. Those conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to those matters
also are described in Note 8. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Harold Y. Spector, CPA
Pasadena, CA
December 13, 2000
<PAGE>
TRADEAWAY COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
October 31, 2000
<TABLE>
<S> <C>
ASSETS
Current Assets $ 0
---------
Property and Equipment Office Equipment 13,465
Less: Accumulated Depreciation (1,346)
---------
Total Property and Equipment 12,119
---------
Other Assets 0
---------
TOTAL ASSETS $ 12.119
---------
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities
Cash (Overdraft) $ 4,250
Accounts Payable 12,331
Payroll Taxes Payable 411
---------
Total Current Liabilities 16,992
---------
Long-term Debt - Related Party 183,589
---------
Total Liabilities 200,581
---------
Stockholders' Equity
Common Stock, $.001 par value; 10,000,000 shares
Authorized; 9,000,000 shares issued and
Outstanding 9,000
Paid-in Capital 74,453
Accumulated deficit during the development stage (271,915)
---------
Total Stockholders' Equity (188,462)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,119
---------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the period from Inception May 19, 2000 to October 31, 2000
<TABLE>
<S> <C>
REVENUE: $ 490
OPERATING EXPENSES
Accounting 5,000
Advertising 46,445
Auto 345
Bank Charges 55
Computer and Internet 9,600
Consulting 121,310
Contribution 130
Depreciation 1,346
Dues and Subscriptions 688
Employee Relations 5,953
Insurance 1,620
License and Taxes 100
Legal and Professional 5,950
Maintenance 84
Miscellaneous 36
Office Supplies 2,835
Payroll Taxes 4,140
Salaries and Wages 44,811
Telephone 4,050
Travel and Entertainment 7,885
Website Development 10,022
---------
Total Operating Expenses 272,405
---------
INCOME (LOSS) BEFORE TAXES (271,915)
PROVISION FOR INCOME TAXES 0
NET INCOME (LOSS) $ (271,915)
---------
NET LOSS PER SHARE - BASIC $ (0.03)
---------
WEIGHTED AVERAGE SHARES OUTSTANDING 8,587,055
---------
</TABLE>
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from Inception May 19, 2000 to October 31, 2000
<TABLE>
<CAPTION>
Paid
Common in Accumulated
Shares Stock Capital Deficit Total
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception, May 19, 2000 0 $ 0 $ 0 $ 0 $ 0
Issuance or stock to Founder 8,453, 067 8,453 8,453
Issuance of stock for Cash
Advance toward expenses
Prior to incorporation 43,333 43 14,957 15,000
Issuance of stock for
consulting fee 500,000 500 49,500 50,000
Issuance of stock for
Advertising expense 3,600 4 9,996 10, 000
Net Loss during the period (271,915) (271,915)
------------------------------------------------------------
Balance at October 31, 2000 9,000,000 $ 9,000 $74,453 $(271,915) $(188,462)
------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the period from Inception May 19, 2000 to October 31, 2000
<TABLE>
<S> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (271,915)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,346
Issuance stock for expenses 60,000
Changes in operating assets and liabilities:
Increase in Accounts Payable 12,331
Increase in Payroll Taxes Payable 411
----------
Net cash used by operating activities (197,827)
----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (13,465)
----------
Net cash used by investing activities (13,465)
----------
CASH FLOW WROM FINANCING ACTIVITIES
Proceeds from Issuance of common stocks 23,453
Net Proceeds from Long-Term Debt 183,589
----------
Net cash provided by financing activities 207,042
----------
NET DECREASE IN CASH (4,250)
CASH AT INCEPTION MAY 19, 2000 0
CASH AT OCTOBER 31, 2000 $ (4,250)
----------
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 0
----------
Taxes paid $ 0
----------
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the Period from Inception May 19, 2000 to October 31, 2000
NOTE 1- NATURE OF BUSINESS
TradeAway.con, Inc. (the "Company") was incorporated under the laws of the state
of Nevada on May 19, 2000 and qualified to do business in Montana on November 9,
2000. The Company is headquartered in Manhattan, Montana.
The Company provides an e-commerce venue that allows a business or person to
acquire goods or services wherein cash is not a requirement for a transaction to
be concluded, through the age-old process of barter and trade activities. To
date the Company has over $673 million in listings and over $418 million in
offers on the listings, and has over 6,000 members. The Company intends to
continue the barter and exchange activities and commence billing activities as
soon as a 10,000 membership has been obtained.
