As filed with the Securities and Exchange Commission on September 30, 1999
Registration Statement No.33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Internet Stock Market Resources, Inc.
(Name of Small Business Issuer in its Charter)
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Delaware 67770 76-0246940
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(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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405 Central Avenue, Suite 102 Lobby Level
St. Petersburg, Florida 33701
727-896-9696
(Address and telephone number of principal executive offices)
Mr. Anastasios Kyriakides
Internet Stock Market Resources, Inc.
405 Central Avenue, Fifth Floor
St. Petersburg, Florida 33701
727-896-9696
(Name, address and telephone number of agent for service)
With a copy to:
Robert M. Overholt, Esq.
Attorney at Law
340 North Sam Houston Parkway East
Suite 250
Houston, Texas 77060
(281) 445-0020
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier registration statement for the same
offering. [ ]
If delivery of this Prospectus is expected to be made pursuant to Rule
434, please check the following box [ ].
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CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Shares to be Amount Offering Aggregate Amount
Registration to be Price Per of Offering
Registered (2) Registered Share (1) Price (1) Fee
- -------------------------------------------------------------------------------------------------------------
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Common Stock,
$.0001 par value
per share 3,333,332 $1.50 $4,999,998.20 $1,390.00
Preferred Stock
$.01 par value
per share 833,333
Common Stock,
$.0001 par value
per share 500,000 $1.50 $750,000.00 $208.50
- -------------------------------------------------------------------------------------------------------------
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(b).
(2) To be issued as a unit consisting of 4 shares of
common stock and 1 share of Preferred stock
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the SEC, acting pursuant to said Section
8(a), may determine.
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Internet Stock Market Resources, Inc.
Cross Reference Sheet for Prospectus Under Form SB-2
Form SB-2 Item No. and Caption Caption or Location in Prospectus
------------------------------ ---------------------------------
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1. Forepart of Registration Cover Page; Cross Reference
Statement and Outside Sheet; Outside Front Cover
Front Cover of Prospectus Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary Information and Prospectus Summary; Summary Financial
Risk Factors Data; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Determination of offering
Price
6. Dilution Dilution
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Outside Front Cover Page of
Prospectus; Plan of Distribution
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Offi-
cers, Promoters and Control
Persons Management
11. Security Ownership of Cer-
tain Beneficial Owners and
Management Principal Shareholders
12. Description of Securities Description of Securities
13. Interest of Named Experts
and Counsel Legal Matters; Experts
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Form SB-2 Item No. and Caption Caption or Location in Prospectus
------------------------------ ---------------------------------
14. Disclosure of Commission
Position on Indemnifica-
tion for Securities Act
Liabilities Undertakings
15. Organization within Last
Five Years Business
16. Description of Business Business
17. Management's Discussion Management's Discussion and
and Analysis and Plan of Analysis of Financial Condition
Operation and Results of Operations
18. Description of Property Business - Facilities
19. Certain Relationships and Certain Relationships and
Related Transactions Related Transactions
20. Market for Common Equity Market for Our Securities; Description
and Related Stockholder of Securities; Plan of Distribution -
Matters Shares Eligible for Future Sale
21. Executive Compensation Management - Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagree-
ments with Accountants on
Accounting and Financial
Disclosure Accounting and Financial Disclosure
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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Prospectus
Internet Stock Market Resources, Inc.
A Maximum of 833,333 Units
(1 Unit = 4 Shares of Common Stock and 1, 1-year, Preferred Stock
convertible for 2 shares Common)
$6.00 PER UNIT 1
---------------------------
Internet Stock Market Resources, Inc. (the "Company") hereby offers
maximum of Eight Hundred Thirty-three Thousand Three Hundred Thirty-three
(833,333) units of its securities. Each unit consists of Four (4) shares of the
Company's Common Stock, par value $0.0001 per share, plus One (1) share of
Preferred Stock; each of the Preferred Shares is exchangeable for Two (2) Shares
of the Company's Common Stock for Two dollars ($2.00) at any time from the
Subscription date to One (1) year thereafter. The minimum investment is 100
units. These securities are being sold on a best efforts with no minimum amount
basis. The offering will expire One Hundred Eighty (180) days after the
effective date of the registration statement for the securities, if not updated
by amendment or terminated sooner.
The offering price has been arbitrarily determined solely by the
Company, and bears no relationship to the Company's assets, sales, book value,
or other generally accepted criteria of value. (See "RISK FACTORS," "PLAN OF
DISTRIBUTION," and "DILUTION.")
In addition to the above units offered, 500,000 shares of the Company's
common stock will be registered as part of this registration. These shares have
been designated to be used as payment for services related to marketing. (See
"PLAN OF DISTRIBUTION.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENT IN THE COMMON STOCK OF INTERNET STOCK MARKET RESOURCES, INC. IS
SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK (SEE RISK FACTORS,@ PAGE 6), AND
SHOULD BE CONSIDERED ONLY BY PERSONS ABLE TO BEAR THE LOSS OF PART OR ALL OF THE
FUNDS INVESTED.
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Offering Price Underwriting Discounts Proceeds to Company 3
and Commissions 2
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Per Unit $6.00 $0.60 $5.40
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Maximum 1 833,333 $4,999,998.00 $499,999.80 $4,499,998.20
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Internet Stock Market Resources, Inc.
405 Central Avenue, Suite 102 Lobby Level, St. Petersburg, Florida 33701
(727) 896-9696
The date of this Prospectus is September 30, 1999.
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Footnotes to the Cover Page
(1) The Company hereby offers to sell up to 833,333 Units at $6.00 per unit (the
"Units"), where a "Unit" is four shares of Common stock of the Company plus one
share of Preferred Stock; each Preferred Share is exchangeable for one year from
the subscription date for two shares of Common stock for $2.00. The Offering is
made on a best efforts basis for a period of up to, and not to exceed, one
hundred eighty days from the date of this Prospectus. The Company, through its
officers and directors, will act as the selling agent for the Offering, which is
being made on a "self-underwritten" basis pursuant to Rule 3a4-1 of the
Securities Exchange Act of 1934 (hereinafter, the "Exchange Act"). See
"DESCRIPTION OF SECURITIES" and "PLAN OF DISTRIBUTION" in this Prospectus.
(2) Subsequent to the granting of an effective date by the Securities and
Exchange Commission (the "Commission"), the Company may retain the services of
an underwriter by filing a post-effective "sticker" amendment, and the Units may
also be sold by selected broker-dealers. Should these Units be sold by an
underwriter or broker-dealers, the Company will pay commissions of up to 10% of
the gross proceeds from the sale of Units; additionally, for each 100,000 Units
sold by an underwriter or broker-dealer, that underwriter or broker-dealer will
receive 144,000 Underwriter's Preferred Stock. Commissions will only be paid
after each investor's three day rescission period (see "VOIDABILITY OF SALES").
The Company will only pay commissions to broker-dealers who are members of the
National Association of Securities Dealers, Inc. In no event will the Company
pay any commissions, sales fees, or expenses to its Officers or Directors. The
proceeds table on the front page and the "USE OF PROCEEDS" section of this
Prospectus allow for the payment of commissions on the full amount of the
Offering. Should the Company sell any of the Units directly, without the need of
commission agents, it will pay no commission on such sales, and the net proceeds
to the Company will increase accordingly. See "USE OF PROCEEDS."
(3) The minimum proceeds realized by the Company from the sale of each Unit will
be $5.40. Should the Company sell all of the Units, the Company will realize at
least $4,499,998.20 in proceeds from the Offering, based upon the payment of
sales commissions to an underwriter or to broker-dealers for the sale of the
maximum number of Units. Should the Company sell some or all of the Units
without using an underwriter or broker-dealers, the Company will pay no sales
commissions and attendant expenses on such sales, so net proceeds realized by
the Company from the Offering will be greater. Any representation or warranty
that is made other than conforming to this document is unauthorized and not
valid. This offering is made in accordance with Regulation SB of the Securities
Act of 1933, as amended.
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NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT HEREIN CONTAINED. IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS OFFERING DOCUMENT DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SHARES OFFERED HEREIN, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION.
THE SHARES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE, TO ALLOTMENT AND
WITHDRAWAL, TO CANCELLATION, OR TO MODIFICATION OF THE OFFER, WITHOUT NOTICE.
THE RIGHT IS RESERVED TO REJECT ANY ORDER, IN WHOLE OR IN PART, FOR THE PURCHASE
OF ANY OF THE SHARES OFFERED HEREIN.
THE DELIVERY OF THE PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCE, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY.
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FOREWORD
The Company has prepared this Prospectus and has provided all the information
contained herein, including financial data.
The Company's principal offices are currently located at 405 Central Avenue,
Suite 102 Lobby Level, St. Petersburg, Florida 33701. The Company's telephone
number is (727) 896-9696, and its fax number is (727) 822-9516. Information
about the Company can also be obtained by sending an e-mail message to
[email protected].
Prospective investors (and their representatives) should read this Prospectus
carefully. Please be aware that this information contained in this Prospectus is
valid only as of the date written on the front cover. Also, the only information
investors should rely on about Internet Stock Market Resources, Inc. and this
Offering is contained in this Prospectus; any other information that anyone
provides about the Company and this Offering should not be relied upon.
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SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere in this
Prospectus. See "Risk Factors" for a discussion of certain factors that should
be considered in connection with an investment in the Units offered here.
The Company
Internet Stock Market Resources, Inc. is in the business of providing
business and advertising information about client companies to end users via the
Internet. The information posted is provided by the companies, and may include
information about goods and services offered as well as other information. End
users are also able, through the Company's Website, to hyperlink to other
information services which carry data about a specific client company; these
hyperlinks may include the Securities and Exchange Commission's EDGAR database,
PR Newswire, the client company's own Website, etc. By providing a platform by
which Internet users can access information about emerging companies, Internet
Stock Market Resources, Inc. makes its Website complex an Internet "portal" for
people and institutions interested in, or seeking information about, emerging
companies.
The Company is also currently engaged in acquiring other ongoing concerns.
To this end, the Company has recently announced that a letter of intent had been
signed with the electronics assembly and manufacturing company, Delcor
Industries, Inc. That acquisition will require cash and the incurring of debt,
the cash component coming from proceeds of this Offering. The Company also plans
to use proceeds from this offering to acquire a brokerage house or broker-dealer
agency so that visitors to the Company's Website may do online trading via a
hyperlink to a brokerage service the Company plans to call "NowTrade." Moreover,
the Company has been in negotiations with other prospective acquisition targets,
and plans to continue those negotiations, attempting to reach letters of intent
in a timely manner, if possible.
The Offering
The Company is offering by this Prospectus a maximum of 833,333, Units of
its securities. Each Unit consists of four (4) shares of the Company's Common
stock, plus one (1) share of Preferred Stock; each Preferred Share is
exchangeable (exercisable) within one (1) year from the subscription date for
two (2) shares of the Company's Common stock for two dollars ($2.00).
The units are being sold on a best efforts basis. If the maximum number of
Units is sold, net proceeds after underwriting discounts and commissions
realized will be $4,419,998, assuming the expenses of the Offering will be
$80,000 for selling 833,333 Units. (The assumption in this paragraph is that
approximately $500,000 in underwriting and discounts are paid.).
Management intends to use the maximum net proceeds as follows: acquisitions,
$3,600,000; marketing, $500,000; salaries and wages, $150,000; software and
equipment, $75,000; and working capital, $594,998. If sales commissions are paid
on all Units sold, then those commissions would be deducted from the working
capital available resulting in proceeds to working capital in the amount of
approximately $95,000. (See Page 2, the Footnotes to the Cover Page, and see
"USE OF PROCEEDS").
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The Company's offices are located at 405 Central Avenue, Suite 102 Lobby
Level, St. Petersburg, Florida 33701. The Company's telephone number is (727)
896-9696, and its fax number is (727) 822-9516. The Company's Website can be
reached at http://www.internetstockmarket.com.
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RISK FACTORS
INVESTMENT IN THE COMMON STOCK OF INTERNET STOCK MARKET RESOURCES, INC. IS
SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK, AND SHOULD BE CONSIDERED ONLY BY
PERSONS ABLE TO BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
RELATING TO THE COMPANY AND ITS OPERATIONS.