The Company's activities to date have been limited to organization, capital
formation and testing of the Company's Internet web sits and barter and exchange
software. The Company has not generated significant revenue from it's planned
operations. The Company is considered a development stage company as defined
under Financial Accounting Standards Board ("FASB") statement No. 7.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimate
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenues and expenses. Actual results nay differ from these
estimates.
Revenue; Recognition
Revenue is recognized at the time a listing is made by either a buyer or seller
and at such time as the barter or exchange activity is completed in the case
where a contingent commission is in place.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less to be cash
equivalents.
Fair Value of Financial Instruments
All financial instruments are carried at amounts that approximate estimated fair
value
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the Period from Inception May 19, 2000 to October 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment
Property and Equipment is stated at cost and depreciated using the straight-line
method over its estimated useful life. Expenditures for repairs and maintenance
are charged against operations. Renewals and betterments that materially extend
the life of an asset are capitalized.
Depreciation expense for the period from Inception May 19, 2000 to October 31,
2000 was $1,346.
Advertising Costs
All cost associated with advertising and promotion are expensed in the year
incurred. Advertising expense for the period from Inception May 19, 2000 to
October 31, 2000 was $46,445.
Website Development Costs
The Company recognizes website development costs in accordance with Emerging
Issues Task Force ("EITF") Issue No. 00-02, "Accounting for Website Development
Costs". As such, the Company expenses all costs incurred that relate to the
planning and post implementation phases of development, including repair or
maintenance of the existing site or the development of website content. Costs
incurred in the development phase are capitalized and recognized over their
estimated useful lives. For the period from Inception May 19, 2000 to October
31, 2000, the Company incurred website development expense of $10,022 included
in the accompanying statement of operations.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting standards ("SEAS") No. 109, "Accounting for Income Taxes." SFAS NO.
109 requires a company to recognize deferred tax liabilities and assets for the
expected future income tax consequences of events that have been recognized in
the Company's financial statements. 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 the enacted
tax rates in effect in the years in which the temporary differences ate expected
to reverse.
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the Period from Inception May 19, 2000 to October 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncement
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS No. 138, which was
issued in June 2000. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments. The Company currently does not use derivative
financial products for hedging or speculative purposes and as a result, does not
anticipate any impact on the Company's financial statements.
In July 2000, the EITF reached a consensus on EITF Issue 99-19, "Reporting
Revenue Gross as a Principal versus Net as an Agent." This consensus provides
guidance concerning under what circumstances a company should report revenue
based on (a) the gross amount billed to a customer because it has earned revenue
from the sale of the goods or services or (b) the net amount retained (that is,
the amount billed to the customer less the amount paid to a supplier) because it
has earned a commission or fee. The Company currently does not have any
inventory or barter assets, and does not anticipate any impact on the Company's
revenue recognition policies
NOTE 3 - NOTE PAYABLE - RELATED PARTY
Prior to inception, the Company entered into an agreement with Amerimont, Inc.
Amerimont"), a real estate development firm controlled by the Company's
controlling shareholder, wherein Amerimont would finance the operations of the
Company until the Company had adequate cash flow from operations or outside
financing that the Company no longer required funding from Amerimont. As of
October 31, 2000, the Company has signed a note, in the amount of $183,589,
payable to Amerimont. The note bears interest at ten percent (10%) and is
payable monthly and amortized over a maximum of ten years. Payments will
commence when cash flow is available for such payments. In the opinion of the
disinterested members of the Board of Directors, the above transaction was fair
and was made in terms that were no less favorable to the Company than would been
obtained if negotiated with unaffiliated third parties.
NOTE 4 - COMMON STOCK TRANSACTIONS
At inception, the Company issued 8,481,400 shares of common stock to its founder
in exchange for cash, reimbursement of expenses and for his service rendered to
the Company. The shares were valued at par value which amount is considered by
the Company to be the fair value of the services. On June 15, 2000, the founder
gifted 4,582,500 shares of his common stock to family members, employees,
consultants and tithing to the church.
<PAGE>
TRADEAWAY .COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the Period from Inception May 19, 2000 to October 31, 2000
NOTE 4 - COMMON STOCK TRANSACTIONS (Continued)
On May 25, 2000, the Company issued 33,333 shares of common stock to a related
party for his $10,000 cash advance toward Company expenses prior to
incorporation.
On June 5, 2000, the Company issued 10,000 shares of common stock to another
related party for his $5,000 cash advance toward Company expenses prior to
incorporation.
On October 25, 2000, the Company issued 500,000 shares of common stock to four
consultants, in the amount of $50,000, for their services rendered.
On October 31, 2000, the Company issued 3,600 shares of common stock to a local
radio station, in the amount of $10,000, in exchange for advertising.
NOTE 5 - PROVISION FOR INCOME TAXES
No provision for income taxes was provided in the accompanying statement of
operations. Due to net operating losses and the uncertainty or realization, no
tax benefit has been recognized for operating losses.
NOTE 6 - NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of shares of
common stock outstanding during the period. Basic net loss per share for the
period from May 19, 2000 to October 31, 2000 is $0.03. Diluted net loss per
share is the same as basic net loss per share due to the lack of dilutive items
in the Company.
NOTE 7 - RELATED PARTY TRANSACTIONS
Note Payable
As discussed in Note 3 to the financial statements, the Company has a note
payable to a related party in the amount of $183,589 as of October 31, 2000.
Lease Commitment
The Company currently shares the office facility with a related party, who bears
all lease expenses. Upon funding, the Company will either move to another
facility as there is not enough space for it to grow or will pay rent. The
rental amount is inconsequential as it would only be $200 to $300 per month.
<PAGE>
TRADEAWAY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
For the Period from Inception May 19, 2000 to October 31, 2000
NOTE 7 - RELATED PARTY TRANSACTIONS (Continued)
Executives and Directors Compensation
The Company currently does not provide cash compensation to its officers and
directors. The services rendered by the officers and directors are immaterial
and are limited as members of the Board of Directors. Consulting Expenses
For the period from Inception May 19, 2000 to October 31, 2000, the Company
incurred a consulting expense of $36,750 to an affiliate controlled by the
Company's controlling shareholder.
NOTE 8 - GOING CONCERN
The accompanying financial statements are presented on the basis that the
Company will continue as a going concern. Going concern contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business over a reasonable length of time. As shown in the accompanying
financial statements, the Company has incurred net losses of $271,915 since
inception, and as of October 31, 2000, the Company has a working capital
deficiency of $16,992 and a net worth deficit of $188,462. Furthermore, the
Company has not generated sufficient revenue to cover its operation costs.
As discussed in Note 9 to the financial statements, the Company is planning to
conduct a private placement offering of 1 million shares of common stock at $3
per share. The Company continued existence depends on the success of this
offering and its future operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 9 - SUBSEQUENT EVENT
In November 2000, the Company files with the securities and Exchange Commission
a Form SB-2 Registration Statement for approval under the Securities Act of 1933
to raise up to $3 million through the sales o, up to 1 million shares of common
stock at $3 per share. As of October 31, 2000, the Company had a net tangible
book value of $(l88,462), or approximately $(.0.02) per share. After giving
effect to the net proceeds of $2,700,000 received from the sale of 1,000,000
shares (assuming the maximum number of shares sold) the pro forma net tangible
book value of the Company at October 31, 2000 would have been $2,511,538 or
approximately $0.25 per share, representing an immediate increase in pro forma
net tangible book value to existing stockholders of $0.27 per share, an
immediate dilution to new investors of $2.75 per share.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Bylaws of the Company provide that directors of the Company will not be
personally liable for monetary damages to the company or its shareholders for
breaches of their duties as directors except in instances of self-dealing,
willful misconduct or recklessness, criminal violations or liabilities involving
the payment of taxes. Such limitations are designed to protect the directors at
the possible disadvantage of shareholders, however management believes such
protection is necessary to induce talented individuals, with important
advantages for the Company, to serve on the board.