Risk Factors Related to the Company
1) Limited Operating History
The Company in its current form resulted from a merger in 1989 between the
Texas public corporation Trans America Enterprises, Inc. and the private
company Sea Venture Cruises, Inc. Subsequent mergers have created the
evolution of Internet Stock Market Resources, Inc. Prior to September
1998, Sea Venture Cruises was unable to launch and sustain
revenue-generating operations in its business ventures. The new Company is
currently operating as an information resource for stock market investors
on the Internet. While other business ventures involving the Internet have
shown dramatic and rapid revenue generation, that has not yet been the
case with the Company, and, as such, the Company has yet to show revenues
of sufficient depth and continuousness to sustain operations. (See the
Notes to the Financial Statements.) Moreover, no assurance can be given
that future Company operations, when and if they grow from their current
state, will meet the Company's expectations in terms of production, sales,
and growth, or that the Company will ever be able to operate at a profit
on a sustained basis.
2) Expansion; Management of Growth
The Company is subject to a variety of business risks generally associated
with new and rapidly growing companies in the business of high technology,
risks such as the inability to achieve continued profitability in view of
an expansion plan, the uncontrollable and inevitable volatility in the
number of competitors, and those competitors' pricing of their services,
etc. Future operating results will depend on many factors, including the
ability of the Company to successfully continue its plans to grow
operations and control costs effectively. The Company's ability to operate
profitably will depend upon a number of factors, including, among others,
the employment and training of management, staff, and other personnel, the
cost and availability of suitable technology for providing user access to
the Company's Website, regulatory limitations regarding those operations
in certain areas such as the posting of information about the securities
and possible offerings of securities by client companies, acceptable
leasing or financing terms for certain equipment, cost-effective and
timely completion of project deployment, securing of required state and
federal government permissions and approvals for displaying certain types
of information about public companies and companies contemplating going
public, and the Company's ability to generate funds from existing
operations. Companies with a relatively short period of actual operations
typically operate with below-normal profitability, and incur certain
additional costs in the process of achieving operational efficiencies
during the first several years of operation. The Company is continuously
evaluating the adequacy of its current policies, procedures, and systems,
including operational risk management, financial controls, management
information systems, electronic data processing and through-put capacities
and relations. Although the Company believes that its systems and controls
are adequate to address its current needs, there can be no assurance that
the Company will adequately deal with all of the changing demands that its
planned expansion will impose on such systems and controls. Failure to
continue to evaluate and improve management, operating, and financial
controls, or difficulties encountered during expansion, could adversely
affect the Company's financial condition and operating results.
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3) Prospective Clients and End User Awareness
The ability of the Company to make prospective client companies aware of
its services is critical to the Company's success. To make a company known
in the world of cyberspace is not easy: many online services and Internet
service providers (ISPs) offer access to the Internet as well as Website
support to give companies visibility on the Internet. Furthermore, the
Company must be able to demonstrate to prospective clients that
contracting for exposure through the Company's Website will deliver
sufficient numbers of viewers of the client's information to justify the
cost of contracting with the Company. To the end of, first, making
prospective clients aware of the Company's services, and, then, to
consummate agreements with those prospects is uncertain. In order for the
Company to grow, it must acquire new clients, and it must also be
constantly getting "hits" on its Website from end users, both those who
have viewed the Company's Website before, and those who have not. It is
only if prospective clients believe that the Company's Website is
attracting significant numbers of on-line viewers, and that those viewers
are of use to the prospective client, that the Company will be able to
secure contracts with them.
4) Dependence upon Offering for Development of Operations and for Expansion
The Company has embarked on an ambitious growth plan. (See "USE OF
PROCEEDS.") The Company will have to delay or modify its plans if less
than the maximum amount is obtained. There will be no assurance that any
delay or modification of the Company's plan would not adversely affect the
Company's development period. If the Company requires additional funds,
such funds may not be available on terms acceptable to the Company.
Specifically, the Company plans to grow from its present position, at
least in one direction, by acquiring other companies whose revenues will
enhance the Company's, and whose technology and/or business synergies will
help grow the Company's presence. If the Company does not have sufficient
funds from this Offering to utilize as cash for acquisitions, this entire
avenue of the Company's growth will be cut off.
5) Competition
The corporate information storage and retrieval aspect of the Internet is
intensely competitive, with firms and other entities of all sizes offering
Internet exposure for corporate clients, and offering end users of the
information a variety of types of information. The well-known search
engine companies like Yahoo!tm and AltaVistatm offer end users access to
company information via hyperlinks to the companies' own Websites, as well
as hyperlinks to private and public repositories of corporate information
such as, in the private sector, the National Association of Securities
Dealers' Website for Disclosure, Inc., and, in the public sector, the
Securities and Exchange Commission's massive EDGAR database. The result of
this competition is that the end user of the Internet has available to him
or her a virtual cornucopia of information. The result for the company
attempting to carve out a profitable niche in this business is that it
must offer features to end users of such magnitude as to attract them to
its Website in such numbers that prospective clients will pay the Company
to be profiled there. This is difficult, and there can be no assurance
that the Company will not be overwhelmed by competitors offering similar,
or possibly even better, corporate information access, and at prices to
client companies below that of the Company.
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6) Government Regulation
Although the Internet itself is largely unregulated except for certain
federal and state laws pertaining to purveying pornography and allowing
access thereto to minors, the Company's operations necessarily have
certain aspects which intersect with state and federal securities laws in
that client companies may be seeking to raise funds through the sales of
certain of their securities, and those clients may use their own Websites,
with hyperlinks from their displays on the Company's Website, to promote
their offerings. This, in itself, may bring the Company into conflict with
securities laws. First, at the state level, the Company may find it
difficult to prevent viewing of solicitation scripts by end users in
states in which the offerings are not "blue skied;" furthermore, at the
federal level, unless a specific exemption applies, an offering of a
client's securities via the Internet constitutes a general solicitation
which would have to be the subject of an applicable, effective
registration statement. The Company may find that certain clients, in
their efforts to raise funds via the powerful medium of the Internet, may
be in violation of securities laws, and the Company, by making their
literature available to the public or by facilitating access to that
information, could find itself construed by state or federal regulators as
having been a promoter of the offerings, a situation which could lead to
regulatory sanction. The Company is instituting proscriptive language in
its client contracts to avoid such situations. The Company will also
monitor the activities of its clients with respect to matters involving
descriptions of their securities and offerings thereof. However, there can
be no assurance that, even with this level of diligence, the Company will
not find itself in a situation where it has unintentionally allowed its
Website to be contributory to a client's defective offering. In such an
event, the Company may face severe penalties for having been involved in
securities law violations. More broadly, a client company may find itself
in other types of litigation, civil or criminal, in which the Company may
find itself accused of sharing liability for the actions of the Company by
virtue of its support of the client's advertising and marketing efforts.
While it is not likely that any such liability would be construed as being
"strict" liability, nevertheless, the Company might have to defend itself
against charges of non-strict liability in a claim against a client
company.
Finally, it is the intention of Management to use substantial
proceeds from this Offering (see "Use of Proceeds" and Item #9) to acquire
interests (total, majority, or otherwise) in other enterprises. The
Company has an understanding with a broker-dealer to acquire it for the
purpose of making it an on-line service available to users of the
Company's Website. The regulatory environment in which broker-dealers
operate is heavily regulated at the state and federal level. In the latter
case, the National Association of Securities Dealers (NASD) strictly
monitors and enforces compliance with complex regulations governing the
operation of broker-dealers. Because the Company will engage in no
investment banking activities, a significant source of potential
securities law violations will be avoided; however, the Company still
anticipates substantial, sustained, and evolving regulatory scrutiny as it
engages in the relatively new and rapidly-growing field of on-line
brokerage operations. Since Management will separate its activities from
those of the broker-dealer, its ability to scrutinize daily trading
activities will be virtually non-existent, leaving open the real
possibility of problems that might result in fines and penalties, or even
in suspension of the broker/dealer's license. Furthermore, as the parent
company of the on-line brokerage firm, the Company may be open to civil
actions from private parties claiming torts were committed against them by
the brokerage firm.
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7) Dependence on Company Chairman
The Company is largely dependent on the personal efforts of its Chairman,
Anastasios Kyriakides, who stands as the entrepreneurial force behind the
Company's business. The untimely loss or unavailability of this key
individual would have a materially adverse effect on the Company's
business prospects and future earnings. Because Mr. Kyriakides has a
unique understanding not just of the Internet and its usefulness to
growing businesses, but, more importantly, of the Company's mission,
technologies, and structure, the loss of Mr. Kyriakides might signal
indefinite delays in implementing the Company's plans. Mr. Kyriakides is
particularly instrumental in negotiating with prospective acquisition
targets.
8) Possible Additional Capital Needs
Additional financing may be required in the future. If or when such
additional funds may be required, there is no assurance that the Company
can obtain the additional financing at all, or on terms acceptable to the
Company, or, if it does, what the effect will be on existing shareholders'
stock value. The Company cannot guarantee that it will be able to maintain
operations solely on the revenues it earns.
9) Non-specific Use of Proceeds
The Company's planned use of proceeds, detailed in the section "USE OF
PROCEEDS," below, is vague, leaving Management with almost complete
discretion to determine ultimate capital expenditure patterns. The
disclaimer at the beginning of the "USE OF PROCEEDS" section explicitly
reserves to Management that discretionary authority, meaning that the
outside investor must rely on the will, wisdom, and insight of the
Officers and Directors of the Company to determine the use of funds which
will be most likely to enhance shareholder value. For example, the
unavailability of firm commitments for certain planned acquisitions by the
Company means that Management does not know with any degree of precision
the final cost of fully implementing its future operational and
development plans. Beyond the direct costs of such acquisitions will
likely be costs of integrating the acquisition targets' operations into
the Company's. These costs could be minor, or they could be substantial,
and the Company does not have a sufficiently detailed business model on
which it can rely to predict an acquired company's post-acquisition
potential drain on cash flow.
10) Directors
The Company has four directors. (See "DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS.") Among those directors are executive
officers of the Company, none of whom have extensive Internet-related
experience outside their current positions. Moreover, three of the
Directors were hand-chosen by the fourth Director, Anastasios Kyriakides.
As such, the three Directors so chosen may be considered dependent on the
continuing good will of Mr. Kyriakides, who could remove them from their
offices and Board memberships at his discretion.
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11) Limitation of Directors' Liability
The Certificate of Incorporation of the Company provides that a Director
of the Company will not be personally liable for monetary damages to the
Company or its stockholders for breaches of his or her fiduciary duty as a
director unless the Director acted in bad faith, knowingly or
intentionally violated the law, or personally gained a financial profit or
other advantage to which the Director was not entitled.
12) Authorized Stock
The Board of Directors has the authority to issue up to 50,000,000 shares
of Common stock of the Company. Additionally, the Company has authorized
1,000,000 shares of preferred stock. See "DESCRIPTION OF CAPITAL STOCK."
This means that, subsequent to the Offering that is the subject of this
Prospectus, the Company may sell substantially more stock than will be
outstanding, even if the maximum number of Units offered here is sold. The
result of such future sales would be dilution of current shareholders'
percentage holdings of the Company's equity, and given the amount of
additional Common stock which might be sold, that dilution could be
substantial. Furthermore, because the Company could use its Common stock
as part of the total consideration paid for one or more of the
acquisitions it plans to make, current shareholders could find their
equity positions diluted without the Company even doing a public offering
in which the current shareholders could participate.
13) Industry and Macroeconomic Events
Management of the Company believes that it is currently a "price setter"
in the selling of its services in that it can establish fees charged to
client customers without regard to the prevailing fees charged by large
numbers of competitors. It can now set its fees by considering the charges
that the users of its service are willing and able to bear. In other
words, in microeconomic terms, it faces a downward-sloping demand curve.
Management anticipates, however, that this will not remain the case for an
indefinite period of time, particularly if the Company and its relatively
few competitors are viewed to be profitable. Such success will undoubtedly
draw entry by more competitors, some of which will be small and quite
efficient, others of which will be large and willing to bear losses for a
long time to gain market share. As such, the Company intends to plan
carefully for the future, maintaining a high level of cost efficiency,
while staying on the technological frontier with respect to services it
can offer to its clients and to end users. Moreover, the Company is now be
concerned with cultivating loyalty in its current client base to ensure
that these companies will stay with Internet Stock Market Resources even
in the face of aggressive efforts by competitors to draw them away. At the
same time, the Company is also mindful of the importance of establishing
strategic alliances with dominant forces on the Internet, forces that
could either enter into strategic relationships with the Company, or
simply offer their own alternative. At present the Company has no links
from major portals such as NetCenter(TM), MSN(TM), Yahoo!(TM), Excite(TM),
AltaVista(TM), etc. and has yet to develop a strategy - much less
implemented one - to increase its exposure on the Internet through
alliances.
Beyond these microeconomic and marketing considerations, the
Company must be prepared for inevitable macroeconomic downturns. While
Management firmly believes that the Internet as a business tool will now
endure and ultimately become an integral part of the way companies conduct
18
<PAGE>
their business affairs, Management does not believe that its clients'
level of expenditures on Internet advertising and exposure will be robust
to recessionary pressures. In fact, it may be the case that such spending
becomes the first casualty as firms attempt to stanch the flow of red ink
in a significantly difficult economic period. Worse, neither the Company
nor any industry analyst knows for certain how expenditures on Internet
advertising and exposure will be affected by recession, since one has not
occurred (of any meaningful depth) since the true ascendance of the
Internet as a business tool. The result at the Company's level is likely
to be large, secular swings in the prices of the various services offered
to clients, these swings correlated with macroeconomic factors. When such
swings bring net fees drawn from customers to low levels, the costs of
many factors of service production which are not directly correlated to
the price charged to the client have the potential to challenge the
Company's cash flow and profitability. If the price troughs are sustained,
the Company may find that it has insufficient depth in its financial
resources to weather the losses. To some extent, the Company can use a
combination of long-term contracts and spot sales to manage the cash flow
risk, but this requires a deft management of resources, and there can be
no guarantee that Company Management will make decisions which properly
balance the risks in the short-term contract market against the safety of
long-term contracts. And even if Management does prudently trade some
revenues for lower risks (as by offering long-term, discounted contracts),
there can be no assurance that a long, deep low in net revenues would not
irreparably harm the Company's profitability.
Risk Factors Related to This Offering
14) Structure of the Offering.
The price and terms of the Units offered here were not the result of
arms-length bargaining. In other words, new investors have not been
represented by separate counsel or other professionals in the structuring
of the Offering or any of the related transactions. This means that
investors are given the opportunity to purchase securities in this
Offering at a price set by the Company without regard to the investors'
analysis or sentiments about a "fair" or "reasonable" offering price.
15) Control
If all of the Units offered here are sold, the new investors will own
82.2% of the Common stock while other shareholders will own the balance of
17.8% of the Common stock, meaning that existing shareholders (that is,
those who were shareholders prior to this Offering) may not continue to
control the Company.
16) Dilution.
Each Share offered hereby will experience immediate dilution of $.57 or
37.7%, in net tangible book value assuming that no value is assigned to
the preferred convertible stock.
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17) No Dividend Policy.
The Company has no dividend policy. It is anticipated that The Board of
Directors will defer payment of dividends for an indefinite future period
to retain earnings for future growth; as such, the only way an investor is
likely to make any money from investment in this Offering is through
appreciation of the Company's Common stock price, and such appreciation,
particularly in the next several years, is doubtful, especially in light
of the stock prices recent performance. See "MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS."
18) Limited Public Market for the Common Stock of the Company
The Units offered hereby have been qualified with the Commission pursuant
to the Securities Act of 1933, as amended, and Regulation S-B promulgated
thereunder; as such the Units are "freely tradable" under federal
securities laws. The Company's long-term plan for providing liquidity to
its shareholders is to develop the public market for its Common stock by
soliciting securities brokers to become market makers of the Company's
Common stock. Currently, the Company is a fully reporting Company and its
Common stock trades on the Over-the-Counter (OTC) Electronic Bulletin
Board Service of the National Association of Securities Dealers (NASD)
under the symbol "ISMR." The OTC is a limited market in the sense that
trading in securities listed there can be very thin, especially because
large-scale market participants like institutional investors tend not to
buy and sell Bulletin Board stocks. Investors sometimes find that they
cannot immediately find buyers for OTC securities they are selling as they
can if they are trading in stocks listed on exchanges like the AMEX or
NYSE. Furthermore, some broker-dealers will not even participate at all in
trading on the OTC because of restrictions like the ones describe in the
next risk factor, "Penny Stock Regulation."
19) Penny Stock Regulation
The Securities and Exchange Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks."
Penny stocks are generally equity securities with a price of less than
$5.00 per share (other than securities listed on certain national
exchanges, or quoted on the NASDAQ system, provided that current price and
volume information with respect to transactions in such securities is
provided by such exchange or system). The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from its rules, to deliver a standardized risk disclosure document
prepared by the Commission that provides information about penny stocks
and the nature and level of risks in the penny stock market. The
broker-dealer must also provide the customer with bid and offer quotations
for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that, prior to a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer must
make a special, written determination that the penny stock is a suitable
investment for the purchaser, and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market
for a stock that becomes subject to the penny stock rules. If the
Company's Common stock is or becomes subject to the penny stock rules,
investors in this Offering may find it more difficult to sell their Units.
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<PAGE>
20) Arbitrary Determination of Offering Price
The price for the Units has been determined arbitrarily by the Company
(see "DETERMINATION OF OFFERING Price"), is not based on the Company's net
worth, earnings, or other established criteria of value, is not the result
of arms-length negotiation, and does not necessarily bear any relation to
any recognized standard of value. As a result, there can be no assurance
that the Common stock owned by an investor in this Offering can be resold
at the Offering Price or better, or even at a lower price.
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USE OF PROCEEDS
If all of the Units of this Offering are sold, the net proceeds to the Company
from the sale of the Units, after deduction of estimated offering expenses, will
be $4,919,998. It is the intention of the Company to use the proceeds of this
Offering in the manner set forth below for the maximum units offered. The
Company, however, reserves the right to deviate from this schedule as
circumstances arise.
<TABLE>
<CAPTION>
833,333
Units Sold
---------------------------------------------------------
No Commissions All Units Sold
Paid with Commission
---------------------------------------------------------
<S> <C> <C>
Gross proceeds from Offering $4,919,998 $4,919,998
Less: Commissions of 10% 2 N/A $500,000
Less: Offering expenses $80,000 $ 80,000
------------ -------------
Net proceeds from Offering $4,919,998 $4,419,998
============ =============
Use of net proceeds:
Salaries $150,000 $150,000
Equipment & software $75,000 $75,000
Acquisitions $4,100,000 $3,600,000
Marketing $500,000 $500,000
Working capital $94,998 $94,998
------------ -------------
Total use of proceeds1 $4,919,998 $4,419,998
============ =============
</TABLE>
- -------------------
1 If less than all of the Units offered are sold, the Company will have to
delay or modify its plan. There can be no assurance that any delay or
modification will not adversely affect the Company's development. If the
Company requires additional funds to produce and market its services, such
funds may not be available on terms acceptable to the Company. (See Page 2,
Footnotes to the Cover Page.)
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<PAGE>
DETERMINATION OF OFFERING PRICE
The price at which the Units of this Offering were set was determined
arbitrarily by the Company. There is no relationship between the price of these
Units and any standard or accepted method of valuation; the offering price bears
no relationship to the Company's assets, sales, book value, or other generally
accepted criteria of value.
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DILUTION
The following table sets forth the difference between the Company's existing
shareholders and purchasers of the Units in this Offering with respect to the
number of Shares purchased from the Company. The table assumes that all of the
Units offered are sold, and calculates net book value per share at May 31, 1999,
on a pro forma basis as if the existing shareholders had held 719,778 Shares of
Common stock of the Company, as they did just prior to the Offering. It is the
belief of Management that this method offers prospective investors the clearest
presentation of dilution, given the Company's most recent financial data. The
following table has given effect to the June 30, 1999, reverse split of Shares
held by existing shareholders and assumes no conversion of preferred stock
issued in this offering.
<TABLE>
<CAPTION>
Ownership Net Book Dilution Per
Shares Percent Value Share
--------------------------------------------------------
<S> <C> <C> <C> <C>
Existing Shareholders 719,778 17.8% (631,639) -
New Investors 3,333,332 82.2% 4,999,998 $.57
Offering Costs (580,000)
--------- ------ --------- ----
Total 4,053,110 100.0% 3,788,359 $.57
========= ====== ========= ====
</TABLE>
Each Share offered hereby will experience immediate dilution of $0.57, or 37.7%,
in net book value. In aggregate, if all the Units of this Offering are sold, the
adjusted book value per share of Common Stock of the Company will be
approximately. Net book value per share represents the amount of total assets
less total liabilities, divided by the number of Shares outstanding. The
following table illustrates such dilution:
<TABLE>
<CAPTION>
<S> <C>
Offering price (per share).........................................................................$1.50 per Share
Net book value (Deficiency in assets) per share as of May 31, 19991...............................$(0.88) per Share
Net book value per share after Offering2............................................................$0.93 per Share
Per share dilution to new investors2................................................................$0.57 per Share
</TABLE>
- --------------
1 calculated using outstanding shares as of September 29, 1999
2 assuming all Units offered hereby are sold.
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SELLING SECURITY HOLDERS
There are no selling security holders in this offering.
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PLAN OF DISTRIBUTION
The Units will be sold directly by the Company through its officers and
directors. No broker or dealer has been retained or is under any obligation to
purchase any Shares. The shares are being offered at the offering price set
forth on the Cover Page of this Prospectus. An investor must purchase a minimum
of 100 Units which equals a $600.00 investment. The shares are being sold on a
best efforts basis, subject to no minimum offering proceeds, up to a maximum of
833,333 units. The offering expires one hundred eighty (180) days after the
Registration statement becomes effective, unless terminated sooner or extended
by the Company. A current Prospectus will be available so long as the offering
is continued, which shall be at the Company's discretion.
The Company plans to seek the support of NASD member firms which are recognized
market makers with the intention of obtaining their assistance in the creation
of a viable market in the Company's securities for the benefit of its
shareholders. In this regard, the Company may employ one or more finders to
assist with introductions to appropriate market makers, for which such finders
would be paid finders fees commensurate with current market practices. No such
finders have been identified, nor have any proposed terms of their engagement
been determined. 500,000 shares of common stock have been designated by the
Board of Directors as consideration for investor relations, public relations and
marketing purposes. These shares will not be paid or conveyed except for
services actually rendered and upon approval of the Board of Directors.
Under Rule 15c2-11 under the Securities Exchange Act of 1934, broker-dealers
acting as market makers are required to have certain current information about
the Company before they can make a market and thereafter as they continue making
a market in its common stock. The Company will furnish periodically to
broker-dealers the information specified in Rule 15c2-11 if not contained in
reports filed with the Securities and Exchange Commission in order to enhance
such firms' ability to make a market in the Company's stock.
The price at which the shares are offered hereby has been arbitrarily set by the
Company's management, and has no relationship to the book value per share,
current earnings of the Company, or other generally accepted measurement of
value. No securities are to be offered for the account of any existing
shareholder.
The purchase price paid by investors must be wired or mailed directly to the
Company by check, or money order, payable only to: "INTERNET STOCK MARKET
RESOURCES, INC." as stated in the enclosed Subscription Agreement.
The proceeds from the sale of the shares will be transmitted to the Company bank
account by noon of the business day following three days of the subscription.
The shares are offered and the Company reserves the right to reject any offer in
whole or in part, or to accept subscriptions in any order, for any or no reason.
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<PAGE>
The Company will send by U.S. mail to subscribers within thirty (30) days,
signed copies of the Subscription Agreement and Common Stock certificates. The
Company intends to contact prospective investors through direct, personal
meetings and telephone calls to persons known by the Company's officers and
directors. All such meetings and other contacts will invite persons interested
in the Offering to obtain a copy of the Offering Circular by contacting the
Company in writing or via email. No general solicitation will be made pursuant
to this Offering.
To subscribe for Shares, each prospective investor must complete, date, execute
and deliver to the Company a Subscription Agreement and remit the purchase price
of the Shares so subscribed by check or money order payable to "INTERNET STOCK
MARKET RESOURCES, INC." A copy of the Subscription Agreement is attached at the
end of this Prospectus.
The Company reserves the right to reject any subscription in its entirety or to
allocate Units among prospective investors. If any subscription is rejected,
funds received by the Company for that subscription will be returned to the
subscriber without interest or deduction.
Within five (5) days of its receipt of a Subscription Agreement accompanied by a
check for the purchase price, the Company will send by first class mail a
written confirmation to notify the subscriber of the extent, if any, to which
the subscription has been accepted by the Company. The Company reserves the
right to reject orders for the purchase of Units in whole or in part. Not more
than thirty (30) days following the mailing of its written confirmation, a
subscriber's Common stock certificate will be mailed by first class mail. The
Company shall not use the proceeds paid by any investor until the Common stock
certificate has been mailed.
Although the Company's long-term plan for providing liquidity to its
shareholders is to develop a public market for its Common stock by soliciting
brokers to become market makers of the shares, to date the Company has not
solicited any such securities brokers, nor does the Company have any immediate
plans to do so. See "Description of Capital Stock-Limitations on Transfer of
Shares."