The Company has included provisions in its Bylaws providing for indemnification
of its directors and officers by the Company to the maximum extent permitted
under applicable law, including the advancement of expenses incurred by a
director or officer in any suit in which the director or officer is involved.
The Company believes that such actions will assist it in attracting and
retaining qualified individuals to serve as directors and officers. Prospective
investors should be aware, however, that the costs associated with indemnifying
a director or officer could be significant and, if not covered by insurance,
could adversely affect the Company's results of operations. Furthermore, in
situations where the Company has advanced litigation expenses to a director or
officer and the director or officer is required to repay the expenses because it
is ultimately determined that the director or officer is not entitled to
indemnification, the director or officer may not have sufficient cash or assets
to repay the expenses advanced by the Company.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange 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 the payment by the Company of expenses
incurred or paid by a director, officer or controlling person by the Company in
the
II-1
<PAGE>
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Shares, the
company will 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 the final adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following costs have been incurred in connection with the preparation of
documents and other costs associated with the Offering:
<TABLE>
<S> <C>
Accounting Fees $ 5,000
Legal Fees $10,000
Standard & Poors Registration $ 4,975
Printing & Copying $ 7,500
Computer Conversion & Set-up Fees $ 5,500
Filing Fees $ 525
Miscellaneous Costs $ 1,500
Consulting Fees $15,000
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
1. At inception May 19, 2000, the Company issued 8,481,400 shares of Common
Stock to Thomas H. Langel, its founder, in exchange for cash, reimbursement of
expenses and for development services rendered to the Company.
2. On May 25, 2000 the Company issued 33,333 shares of Common Stock to Michael
Langel, brother of the founder, in exchange for $10,000 cash advanced as payment
for expenses of the Company prior to its incorporation.
3. On June 5, 2000 the Company issued 5,000 shares each to Everett Lay and Rose
Lay, in-laws of the founder, in exchange for $5,000 cash advanced as payment for
expenses of the Company prior to its incorporation.
4. On June 15, 2000 the founder gifted 4,582,500 shares of Common Stock to
family members, employees, consultants and tithing to the church. No cash
changed hands in this transaction.
5. On September 15, 2000 the Company issued 500,000 to consultants for services
rendered at a stated value of $50,000.
6. On October 25, 2000 the Company issued 3,600 shares of Common Stock to a
local radio station in exchange for $10,000 worth of radio advertising.
No additional shares of common stock have been issued.
ITEM 27. EXHIBITS.
<TABLE>
<S> <C>
Underwriting Agreement - There is no underwriting Agreement
Plan of Acquisition, etc. - There are no such plans.
3.1 Articles of Incorporation - Attached
3.2 By-Laws - Attached
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
Security Holders Rights - There are no Security Holders
5.1 Legal Opinion - Attached
Audited Financial Statements - Attached
Tax Matter Opinion - See audited financial statements attached
Voting Trust Agreement - None
Material Contracts - None
Earnings per share - See audited financial statements attached
Subsidiaries of Entity - None
Counsel of Experts - Legal opinion
23.1 Consent of Independent Auditors
Power of Attorney - None
Statement of Trustee Eligibility - Not Applicable
Invitation for Competitive bids - None
</TABLE>
ITEM 28. UNDERTAKINGS.
Furnish the undertakings required by Item 512 of Regulation S-B.
Not required.
II-3
<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 for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Manhattan, State of Montana, on January 4, 2001
TRADEAWAY.COM, INC.
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(Registrant)
/s/ THOMAS H. LANGEL
----------------------------------------
Thomas H. Langel, President and Director
By (Signature and Title)
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.
(Signature) /s/ THOMAS H. LANGEL
----------------------------------------
(Title) Thomas H. Langel, President and Director
(Date) JANUARY 4, 2001
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II-4