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LEGAL MATTERS
No legal proceedings are pending or threatened to which Internet Stock Market
Resources, Inc is a party. Opinions with regard to this Offering is rendered by
the Company's special counsel, Robert M. Overholt, Attorney at Law, 340 N. Sam
Houston Pkwy. East, Suite 250, Houston, Texas 77060: telephone number (281)
445-0020. The Statutory Agent for the Company is Anastasios Kyriakides whose
address is 405 Central Ave , 5th Floor, St. Petersburg, FL 33701
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35
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Directors and executive officers of the Company are as follows:
Name Age Other Office Held Term Period Served
- --------------------- --- -------------------------------- ---- -------------
<S> <C> <C> <C>
Anastasios Kyriakides 52 Chairman/Director/Secretary ASM* 12 years
Budd Morris 53 President/Director ASM* 2yrs. 7 months
Caroline Latta 51 Vice President/Director ASM* 2yrs. 6 months
Chad Morris 27 Asst. Vice President/Director ASM* 9 months
</TABLE>
*ASM=Annual Shareholders Meeting
The members of the Board of Directors of the Company are elected for a one- year
term by the shareholders at each annual meeting. Officers are elected by the
Directors for a one-year term at each annual meeting, or until otherwise
replaced by the Board of Directors. The following table sets forth certain
information with respect to the Officers and Directors of the Company.
CERTAIN SIGNIFICANT EMPLOYEES Larry Jacoby, who is neither an officer nor a
director of the Company, is responsible for the Management of Information
Systems for the Company.
FAMILY RELATIONSHIPS AMONG OFFICERS AND DIRECTORS The Company's Vice President
Caroline Latta is the spouse of Company President Budd Morris, and Company
Assistant Vice President Chad Morris is the son of Company President Budd
Morris.
BUSINESS EXPERIENCE OF OFFICERS AND DIRECTORS
Background during last 5 years.
Anastasios Kyriakides is the Chairman and Secretary of the Board
of Directors of the Company. Mr. Kyriakides received the degree Bachelor of
Science in business from Florida International University in 1989; in 1997, he
received from the American Institute of Banking a degree in investment banking.
Mr. Kyriakides has extensive experience in the field of investment banking and
venture capital. From 1989 to the present, Mr. Kyriakides has consulted for
numerous companies in the areas of banking, travel, and electronics. In 1994,
Mr. Kyriakides became the Chairman of Montgomery Ward Travel, a company created
to provide full travel services to 8 million Montgomery Ward customers and
credit card holders; he served in this capacity from 1994 to 1996. Prior to
that, Mr. Kyriakides had organized the successful start-up operations of Seawind
Cruise Line in 1990; Mr. Kyriakides was the founder, and later, the Chairman,
CEO, and Secretary until 1994. In 1984, Mr. Kyriakides founded Regency Cruise
Line and served as its Chairman and Secretary until 1987. In 1983, Mr.
Kyriakides founded the Mylex Corporation to develop and produce the world's
first hand-held optical scanner and VGA card for personal computers. Mr.
Kyriakides also founded Lexicon Corporation, producing the first hand held
language translator. As the President and Chairman, Mr. Kyriakides guided Mylex
and Lexicon from their inception as private companies to become public companies
traded on the NASDAQ under the stock symbol MYLX and LEXI.
Budd Morris is the President, Treasurer, and Chief Executive Officer of the
Company, and is a member of the Board of Directors. Mr. Morris attended Southern
Colorado State College during the late 1960s; subsequent to his studies there,
Mr. Morris was employed by American Stores, Inc. where he served in upper
management positions; from 1987 to 1992, he was Executive Vice President and
Officer of Jewel Osco of Florida, a subsidiary of American Stores. In 1993, Mr.
Morris left American Stores to become Director of Marketing for Cellular One, a
division of McCaw Telecommunications, Inc. From 1995 to 1997, Mr. Morris was
Regional Sales and Operations Manager of LIM Imports Corporation. In February of
1997, he accepted the position of President of Internet Stock Exchange Corp.
(the former name of Internet Stock Market Resources, Inc.). Initially, his
primary responsibilities were to develop sales collateral, staffing, material,
marketing, and alliances, as well as to carry out other managerial duties. In
January of 1999, Mr. Morris was appointed to the position of Chief Executive
Officer and Treasurer of the Company while retaining the office of President.
His duties now include monitoring strategic operations, controlling marketing
alliances and expenses, and other such duties traditionally incumbent upon the
President and CEO of a public company.
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<PAGE>
Caroline Latta is a Vice President and the Chief Financial Officer of the
Company, and is a member of the Board of Directors of the Company. Ms. Latta
attended Drury College in Springfield, Missouri until 1970. Prior to her current
position, she co-owned and operated Passport Gateway Magazine, an upscale
tourist publication. For three years, she was a mortgage broker consultant for
Northern Funding Group, a not-for-profit funding organization. Most recently,
she served as a consultant for Internet Stock Exchange Corporation (now Internet
Stock Market Resources, Inc.) from March of 1997 until her appointment to the
office of Vice President of Sales and Marketing. Her duties include marketing
the Internet site and consulting with principals of public companies needing
exposure on the Internet. Ms. Latta was promoted to the office of Chief
Financial Officer in January of 1999; her duties now include budgeting and
allocation of funds and accounting procedures, as well as such other duties as
she has performed since she began her professional relationship with the
Company.
Chad Morris is an Assistant Vice President and the Chief Operating
Officer of the Company, and is a member of the Board of Directors. Mr. Morris is
a graduate of the Florida State University, having earned the degree Bachelor of
Science in Social Sciences. Mr. Morris was the Financial Officer for a
not-for-profit organization, Kappa Alpha Order, from January of 1995 through May
of 1997. He was employed by a private technology company, Aerotek Inc., in the
capacity of Technical Contracts Manager from 1997 through December of 1998. Mr.
Morris came to work for Internet Stock Market Resources, Inc. in January of 1999
as Chief Operating Officer where his duties include sales, marketing, and
operations.
None of the persons listed above serves as an officer or director of another
public corporation.
Promoters
There are, at the date of this Prospectus, no promoters of this Issue. The
Company may, however, retain the services of an underwriter; such a relationship
would be the subject of an amendment to this Prospectus.
Control Persons
M.C.K. Marine Enterprises, Inc., a Liberian corporation, is a "control person"
of Internet Stock Market Resources, Inc. Anastasios Kyriakides, the Chairman and
Secretary of Internet Stock Market Resources, Inc., has a controlling interest
in M.C.K. Marine Enterprises, Inc.
37
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the security ownership of beneficial owners and
managers of the company.
<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature
Class Of Beneficial Owner Of Beneficial of Class Ownership* Percent
------------ --------------------------- --------------------------------- -------
<S> <C> <C> <C>
Common Stock M.C.K. Marine Enterprises** 443,989 6.85%
c/o Anastasios Kyriakides
204 37th Ave., Suite 332
St. Petersburg, Fl. 33704
Common stock Anastasios Kyriakides 2,000,000 30.87%
204 37th Ave., Suite 332
St. Petersburg, Fl. 33704
</TABLE>
*As of September 29, 1999, and not adjusting for a one-for-nine reverse split
effective June 30, 1999.
**M.C.K. Marine Enterprises is controlled by Company director Anastasios
Kyriakides.
Note: As a group, the officers and directors beneficially own approximately
2,443,989 shares at July 16, 1999 (subsequent to, but not adjusting
for, a one-for-nine reverse split of all outstanding shares of Common
Stock of the Company).
There have been no changes in control of the Company during the past two years.
38
<PAGE>
DESCRIPTION OF SECURITIES
The Company currently has authorized Fifty Million (50,000,000) shares of Common
stock, par value $0.0001 per share. Additionally, the Company has authorized One
Million (1,000,000) shares of Preferred stock, par value $0.01 per share. At the
date of this Prospectus, the Company has 719,778 shares (6,478,000 Shares
without giving effect to reverse split) of its Common stock issued and
outstanding, and no shares of its Preferred stock issued.
With this Offering, the Company is offering a maximum of Eight Hundred
Thirty-three Thousand Three Hundred Thirty-three (833,333) units (the "Units"),
with each Unit consisting of Four (4) shares of Common stock plus one share of
Preferred Stock. Each of the Preferred Share is convertible for two (2) shares
of the Company's Common stock within one (1) year of the subscription for two
($2.00).
39
<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL
None of the experts named in this Prospectus own any securities of the Company.
40
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
The Company does not currently have, nor has it ever had, any insurance or other
instrument of indemnity against liability under the Securities Act of 1933, as
amended. The Company has taken the general position that the Commission
considers such indemnification not in the public interest.
41
<PAGE>
ORGANIZATION WITHIN LAST FIVE YEARS
Before 1989, the Company filed with the United States Securities and Exchange
Commission a registration statement on Form S-18, effectively causing the
Company to become a reporting entity under Section 12(g) of the Securities
Exchange Act of 1934. On February 9, 1989, the Company was merged with Sea
Venture Cruises, Inc., a close, Delaware corporation, in a tax-free
reorganization which resulted in the re-domiciling of the Corporation from Texas
to Delaware. Trans America Enterprises, Inc., the specifically-named surviving
corporation of the merger, changed its name to Sea Venture Cruises, Inc., and
conducted business as such until last year.
Because of a lack of success in the cruise business, the Company began to seek a
merger partner in a new line of enterprise. Determining that substantial
opportunities existed in the burgeoning area of Internet information services,
certain principals of the Company began developing a separate, private, Florida
corporation called Internet Stock Market Corp., which was engaged in providing
information on the World Wide Web through a Web site with the URL
http://www.internetstockexchange.com. (That Web address was later revised to
www.internetstockmarket.com.) On March 26, 1998, the Company's name was changed
by amendment to the (Amended) Articles of Incorporation to Internet Stock
Exchange Corp.
On August 17, 1998, the Company changed its name to Internet Stock Market
Resources, Inc. and subsequently announced that it had merged with the private,
closely-held Florida corporation Internet Stock Market Corp. The financial
statements of the Surviving Corporation herewith presented reflect the effect as
if the merger were accounted for as a "pooling of interests" (because of the
common control) of the private corporation (the "Non-surviving Corporation")
with that of the Company (the "Surviving Corporation" of the
merger/acquisition). The effective date of the merger coincides with the first
day (September 1, 1998) of the second quarter of the Company's just-ended fiscal
year.
On June 9, 1999 , the Company approved a reverse-split of all issued and
outstanding shares of Common Stock of the corporation on a nine for one
(9-for-1) basis, with fractional shares being canceled effective June 30, 1999.
This reverse- split resulted in the total number of shares issued and
outstanding becoming 719,778.
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<PAGE>
DESCRIPTION OF BUSINESS
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS
The Company's website is located at www.internetstockmarket.com and is in the
business of providing business and advertising information about client
companies to end users via the Internet. The information posted is provided by
the companies, and may include information about goods and services offered as
well as other information. End users are also able, through the Company's
Website, to hyperlink to other information services which carry data about a
specific client company; these hyperlinks may include the Securities and
Exchange Commission's EDGAR database, PR Newswire, the client company's own
Website, etc.
DISTRIBUTION METHODS OF PRODUCTS OR SERVICES
The Company provides its primary service by taking information provided by
client companies and preparing it in such a manner that it is viewable by end
users using industry standard Internet browsers such as Microsoft Internet
Explorer and Netscape Navigator. The preparation process generally entails
translating the client company's information into hypertext markup language
(HTML). In the case of a client that elects for the more expensive "banner
listing," the HTML will be supplemented with client company-provided graphics,
formatted in one of the industry standards of GIF or JPEG. All client companies
are presented, alphabetically by industry, in the "Listed Members" section of
the Company's Website, where end users can go to review a company by name and by
graphic (when applicable) and then hyperlink to more detailed information if
desired.
The more detailed information consists of a selection including the company's
core, summary profile, as well as, where applicable, EDGAR database information,
press releases from the company on PR Newswire, etc. The Company supports its
Website complex with its own server.
STATUS OF ANY NEW PUBLICLY ANNOUNCED PRODUCT OR SERVICE
The Company has not publicly announced any new services, although the Websites
front page has a hyperlink button to an on-line trading service that the Company
contemplates launching at a future date when and if capital and necessary
regulatory approvals are obtained.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS
The Company's business does not rely on raw materials in the traditional sense
other than the human resources required for maintenance of its Website complex.
It does, however, depend upon access to telephonic communications lines for the
transmittal of data, primarily under hypertext transfer protocol ("http"), as
well as for communication by voice and data with customers. The Company's
primary long distance carrier is AT&T.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION
The Company holds no patents, trademarks, licenses, franchises, concessions, or
royalty agreements, nor does it have any labor contracts. The Company has filed
for a trademark for Internet Stock Market.
NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
The Company currently offers no services for which government approval is
required.
COMPETITION
The corporate information storage and retrieval aspect of the Internet is
intensely competitive, with firms and other entities of all sizes offering
Internet exposure for corporate clients, and offering end users a variety of
types of information. The well-known search engine companies like Yahoo! and
AltaVista offer end users access to company information via hyperlinks to the
companies' own Websites, as well as hyperlinks to private and public
repositories of corporate information such as, in the private case, the National
Association of Securities Dealers' Website complex, which consists of pages for
Disclosure, Inc., OTC, etc., and, in the public case, the Securities and
43
<PAGE>
Exchange Commission's massive EDGAR database. Furthermore, a number of Websites
featuring corporate information profiles, stock guides and tips, and investment
advice are appearing each month. The result of this competition is that end
users of the Internet has available to them a virtual panoply of information.
The result for the company attempting to carve out a profitable niche in the
business is that it must offer features to end users of such magnitude as to
attract them to its Website in such numbers that prospective clients will pay
the company to be profiled there. This is difficult, and there can be no
assurance that the Company will not be overwhelmed by competitors offering
similar, or possibly even better, corporate information access, and at prices to
clients below that of the Company.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
Although the Internet itself is largely unregulated except for certain federal
and state laws pertaining to purveying pornography and allowing minors access
thereto, the Company's operations necessarily have certain aspects which
intersect with state and federal securities laws in that client companies may be
seeking to raise funds through the sales of certain of their securities, and
those clients may use their own Websites, with hyperlinks from their displays on
the Company's Website, to promote their offerings. This, in itself may bring the
Company into conflict with securities laws. First, at the state level, the
Company may find it difficult to prevent viewing of solicitation scripts by end
users in states in which the offerings are not "blue skied;" furthermore, at the
federal level, unless a specific exemption applies, an offering of a client's
securities via the Internet constitutes a general solicitation which would have
to be the subject of an applicable, effective registration statement. The
Company may find that certain clients, in their efforts to raise funds via the
powerful medium of the Internet, may be in violation of securities laws, and the
Company, by making their literature available to the public or by facilitating
access to that information, could find itself construed by state or federal
regulators as having been a promoter of the offerings, a situation which could
lead to regulatory sanction. The Company is instituting proscriptive language in
its client contracts to avoid such situations. The Company will also monitor the
activities of its clients with respect to matters involving descriptions of
their securities and offerings thereof. However, there can be no assurance that,
even with this level of diligence, the Company will not find itself in a
situation where it has unintentionally allowed its Website to be contributory to
a client's defective offering. In such an event, the Company may face severe
penalties for having been involved in securities law violations. More broadly, a
client company may find itself in other types of litigation, civil or criminal,
in which the Company may find itself accused of sharing liability for the
actions of the Company by virtue of its support of the client's advertising and
marketing efforts. While it is not likely that any such liability would be
construed as being "strict" liability, nevertheless, the Company might have to
defend itself against charges of non-strict liability in a claim against a
client company. The implications of this exposure, at the present time, are
entirely of a private, civil nature, and Management does not foresee government
regulations involving such matters.
AMOUNT SPENT DURING EACH OF THE LAST TWO FISCAL YEARS ON RESEARCH AND
DEVELOPMENT ACTIVITIES
The Company does not generally involve itself in research and development.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS (FEDERAL, STATE AND
LOCAL)
Environmental laws do not materially affect the Company.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES
The Company currently has five full-time employees, four of which are officers
and directors, the fifth of which is responsible for Management of Information
Systems. Except for the Company's Chairman and Secretary, Anastasios N.
Kyriakides, the officer/employees earn compensation as independent contractors
on commission through the production of new business and the maintenance of
their own books of existing business; Mr. Kyriakides currently receives no
compensation of any kind from the Company; however, the Company may in the
future alter this status as an unpaid principal/employee.
44
<PAGE>
CYCLICALITY OF THE INDUSTRY
General public use of the Internet industry has developed, for the most part,
within the past 5 years. As such, the industry has yet to experience an economic
cycle, and has arguably not even experienced an economic pause as yet; as such,
there is no empirical data on the industry's sensitivity to the business cycle
on the macroeconomic level. Nevertheless, Management of Internet Stock Market
Resources, Inc. that the Internet industry in general, and the Company in
particular, will experience downward pressures on revenues during the
recessionary phase of the economic cycle. To the extent that the Company's
business is dependent on payments from business clients, many of which are in
other industries, even if the Internet industry itself is robust to the economic
cycle, the Company's revenues may be eroded by any economic downturn's effect on
its clients' businesses.
ECONOMIC DEPENDENCE
The Company has no single source for 10% or more of its revenues, and it does
not anticipate any such relationship in the foreseeable future.
RECENT DEVELOPMENTS
Through the end of the current fiscal year, the Company had largely conducted
its business in the normal course, having added three to four new clients per
month to its "listed members" service. The Company has also been laying the
groundwork for the acquisition of several closely-held, going concerns with the
intent of making them wholly- or partially-owned subsidiaries of the Company.
Subsequent to the end of its fiscal year , the Company had entered into certain
letters of intent, described in Management Discussion and Analysis, below, and
in the Notes to the Financial Statements presented in later in this Prospectus.
YEAR 2000 ISSUES
The year 2000 issue results in certain computer systems and software
applications that use only two digits (rather than four) to define the
applicable year. Consequently, such systems and applications may recognize a
date of "00" as the year 1900 instead of the intended year 2000. This could
directly result in a system failure or miscalculations causing disruption of
operations, including, among other things, a temporary inability to process
customers' transactions, order supplies, or engage in similar, normal business
activities. The Company has conducted an initial assessment of its computer
system and software applications and the Company believes that the terminals
will be Year 2000 compliant. The Company is communicating with key suppliers,
financial institutions, and customers during 1999 to identify and coordinate the
resolution of any year 2000 issues that might arise from these constituencies.
Based on its initial assessment, the Company believes the cost of addressing the
Year 2000 issue will not have a material impact on the Company's financial
position or results of operations. The Securities and Exchange Commission has
asked public companies to disclose four general types of information related to
Year 2000 Preparedness: the Company's state of readiness, costs, risks, and
contingency plans. Accordingly, the Company has included the following
discussion in this report, in addition to the Year 2000 disclosures previously
filed.
State Of Readiness
All equipment and computer systems currently utilized
by the Company in-house are believed to be year 2000 compliant. Most vendors
used by the Company are large companies and the Company expects that these
companies will be year 2000 compliant. However, the Company has not received
written notification from all vendors affirming their year 2000 compliance.
Therefore, there can be no assurance that the systems of other companies with
which the Company does business will be year 2000 compliant. None of the
Company's systems interfaces directly with any third-party vendors, except for
its Internet services, and the Company has been informed that those systems are
Year 2000 compliant. None of the Company's services is believed to be subject to
year 2000 compliance so the Company does not expect to incur any liability in
this area. The failure on the part of merchandise vendors, or other companies
with whom the Company transacts or may transact business, to be year 2000
compliant on a timely basis may have an adverse impact on the operations of the
Company.
Costs
The total cost to the Company of Year 2000 activities has not been and is not
anticipated to be material to its financial position or results of operations in
any given year. Management estimates the total costs of addressing the Year 2000
issue to be less than $10,000. These total costs are based on Management's best
estimates. There are no guarantees that these estimates will be achieved and
actual results could differ from those estimates.
45
<PAGE>
The Company plans to inventory sufficient quantities of supplies from outside
suppliers to be capable of operating for several months should third parties
incur year 2000 problems. The cost of increasing the supply levels is not
expected to exceed $5,000, and any excess purchases will be paid for from
available cash, or will simply not be purchased. Any costs associated with the
year 2000 issue will be expensed as incurred. The amount expensed to date has
been immaterial.
Risks
The Company utilizes computers and software in various aspects of its business,
principally billing and accounting. The Company believes that its computers and
software comply with the Year 2000 issue. The Company does not expect any
material adverse impact on its operations relative to the Year 2000 issue.
However, as discussed above, the Company is also exposed to the risk that one or
more of its clients, suppliers, or vendors could experience Year 2000 problems
that could impact the ability of such customers to transact business or such
suppliers or vendors to provide goods and services. Although this risk is
lessened by the availability of alternate suppliers, the disruption of certain
services, such as utilities, could, depending upon the extent of the disruption,
potentially have a material adverse impact on the Company's operations.
Contingency Plans
The Company is in the process of identifying and developing contingency plans
for any problems that might be experienced by the Company's suppliers, clients
or vendors. This includes identifying alternate suppliers.
46
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's revenues for the twelve (12) months ending May 31, 1999, were
$214,175 against revenues of $382,775 for the twelve (12) months ending May 31,
1998, representing a decline of 44%. Management attributes much of this decline
to extraordinary revenues earned from some one-time services performed by the
Company during the previous fiscal year, and to the realization of virtually no
revenue generation during part of its fiscal third quarter of this year, this
latter pause being the result of suspension of sales activities during a
regulatory investigation which resulted in no findings adverse to the Company.
This temporary halt to new business development was overcome in the Company's
fiscal fourth quarter as continuing clients remained with the Company while new
clients were being added at the rate of approximately three to four per month.
As had been anticipated by Management, operating expenses declined by only
13.3%, reflecting certain fixed costs of operations. As such, it is Management's
judgment that, as operating revenues grow, total expenses will also do so, but
at a lower rate, although Management has chosen not to rely the fourth quarter
results as an indication of this expectation due to the need for at least
several forward quarters' data for confirmation.
Total cash balances declined 22.1% from their year-previous levels; at fiscal
year end 1998 almost one-third of the Company's total cash was in restricted
form (i.e., earmarked for a specific purpose, and not available for general
use); therefore, considering only cash available for general purposes, the
Company's cash balances have increased by 14.2% over year-previous levels,
evidencing somewhat better liquidity for the Company's day-to-day needs at the
end of the current fiscal year. The elimination of the restricted cash balance
was the main cause of the decline of 22.4% in current assets from the level at
the end of the Company's previous fiscal year, and this single, dominating
effect carried over to the total assets, as well.
With respect to current liabilities, a sharp decline in the current portion of a
note payable to a stockholder contributed substantially to a drop of 55% from
the level at the end of the previous fiscal year. Management is encouraged by
the improvement in its current ratio (current assets divided by current
liabilities, used as a measure of the Company's ability to cover short-term
obligations with liquid assets) to 0.58 at fiscal year-end 1999 from 0.34 at
fiscal year-end 1998. Coupled with continuing retirement of the outstanding
long-term note payable, the Company's total liabilities have decreased
year-over-year by 34.3%, marking what Management feels is a significant
reduction in overall risk.
From fiscal year-end 1998 to fiscal year-end 1999, the Company's total
deficiency in assets fell by approximately 37%, giving Management reason to
believe that the entirety of the Company's asset deficiency can continue to
decrease.
With respect to cash flows, the Company's operating activities used net cash of
more than $102,000 during the current fiscal year while operating activities
provided almost $97,000 during the preceding fiscal year. This is the result,
among other, lesser factors, of the Company's aggressive reduction in accrued
liabilities as well as a $136,000 increase in deferred income, the latter factor
being the result of changes in the recognition of sales revenues.
Management has embarked on an aggressive plan of expansion involving two
separate, but related, components. First, it is fully the intention of
Management to continue to develop new clients for its flagship business
information Website while maintaining its existing "listed members" base. This
component of Management's plan requires the active, on-going efforts of senior
managers acting in their capacities as producers, making prospective new clients
aware of the benefits of the Company's Website portal at the same time as
providing a high level of service and responsiveness to current clients. Second,
the Company's business model encompasses an imperative to acquire other going
concerns to become subsidiaries of the Company. Although Management seeks
acquisitions within the perimeter of its areas of core competence, it has made
overtures to a diverse set of potential holdings. It is Management's intention
to use a variety of financing vehicles to acquire subsidiaries; among these may
be cash, debt, and/or equity securities of the Company. To the end of having
cash available for acquisitions, the Company has made plans to raise capital
through a public offering of its securities under Regulation S-B. To the end of
having its securities be of sufficient value to use in and of themselves as
consideration in acquisitions, it is the intention of Management, at the
earliest possible time, to seek approval for listing in the Small Cap market of
the National Association of Securities Dealers (NASD) automated quotations
system.
EFFECTS OF INFLATION
The Company believes that its revenues and results of operations have not been
significantly affected by inflation during the three years ended May 31, 1999.
The economy's overall low inflation rates at both the producer and consumer
levels has been reflected in the Company's business and industry as well.
47
<PAGE>
GOING CONCERN
The Company has suffered recurring losses from operations and at May 31, 1999,
had a working capital deficit and a deficiency in assets. These and other
factors raise doubt about the Company's ability to continue as a going concern
without additional capitalization. The attached financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
LIQUIDITY AND CAPITAL RESOURCES
Management has decided to address the Company's financial situation by the
following:
Proceeds from the sale of additional shares of Common Stock for $72,000 as part
of its foreign private placement, was received in July 1999.
The note payable to a stockholder has been restructured and will not be
satisfied until the Company has an acceptable level of working capital.
This Offering on Form SB-2 is expected to raise up to $5,000,000, before
expenses and underwriting commissions, from the general public.
The Company anticipates that the acquisition of at least two, possibly four,
additional companies in the computer and internet fields for a better vertical
integration and to spread general and administrative costs over a broader base.
In that regard, three letters of intent have been signed, and the Company is in
the process of drafting agreements and performing its due diligence.
Increase promotional expenditures in an effort to increase revenues.
Subsequent to the end of the current reporting period, the Company announced
that it had entered into a letter of intent with the private, close corporation
Delcor Industries, Inc., which manufactures and assembles electronic components.
The proposed acquisition involves the use of both cash and long-term debt of the
Company. Consummation of this acquisition is predicated on raising sufficient
capital from a placement of its equity securities as previously mentioned in
this Management Discussion and Analysis.
Management further notes that negotiations for the acquisition of other firms
are on-going at this time.
DESCRIPTION OF PROPERTY
Pursuant to a lease that expires on July 31, 2000, the Company leases
approximately 1,200 square feet of office space for $1,050 per month at Suite
102 Lobby Level, 405 Central Avenue in St. Petersburg, Florida. The office
building is approximately 7 years old, and in good condition.
48
<PAGE>
[THIS PAGE IS INTENTIONALLY BLANK]
49
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 15, 1990, the Company issued 443,988,735 restricted common shares to
M.C.K. Marine Enterprises, Inc. in exchange for a loan of $1,605,800. M.C.K.
Marine Enterprises, Inc. was and still is owned and controlled by Company
Director, Chairman, and Secretary Anastasios Kyriakides.
Pursuant to the merger of Internet Stock Market Resources, Inc. with and into
Internet Stock Exchange Corp. (the predecessor to the Company) - the merger
becoming effective on September 1, 1998 (see "DESCRIPTION OF BUSINESS"), Company
Director, Chairman, and Secretary Anastasios Kyriakides, through affiliate
parties, received consideration in the amount of 2,000,000 shares of the
Company's Common Stock plus a $1,000,000 note payable. The terms of repayment of
that loan have recently been restructured (described in the Notes to the
Financial Statements in the "FINANCIAL STATEMENTS" section, below).
50
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The principal United States market in which the Company's Common stock has been
traded is the Over the Counter (OTC) Electronic Bulletin Board Service of the
National Association of Securities Dealers (NASD).The Company's common stock
began trading in 1989 under the symbol SVCR (subsequently changed to ISMR).
Through the Fourth Quarter of fiscal 1998, the high sales price was $5.00
(adjusted for a 1-for-1000 reverse-split) and the low sales price was $0.0001.
The Company's market makers include Sharp Capital, Weinn Securities, Hill
Thompson Securities, and Paragon Securities.
The Company's common stock, under the symbol "ISMR," has experienced sales of
stock at a high of $3.50 and a low of $0.25.
<TABLE>
<CAPTION>
Year Ended Year Ended
May 31, 1999 May 31, 1998
High Low High Low
--------------- --------------
<S> <C> <C> <C> <C>
First Quarter* 2.25* 1.50* ** **
Second Quarter* 3.50* .87* ** **
Third Quarter* 1.25* .56* ** **
Fourth Quarter* .75* .25* ** **
</TABLE>
*The prices presented above are bid prices which represent prices between
broker-dealers and do not include retail marketups and markdowns or any
commission to the dealer. These prices may not reflect actual transactions.
** Bid prices during this time period were insignificant.
On May 31, 1999, there were approximately 417 holders of record of the Company's
common stock. This number does not include any adjustment for stockholders
owning the Company's common stock in "street" name.
The Company has not paid dividends since its inception, does not anticipate
paying any dividends in the foreseeable future and intends to retain earnings,
if any, to provide funds for general corporate purposes and the expansion of the
Company's business. Florida law restricts the payment of dividends for
corporations with a deficiency in assets; however, the $1,000,000 note issued in
connection with the merger was treated as a distribution.
51
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
Summary Compensation Table
Long Term Compensation
----------------------------
Annual compensation | Awards |Payouts|
- -----------------------------------------|------------------|-------|
(a) (b) (c) (d) (e) | (f) (g) | (h) | (i)
Name Other |Restrctd Securit. | |All Other
and Annual | Stock Underlying| LTIP | Compen-
Principal Compen- |Award(s) Options/ |Payouts| sation
Position Year Salary($)Bonus($)sation($) | ($) SARs (#)| ($) | ($)
- -----------------------------------------|------------------|-------|---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CEO | | |
Budd | | |
Morris 1999 0 0 27,628 | 0 0 | 0 | 0
1998 0 0 64,587 | 0 0 | 0 | 0
1997 0 0 N/A | 0 0 | 0 | 0
---- | | |
Anastas- 1999 0 0 0 | 0 0 | 0 | 0
ios 1998 0 0 0 | 0 0 | 0 | 0
Kyriak- 1997 0 0 0 | 0 0 | 0 | 0
ides | | |
- ------------- | | |
CFO | | |
Caroline | | |
Latta 1999 0 0 10,068 | 0 0 | 0 | 0
1998 N/A N/A 938 | N/A N/A | N/A | N/A
1997 N/A N/A N/A | N/A N/A | N/A | N/A
- ------------- | | |
COO | | |
Chad | | |
Morris 1999 0 0 10,350 | 0 0 | 0 | 0
1998 N/A N/A N/A | N/A N/A | N/A | N/A
1997 N/A N/A N/A | N/A N/A | N/A | N/A
- ------------- | | |
Secretary | | |
Anastas- 1999 0 0 0 | 0 0 | 0 | 0
ios 1998 0 N/A N/A | N/A N/A | N/A | 25,000
Kyriak- 1997 0 N/A N/A | N/A N/A | N/A | 0
ides(1) | | |
| | |
- ------------- | | |
Other Officers/Directors | | |
John 1999 0 0 0 | 0 0 | 0 | 0
Bramis 1998 0 0 0 | 0 0 | 0 | 0
(2) 1997 0 0 0 | 0 0 | 0 | 0
---- | | |
John 1999 0 0 0 | 0 0 | 0 | 0
Karava- 1998 0 0 0 | 0 0 | 0 | 0
siles(3) 1997 0 0 0 | 0 0 | 0 | 0
</TABLE>
- -------------
(1) Anastasios Kyriakides had the title of President of the Company until Budd
Morris was appointed to the capacity, and had held that title for the Company's
predecessor, Internet Stock Exchange Corp.
(2) John Bramis served as an uncompensated officer and director of the Company
for approximately the first two quarters of fiscal year 1999, and served
similarly for the Company's predecessor, Internet Stock Exchange Corp. In that
latter role, he served as uncompensated President.
(3) John Karavasiles served as an uncompensated officer and director of the
Company for approximately the first two quarters of fiscal year 1999, and served
similarly for the Company's predecessor, Internet Stock Exchange Corp. In that
latter role, he served as uncompensated President. The Company's executive
officers currently earn their salaries as independent contractors through
commissions on sales. There are currently no contracts with any of the executive
officers of the Company; moreover, there is currently no compensation provided
to any person in his/her capacity as a director, and no reimbursement for
expenses incurred by directors in their capacities as such.
52
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has no disagreements with its accountants, nor have there been
material changes in the Company's financial statements as a result of
disagreements between the Company and its accountants with respect to the
Company's accounting or with respect to financial disclosures.
53
<PAGE>
INTERNET STOCK MARKET RESOURCES, INC.
FINANCIAL STATEMENTS
MAY 31, 1999 and 1998
<TABLE>
<CAPTION>
CONTENTS
Page
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Deficiency in Assets F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-11
</TABLE>
<PAGE>
Dohan and Company 7700 North Kendall Drive, #204
Certified Public Accountants Miami, Florida 33156-7564
A Professional Telephone: (305) 274-1366
Association Facsimile: (305) 274-1368
Independent Auditor's Report
Stockholders and Board of Directors
Internet Stock Market Resources, Inc.
St. Petersburg, Florida
We have audited the accompanying balance sheets of Internet Stock Market
Resources, Inc., as of May 31, 1999 and 1998, and the related statements of
operations, deficiency in assets and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Internet Stock Market
Resources, Inc. at May 31, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Dohan and Company, P.A., CPA's
July 9, 1999
Miami, Florida
Member:
Florida Institute of Certified Public Accountants
American Institute of Certified Public Accounts - Private Companies and SEC
Practice Sections
SC International - Offices in Principal Cities World-Wide
F-1
<PAGE>
<TABLE>
<CAPTION>
INTERNET STOCK MARKET RESOURCES, INC.
BALANCE SHEETS
(Restated)
May 31, 1999 1998
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 122,786 107,653
Restricted cash - 50,000
Accounts receivable, less allowance for doubtful
accounts of $37,320 and $19,493 in 1999
and 1998 22,343 32,193
Recoverable income taxes 5,928 -
Accrued interest receivable from stockholder - 4,920
--------- ---------
TOTAL CURRENT ASSETS 151,057 194,766
PROPERTY AND EQUIPMENT 40,244 49,973
DEPOSITS 1,000 1,000
--------- ---------
TOTAL ASSETS 192,301 245,739
--------- ---------
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable 11,197 8,995
Accrued and other liabilities 20,998 57,096
Deferred income 112,084 124,444
Current portion of note payable to stockholder 113,550 385,385
Other 1,146 -
--------- ---------
TOTAL CURRENT LIABILITIES 258,975 575,920
NOTE PAYABLE TO STOCKHOLDER, 6%, DUE JUNE 1, 2000 564,965 678,515
--------- ---------
823,940 1,254,435
COMMITMENTS AND CONTINGENCIES (NOTE 8)
DEFICIENCY IN ASSETS
Preferred stock, $.01 par value; 1,000,000 shares
authorized; none issued and outstanding
Common stock;$.0001 par value; 50,000,000 shares
authorized; 5,278,001 and 2,478,001 shares
issued and outstanding 528 248
Additional paid-in capital 504,657 3,458,058
Deficit (1,136,824) (4,467,002)
--------- ---------
TOTAL DEFICIENCY IN ASSETS (631,639) (1,008,696)
--------- ---------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS 192,301 245,739
--------- ---------
</TABLE>
See accompanying notes.
F-2
<PAGE>
<TABLE>
<CAPTION>
INTERNET STOCK MARKET RESOURCES, INC.
STATEMENTS OF OPERATIONS
(RESTATED)
For the years ended May 31, 1999 1998
-------- -------
<S> <C> <C>
REVENUES 214,175 382,775
EXPENSES
Bad debts 35,763 19,493
Depreciation and amortization 11,307 5,553
Office rent 13,482 12,359
General and administrative 43,801 105,909
Interest 34,947 -
Promotion 3,375 21,386
Professional fees 82,405 51,518
Compensation and related taxes 97,890 156,709
Telephone 20,668 23,470
---------- ---------
TOTAL EXPENSES 343,638 396,397
---------- ---------
LOSS FROM OPERATIONS (129,463) (13,622)
OTHER INCOME 1,583 5,332
---------- ---------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (127,880) (8,290)
PROVISION FOR INCOME TAXES (CREDITS) - -
---------- ---------
NET LOSS (127,880) (8,290)
---------- ---------
BASIC NET LOSS PER SHARE (0.04) (0.00)
========== =========
WEIGHTED AVERAGE SHARES OUTSTANDING 3,582,412 2,478,001
========== =========
</TABLE>
See accompanying notes.
F-3
<PAGE>
<TABLE>
<CAPTION>
INTERNET STOCK MARKET RESOURCES, INC.
STATEMENTS OF DEFICIENCY IN ASSETS
For the years ended May 31, 1999 and 1998
ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
($) ($) ($) ($)
-------- ------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
(RESTATED)
BALANCES -
MAY 31, 1997 478,001 48 3,454,664 (3,458,712) (4,000)
STOCK ISSUED
FOR MERGER 2,000,000 200 800 1,000
DEBT ISSUED IN
CONNECTION
WITH MERGER (1,000,000) (1,000,000)
CANCELLATION
OF SHARES 2,594 2,594
NET LOSS FOR
1998 (8,290) (8,290)
---------- ------ ---------- ---------- ---------
BALANCES -
MAY 31, 1998 2,478,001 248 3,458,058 (4,467,002) (1,008,696)
PRIVATE STOCK
PLACEMENT 2,800,000 280 504,657 - 504,937
RECAPITALIZATION
OF DEFICIT (3,458,058) 3,458,058 -
NET LOSS FOR
1999 (127,880) (127,880)
---------- ------ ---------- ---------- ---------
BALANCES -
MAY 31, 1999 5,278,001 528 504,657 (1,136,824) (631,639)
---------- ------ ---------- ---------- ---------
</TABLE>
See accompanying notes.
F-4
<PAGE>
<TABLE>
<CAPTION>
INTERNET STOCK MARKET RESOURCES, INC.
STATEMENTS OF CASH FLOWS (RESTATED)
May 31, 1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $(127,880) $ (8,290)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,307 5,553
Changes in assets and liabilities:
Decrease (increase) in restricted cash 50,000 (50,000)
Decrease (increase) in accounts receivable 9,850 (32,193)
Increase in recoverable income taxes (5,928) -
Decrease (increase) in accrued interest receivable 4,920 (4,920)
Increase in accounts payable 2,202 8,995
Increase (decrease) in accrued and other liabilities (36,098) 53,096
Increase (decrease) in deferred income (12,360) 124,444
Increase in other liabilities 1,146 -
--------- ---------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (102,841) 96,685
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance 504,937 3,594
Proceeds of stockholder loan - 63,900
Principal payments on note payable stockholder (385,385) -
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 119,552 67,494
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (1,578) (55,526)
Security deposits - (1,000)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (1,578) (56,526)
--------- ---------
INCREASE IN CASH 15,133 107,653
CASH, beginning of year 107,653 -
--------- ---------
CASH, end of year $ 122,786 $ 107,653
--------- ---------
SUPPLEMENTAL DISCLOSURES
Interest received $ 6,503 $ 412
Interest paid $ 36,363 $ -
Income taxes paid $ - $ 5,928
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NON-CASH
FINANCING TRANSACTIONS:
In connection with the merger of a commonly controlled affiliate, the Company
issued 2,000,000 shares of common stock in exchange for 1,000 shares outstanding
of the non-surviving corporation and $1,000,000 of debt, recorded as "Note
payable stockholder."
See accompanying notes.
F-5
<PAGE>
INTERNET STOCK MARKET RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
BUSINESS ACTIVITY Internet Stock Market Resources, Inc., (the Company) provides
Internet design and access to financial websites and information on behalf of
smaller, growing public companies.
Effective September 1, 1998, Internet Stock Market Resources, Inc. (formerly,
Internet Stock Exchange Corp.) acquired 100% of the shares authorized, issued,
and outstanding, consisting of 1,000 shares of common stock, $1.00 par value per
share, of Internet Stock Market Corp., a closely-held Florida corporation, under
an Agreement and Plan of Merger. The shareholders of Internet Stock Market Corp.
were compensated with 2,000,000 restricted common shares of the Company's stock
and a promissory note in the amount of $1,000,000.
The Surviving Corporation is duly organized under General Corporation Law of the
State of Delaware, is in good standing, and is qualified to conduct business in
any lawful jurisdiction. The Surviving Corporation has completed all aspects of
its merger/acquisition with the Non-surviving Corporation.
ACCOUNTING BASIS These financial statements reflect the merger as if it were a
"pooling of interests" of the two entities as a result of common control.
Accordingly, financial information for periods prior to the merger reflect
retroactive restatement of the companies' combined financial position and
operating results.
RECLASSIFICATIONS AND RESTATEMENTS Amounts in the prior year financial
statements have been reclassified for comparative purposes to conform with the
presentation of the current year financial statements. Additionally, amounts in
the prior year financial statements have been restated to give retroactive
effect to the merger for purposes of comparative financial statement
presentation.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, the
Company considers all highly liquid debt securities purchased with a maturity of
three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject
the Company to a concentration of credit risk, are cash and cash equivalents and
accounts receivable. The Company currently maintains its day-to-day operating
cash balances at a single financial institution. At times, cash balances may be
in excess of the FDIC insurance limits. The amounts in excess were $21,851 and
$8,672 at May 31, 1999 and 1998,respectively.
As of May 31, 1999 and 1998, the Company had outstanding trade receivables,
which carrying value of these receivables was reduced for estimated
uncollectibility to estimated fair market value by an allowance for doubtful
accounts. The Company's clients are typically smaller publicly-traded
organizations. Consequently, the Company's ability to collect the amounts due
from clients may be affected by economic fluctuations in their industries and
geographical location, as well as fluctuations in the financial and stock
markets in general.
F-6
<PAGE>
PROPERTY AND EQUIPMENT Property and equipment, consisting of furnishings and
equipment used in its current operations, is stated at cost, less accumulated
depreciation. Depreciation is begun when the assets are placed in service and
computed using the straight-line method over the estimated useful lives of the
assets, which range from five to seven years.
LONG-LIVED ASSETS Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate that the related
carrying amount may not be recoverable. When required, impairment losses on
assets to be held and used are recognized based on the fair value of the asset.
Long-lived assets to be disposed of, if any, are reported at the lower of
carrying amount or fair value less cost to sell.
SALES REVENUE Revenues from sales are recorded when the collection of sales
proceeds is reasonably assured and all other material conditions of the sales
are met. Income on contracts in excess of one month is deferred and recognized
monthly, pro-rata, over the term of the agreement.
ADVERTISING Advertising costs are charged to operations in the year incurred.
BASIC NET LOSS PER SHARE Basic net loss per common share is computed by dividing
the net income or loss available to Common stockholders by the weighted average
number of common shares outstanding during each period. There were no common
stock equivalents as of the years ended May 31, 1999 and May 31, 1998.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement No. 109 (FAS No. 109), Accounting
for Income Taxes. SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of the difference in events that have been recognized in the
Company's financial statements compared to the tax returns.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the
requirements of Statement of Financial Accounting Standards No. 107, the fair
value amounts of financial instruments have been determined based on available
market information and appropriate valuation methodology. The carrying amounts
and estimated fair values of the Company's financial assets and liabilities
approximate fair value due to the short maturity of the instruments. The fair
value of the note payable stockholder is estimated based on an annual interest
rate of 6% and the anticipated dates of payment and has not been increased
accordingly. Fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment; therefore, fair value cannot
be determined with precision.
F-7
<PAGE>
2. RELATED PARTY TRANSACTIONS
COMPENSATION AND CONVERSION OF SHARES The compensation to a Non-surviving
Corporation (Internet Stock Market Corp.) shareholder for his equity in that
business was $1,000,000 in the form of a promissory note payable with 6%
interest [Page F-7] per annum, issued by the Surviving Corporation (Internet
Stock Market Resources, Inc.). This note was due upon demand by the holder, but
subsequently changed to allow the Company to accumulate sufficient working
capital. The shareholder is an officer and director of the Company.
3. RESTRICTED CASH
In May 1998, the Board of Directors authorized the Company to offer and sell
shares of its common stock under a private placement, which was subsequently
cancelled. Prior to the year end, May 31, 1998, the Company received $50,000
from an investor to purchase shares of its common stock, which was subsequently
returned to the investor.
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Property and equipment consisted of the following:
1999 1998
----------- -----------
<S> <C> <C>
Office equipment $57,104 $55,526
Accumulated depreciation (16,860) ( 5,553)
----------- -----------
Property and equipment, net $40,244 $49,973
=========== ===========
</TABLE>
Total depreciation expense for the years ended May 31, 1999 and 1998, amounted
to $11,117 and $5,553, respectively.
5. ACCRUED AND OTHER LIABILITIES
<TABLE>
<CAPTION>
Accrued liabilities consisted of the following:
1999 1998
------------- ------------
<S> <C> <C>
Professional fees $20,150 $ 6,900
Accrued compensation and related taxes 848 196
Deposit on potential purchase of stock - 50,000
------------- ------------
$20,998 $57,096
============= ============
</TABLE>
6. STOCKHOLDERS' EQUITY
The Company has authorized 50,000,000 shares of common stock with a par value of
$.0001 per share. At May 31, 1999 and 1998, 5,278,001 shares and 2,478,001
shares, respectively, were issued and outstanding. The Company has authorized
1,000,000 shares of preferred $.01 par value.
F-8
<PAGE>
PRIVATE OFFERING In August 1998, the Board of Directors authorized the Company
to offer and sell to foreign investors up to 4,000,000 shares of its common
stock at a purchase price of $.25 per share under a private placement to foreign
investors, pursuant to an exemption available under the Securities Act of 1933,
as amended. Under this offering, which was made prior to the merger, 2,800,000
shares were issued at prices ranging from $.12 to $.25 generating net proceeds
of $504,937 prior to May 31, 1999. Additional (pre-reverse split) shares of
1,200,000 were sold in June 1999 for $72,000, with payment expected in July
1999.
7. INCOME TAXES
For the year ended May 31, 1999, the Company generated for U.S. income tax
purposes a net operating loss of approximately $93,300. This loss carryforward
expires in the year 2018. The Company had a net operating loss carryforward of
approximately $2,850,000 as of May 31, 1998. However, as of September 1, 1998,
and subsequently, there were ownership changes in the Company as defined in
Section 382 of the Internal Revenue Code. Because of these changes, the
Company's ability to utilize net operating losses and capital losses available
before the ownership change were virtually eliminated. The utilization of the
remaining carryforward is dependent on the Company's ability to generate
sufficient taxable income during the carryforward periods and no further
significant changes in ownership.
The Company computes deferred income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, which requires the use of an asset and
liability method of accounting for income taxes. Under FAS No. 109, deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. These differences result primarily
from the use of the accelerated cost recovery method of depreciation and the
write-off method for accounts receivable as opposed to the allowance method.
Statement No. 109 also provides for the recognition and measurement of deferred
income tax benefits based on the likelihood of their realization in future
years. A valuation allowance must be established to reduce deferred income tax
benefits if it is more likely than not that a portion of the deferred income tax
benefits will not be realized. It is Management's opinion that the entire
deferred tax benefit may not be recognized in future years. Therefore, a
valuation allowance equal to the deferred tax benefit has been established,
resulting in no deferred tax benefits as of the balance sheet dates.
8. COMMITMENTS AND CONTINGENCIES
LEASED PREMISES The Company leases its facilities in St. Petersburg, Florida
under a three-year lease agreement dated July 24, 1997. The lease provides for
monthly payments of $1,124. Rent expense for the years ended May 31, 1999 and
1998, was $13,482 and $12,359, respectively.
Future minimum lease payments under the lease agreement for years ending May 31
are as follows:
2000 $ 13,488
2001 2,248
--------
$ 15,736
========
F-9
<PAGE>
CONSULTING AGREEMENTS From time-to-time, the Company engages, retains and
dismisses various consultants. The consultants provide various services
including assisting with shareholder relations, responding to inquiries, short
and long-term strategic planning, marketing the Company to the investment
community and identification and negotiation of potential acquisitions.
YEAR 2000 The year 2000 issue results from certain computer systems and software
applications that use only two digits (rather than four) to define the
applicable year. As a result, such systems and applications may recognize a date
of "00" as 1900 instead of the intended year 2000, which could result in data
miscalculations and software failures. The Company has conducted a preliminary
assessment of its key computer systems and software application and believes
they are Year 2000 compliant. Based on the initial assessment, the Company
believes the cost of addressing the Year 2000 issue should not have a material
impact on the Company's financial position or results of operations.
POTENTIAL ACQUISITIONS On May 25, 1999, the Board of Directors authorized
negotiations with PEP Equities, Inc. for the purpose of acquiring an interest to
the extent that it would become a subsidiary of the Company.
The Company is negotiating with Micro Bytes Computer Center, Inc. for the
purchase of business assets and inventory and has executed a Letter of Intent
dated June 16, 1999. The purchase would be accomplished in part by the issuance
of restricted common stock by the Company, which would be given "piggy-back"
registration rights.
On June 30, 1999, a letter of intent was signed by the Company and Delcor
Industries, Inc. (Delcor) to acquire 100% of Delcor for cash and debt. The
letter of intent gives the parties until August 1, 1999 to sign a purchase
agreement to finalize the acquisition. Delcor manufactures and assembles
electronic components, and employs approximately 75 people.
9. GOING CONCERN AND MANAGEMENT'S PLAN
GOING CONCERN The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. The Company has suffered recurring
losses from operations and at May 31, 1999, had a working capital deficit and a
deficiency in assets. These and other factors raise doubt about the Company's
ability to continue as a going concern, without additional capitalization. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
MANAGEMENT'S PLANS
Management has decided to address the Company's financial situation by the
following:
o Sale of 1,200,000 additional shares of common stock for $72,000 as part
of its foreign private placement, expected to be received in July 1999.
o The note payable stockholder has been restructured and will not be
satisfied until the Company has an acceptable working capital.
o An SB-2 is expected to be filed with the United States Securities and
Exchange Commission, which would provide for the Company to raise up to
$5,000,000 from the general public.
F-10
<PAGE>
o Acquisition of at least two, possibly four, additional companies in the
computer and internet fields for a better vertical integration and to
spread general and administrative costs over a broader base. In that
regard, three letters of intent have been signed and the Company is in
the process of drafting agreements and performing its due diligence.
o Increase promotional expenditures in an effort to increase revenues.
10. SUBSEQUENT EVENTS
REVERSE STOCK SPLIT During the first fiscal quarter of the Company's 1998 fiscal
year, the common stock of the Company experienced a significant decline in the
trading per share price. In addition to the detrimental effect the lower trading
price had to the shareholders, it diminished the Company's ability to make
acquisitions using the Company's common stock. As a result of the above,
effective on June 30,1999, the Company reverse split its common stock at a ratio
of one new share for each nine old shares issued and outstanding. Recognition of
the reverse stock split has not been given in the May 31, 1999, and 1998
financial statements.
SALE OF COMMON STOCK On June 14, 1999, the Company sold the remaining 1,200,000
(pre-reverse split) shares of its common stock from its private placement for
$72,000, however, the amount is unpaid.
F-11
<PAGE>
UNTIL XXXX XX, 19XX, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
TABLE OF CONTENTS
Summary Information.......................................11
Risk Factors..............................................14
Use of Proceeds...........................................23
Determination of Offering Price...........................25
Dilution..................................................27
Selling Security Holders..................................29
Plan of Distribution......................................31
Legal Matters.............................................34
Directors, Executive Officers, Promoters and Control
Persons..................................................36
Security Ownership of Certain Beneficial Owners and
Management...............................................38
Description of Securities.................................39
Interest of Named Experts and Counsel.....................40
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities..............................41
Organization Within Last Five Years.......................42
Description of Business...................................43
Management's Discussion and Analysis or Plan of
Operation................................................47
Description of Property...................................48
Certain Relationships and Related Transactions............50
Market for Common Equity and Related Stockholder
Matters..................................................51
Executive Compensation....................................52
Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure......................53
Financial Statements......................................F-1-F-11
MAXIMUM 833,333 UNITS
$6.00 per Unit
Internet Stock Market Resources, Inc.
Prospectus
Internet Stock Market Resources, Inc.
405 Central Avenue, Fifth Floor
St. Petersburg, Florida 33701
(727) 896-9696
Dated: September 30, 1999
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned in the City of St.
Petersburg, State of Florida, on August 19,1999.
Internet Stock Market Resources, Inc.
By: /s/ Budd Morris
-------------------
Budd Morris, Chief
Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement was signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Budd Morris Director and Chief Executive Officer September 29,1999
- ---------------
Budd Morris
/s/ Anastasios Kyriakides Director and Secretary September 29, 1999
- -------------------------
Anastasios Kyriakides
/s/ Caroline Latta Director and Vice President September 29, 1999
- ------------------
Caroline Latta
/s/Chad Morris Director and Vice President September 29, 1999
- --------------
Chad Morris
</TABLE>
<PAGE>
INDEX TO EXHIBITS
No Exhibits are attached.
The foregoing represents a majority of the Board of Directors
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
- ----------- -----------------------
3.1 Articles of Incorporation of Internet Stock Market Resources, Inc.*
3.2 By-Laws of Internet Stock Market Resources, Inc.*
4.1 Specimen Common Stock Certificate*
4.2 Specimen Preferred Stock Certificate*
4.3 Subscription Agreement
5 Opinion of Robert M. Overholt Esq
27 Financial Data Schedule
* To be filed by amendment
SUBSCRIPTION AGREEMENT
INVESTOR SUBSCRIPTION AGREEMENT FOR INTERNET STOCK MARKET, RESOURCES, INC.
Persons interested in purchasing shares of the Common Stock of Internet Stock
Market Resources, Inc. must return this completed Subscription Agreement along
with their wire transfer, check or money order for their total payment, payable
only to: Internet Stock Market Resources, Inc. 405 Central Ave., Suite 102 Lobby
Level, St.Petersburg, FL 33701 (http://www.internetstockmarket.com)
If and when accepted by Internet Stock Market Resources, Inc. (the "Company"),
this Subscription Agreement shall constitute a subscription for shares of Common
Stock, .0001 par value per share, of the Company. The minimum investment is
$600.00 for 100 units . An accepted copy of this Agreement will be returned to
you as your receipt, and a stock certificate will be issued to you shortly
thereafter.
Method of Payment: (CIRCLE ONE ) Check, Money Order or Wire (fax or e-mail for
instructions) payable only to: "Internet Stock Market Resources, Inc.".
- --------------------------------------------------------------------------------
I hereby irrevocably tender this Subscription Agreement for the purchase of
_________ units at six dollars ($6.00) per unit. With this subscription
Agreement, I tender payment in the amount of $__________ ($6.00 per unit) for
the shares subscribed.
In connection with this investment in the Company, I represent and warrant as
follows:
(a) Prior to tendering payment for the shares, I received the Company's
final Prospectus dated September 30, 1999.
(b) I am a bona fide resident of the state of ________________________.
1
<PAGE>
Please issue the shares which I am purchasing as follows:
1. INDIVIDUAL(S) -- if more than one owner, please issue as follows:
[ ] Tenants-in-Common (all parties must sign -- each investor has an undivided
interest)
[ ] Joint Tenants with Right of Survivorship (all parties must sign joint
ownership)
[ ] Minor with adult custodian under the Uniform Gift to Minors Act in your
state
(the minor will have sole beneficial ownership)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------- ----------------------------------------------------
<S> <C>
INVESTOR NO. 1 (PRINT NAME ABOVE) INVESTOR NO. 2 (PRINT NAME ABOVE)
- --------------------------------------------- ----------------------------------------------------
Street (residence address) Street (residence address)
- --------------------------------------------- ----------------------------------------------------
City State Zip City State Zip
- --------------------------------------------- ----------------------------------------------------
Home Tele. Business Tele. Home Tele. Business Tele.
- --------------------------------------------- ----------------------------------------------------
FAX e-mail FAX e-mail
- --------------------------------------------- ----------------------------------------------------
Social Security Number Social Security Number
- --------------------------------------------- ----------------------------------------------------
Signature Date Signature Date
ACCEPTED BY: INTERNET STOCK MARKET RESOURCES, INC.
- ---------------------------------------------
Name, Title Date.
</TABLE>
2
<PAGE>
SUBSCRIPTION FORM FOR OTHER THAN INDIVIDUAL
Purchasers of shares of the Common Stock of Internet Stock Market, Inc. for
other than individuals must complete this form for the proper entity that will
hold title to the shares. Send this completed Subscription Agreement along with
the proper wire transfer, check or money order for the total payment, payable
only to: Internet Stock Market Resources, Inc. 405 Central Ave. Suite 102 Lobby
Level, St. Petersburg, Florida 33701 (http://www.internetstockmarket.com).
If and when accepted by Internet Stock Market Resources, Inc., (the "Company"),
this Subscription Agreement shall constitute a subscription for shares of Common
Stock, no par value per share, of the Company. The minimum investment is six
hundred dollars ($600.00) for 100 units. An accepted copy of this Agreement will
be returned to you as your receipt, and a stock certificate will be issued to
you shortly thereafter.
Method of payment: (CIRCLE ONE) Check, Money Order or Wire (fax to 727-822-9516
or e-mail [email protected] for instructions) payable only to:
"Internet Stock Market Resources, Inc".
ENTITY:
[ ] CORPORATION (authorized agent of corporation must sign)
[ ] EXISTING PARTNERSHIP (at least one partner must sign)
[ ] TRUST (all trustees must sign)
- ----------------------------------------------------------
Name of Entity
- ----------------------------------------------------------
Authorized Agent (print name above)
- ----------------------------------------------------------
Title of Authorized Agent
- ----------------------------------------------------------
Social Security or Federal Identification Number of Entity
- ----------------------------------------------------------
Street (business address) or address of Registered Agent
- ----------------------------------------------------------
City State Zip
- ----------------------------------------------------------
Business Tele. or Home Tele. of Registered Agent of Entity
- ----------------------------------------------------------
FAX e-mail
The undersigned acknowledges under the penalties of perjury that the foregoing
information is true, accurate, and complete.
- ----------------------------------------------------------
Signature Date
- ----------------------------------------------------------
For a Trust, all Trustees must sign. Add a line for each to the Right of form.
ACCEPTED BY: INTERNET STOCK MARKET RESOURCES, INC.
- ----------------------------------------------------------
Name, Title Date.
3
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction or to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof or that there has been no change in the affairs of the
Company since such date.
4
ROBERT M. OVERHOLT
ATTORNEY AT LAW
340 North Sam Houston Pkwy. East -- Suite 250
Houston, Texas 77060
Tel: (281) 445-0020 Fax: (281) 445-0022
Efax (Toll Free): 1-888-285-3582
Pager: (713) 687-7332
September 30, 1999
Internet Stock Market Resources, Inc.
405 Central Avenue
Fifth Floor
St. Petersburg, Florida 33701
Dear Ladies and Gentlemen,
You have requested that the undersigned furnish you my legal opinion
with regard to the legality of the following described securities of Internet
Stock Market Resources, Inc. (hereinaft3r referred to as the "Company") covered
by a Form SB-2 Registration Statement (hereinafter referred to as the
"Registration Statement") filed with the Securities and Exchange Commission
(File No. _____________) by the Company on September 30, 19999 for the purpose
of registering such securities under the Securities Act of 1933:
(i) Eight Hundred Thirty Three Thousand Three Hundred Thirty
Three (833,333) Units (hereinafter referred to as the "Units") each
unit consisting of four (4) shares of common stock and one (1) share of
preferred stock; and
(ii) Five Hundred Thousand (500,000) shares of common stock
issuable upon Board of Director approval.
In connection with this opinion, the undersigned has examined the
corporate records of the company, including the company's Article of
Incorporation, ByLaws, and the Minutes of the Board of Directors and
Shareholders meeting, the Registration Statement and such other documents and
records as I deemed relevant in order to render this opinion. In addition, the
opinion expressed herein is limited to federal law and the laws of the State of
Delaware.
Based upon the foregoing, it is my opinion that :
1. The company is duly and validly organized and is validly
existing and in good standing under the laws of the State of Delaware.
2. The Registered Securities, when sold and issued in
accordance with the registration statement and the final prospectus
thereunder, and for the consideration therein referred to, will be
legally issued, fully paid and non-assessable.
Page 1 of 2
<PAGE>
I hereby consent to the filing of this opinion, with the Securities and
Exchange Commission as an exhibit to the Registration Statement and further
consent to statements made therein regarding my office and the use of my name
under the heading of "Legal Matters" in the prospectus constituting a part of
such Registration Statement.
Very truly yours,
Robert M. Overholt
Page 2 of 2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED May 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> MAY-31-1999
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<PP&E> 57,104
<DEPRECIATION> (16,860)
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<CURRENT-LIABILITIES> 258,975
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0
0
<COMMON> 528
<OTHER-SE> (632,167)
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<TOTAL-REVENUES> 214,175
<CGS> 0
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<OTHER-EXPENSES> (307,275)
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<INTEREST-EXPENSE> (36,363)
<INCOME-PRETAX> (129,463)
<INCOME-TAX> 0
<INCOME-CONTINUING> (127,880)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127,880)
<EPS-BASIC> (0.036)
<EPS-DILUTED> (0.036)
</TABLE>
