As filed with the Securities and Exchange Commission on January 26, 2000
Registration Statement No. 333-88279
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
Amendment 3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Internet Stock Market Resources, Inc.
(Name of Small Business Issuer in its Charter)
<TABLE>
<CAPTION>
Delaware 7872 76-0246940
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>
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, 102 Central Avenue
St. Petersburg, Florida 33701
727-896-9696
(Name, address and telephone number of agent for service)
With a copy to:
Thomas R. Todd, Jr., Esq.
P.O. Box 88519
Atlanta, Georgia 30356
(404) 630-7100
Approximate date of commencement of proposed sale to the public: As soon as
practicable subsequent to the effective date.
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 [ ].
1
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed Maximum Aggregate Registration
Shares to be Registered Maximum Price Amount Fee
Registered (2) Price Per of Offering
Share (1) Price (1)
($) ($) ($)
<S> <C> <C> <C> <C>
Common Stock, 3,333,332 2.50 8,333,330.00 $2,317
$0.0001 par
value per share
3,333,332
Preferred Stock, 833,333
$0.01 par value
per share
</TABLE>
2
Internet Stock Market Resources, Inc.
<TABLE>
<CAPTION>
Cross Reference Sheet for Prospectus Under Form SB-2
Form SB-2 Item No. and Caption Caption or Location in Prospectus
- ------------------------------ ---------------------------------
<S> <S>
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
Cover Pages of Prospectus SAME
3. Summary Information and Summary;
Risk Factors SAME
4. Use of Proceeds SAME
5. Determination of Offering Price SAME
6. Dilution SAME
7. Selling Security Holders SAME
8. Plan of Distribution Outside Front Cover Page of
Prospectus;
Plan of Distribution
9. Legal Proceedings SAME
10. Directors, Executive Officers,
Promoters and Control Persons SAME
11. Security Ownership of Certain
Beneficial Owners and Management SAME
12. Description of Securities SAME
13. Interest of Named Experts and Legal Matters;
Counsel Interest of Named Experts and
Counsel
14. Disclosure of Commission Position
on Indemnification for Securities SAME;
Act Liabilities Undertakings
15. Organization within Last Five
Years SAME
3
<PAGE>
16. Description of Business SAME
17. Management's Discussion and
Analysis or Plan of Operation Management's Discussion and Analysis
18. Description of Property SAME
19. Certain Relationships and Related SAME
20. Market for Common Equity and
Related Stockholder Matters SAME
21. Executive Compensation SAME
22. Financial Statements SAME
23. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure SAME
24. Indemnification of Officers and
Directors SAME
25. Other Expenses of Issuance and
Distribution SAME
26. Recent Sales of Unregistered
Securities SAME
27. Exhibits SAME
28. Undertakings SAME
</TABLE>
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.
4
<PAGE>
Prospectus
A Maximum of 833,333 Units
$10.00 PER UNIT
This is a public offering of Internet Stock Market Resources, Inc. securities.
* Each Unit offered by this prospectus consists of four shares of Internet
Stock Market Resources' common stock and one share of Internet Stock Market
Resources Class A preferred stock.
* Internet Stock Market Resources has set the price of the Units
arbitrarily.
* This is a best-efforts offering. No minimum number of Units must be sold
before Internet Stock Market Resources can use the proceeds. This offering
will end no more than 180 days from the date at the bottom of this page.
Internet Stock Market Resources' common stock trades on the Over-the-Counter
Electronic Bulletin Board Service of the National Association of Securities
Dealers under the symbol Internet Stock Market Resources. On January 25, 2000,
the bid price for the stock was $1.25 and the ask price was $1.50.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS DOCUMENT IS TRUTHFUL OR COMPLETE. ANY STATEMENT TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTMENT IN UNITS OF INTERNET STOCK MARKET RESOURCES, INC. IS VERY
RISKY AND SPECULATIVE AND SHOULD BE CONSIDERED ONLY BY THOSE WHO ARE ABLE TO
BEAR THE LOSS OF PART OR ALL OF THE MONEY THEY INVEST. SEE THE SECTION TITLED
RISK FACTORS, STARTING ON PAGE 5.
<TABLE>
<CAPTION>
---------------------------------------------------
Offering Price Proceeds to
Company
($) ($)
---------------------------------------------------
<S> <C> <C>
Per Unit $10.00 $10.00
-----------------------------------------------------
Maximum 833,333 $8,333,333.00 $8,333,330.00
-----------------------------------------------------
</TABLE>
Internet Stock Market Resources, Inc.
405 Central Avenue * 102 Lobby Level
St. Petersburg, Florida 33701
(727) 896-9696
The date of this Prospectus is XXXX XX, 19XX
1
<PAGE>
SUMMARY
The Company
Internet Stock Market Resources, Inc. provides Internet-based business
and advertising information about emerging companies. Client companies provide
their own content, which may include information about goods and services they
offer, new corporate developments, and links to their own Websites. Through
Internet Stock Market Resources' Website, Internet users are also able to go
to other information services that carry other data about clients, including
links to the Securities and Exchange Commission's EDGAR database, PR Newswire,
stock quotation services, etc. By providing a platform for Internet users to
access information about emerging companies, Internet Stock Market Resources
makes its Website an Internet portal for people and institutions interested in
emerging companies. Recently, Internet Stock Market Resources activated a link
on its Website to the on-line brokerage service NowTrade, which is owned by
Internet Stock Market Resources' controlling shareholder.
Internet Stock Market Resources is also negotiating to acquire assets of
other, industry-related companies. Specifically, Internet Stock Market
Resources is currently in re-negotiation with a private corporation called
Delcor Industries to buy its operating assets; based on terms in an expired
letter of intent with Delcor, the purchase price would be approximately $1.5
million cash. Internet Stock Market Resources plans to use cash for any such
asset purchases, if the money is available, and considers the price for
Delcor's assets the basis for any other asset purchases. In addition to cash,
other asset purchases may involve debt and/or stock. The cash part of any
purchases will come from proceeds of this offering. Internet Stock Market
Resources intends to buy other companies' assets only if each block of
acquired assets can be used as an operating unit, generating its own revenue
stream.
How to Contact Internet Stock Market Resources
The executive officers of Internet Stock Market Resources can be reached any
of these ways:
* in the offices at 405 Central Avenue, 102 Lobby Level, St. Petersburg,
Florida 33701;
* by telephone number is (727) 896-9696;
* via facsimile number is (727) 822-9516; or
* on the World Wide Web at http://www.InternetStockMarket.com.
The Offering
Internet Stock Market Resources is offering by this prospectus a maximum of
833,333 Units of its securities.
* Each Unit consists of four shares of Internet Stock Market Resources
common stock and one share of Internet Stock Market Resources Class A
preferred stock.
* Each of the preferred shares can be exchanged for one year from the
issue date for two shares of Internet Stock Market Resources common stock for
$2.00. After a year, the conversion price will be the market bid price of two
shares of the common stock.
* The minimum amount of a subscription is 100 Units.
* Internet Stock Market Resources has set the price of the Units
arbitrarily.
* This offering will terminate no more than 180 days after the date of
this prospectus.
* This is a best efforts offering. No minimum amount of money must be
raised before Internet Stock Market Resources can use the proceeds from
subscriptions.
2
<PAGE>
<TABLE>
<S> <C> <S>
* Common Stock shares outstanding before the offering 719,777 If all
* Units offered 833,333 833,333
* Common Stock - shares outstanding after the offering 4,053,109 Units are
* Preferred Stock - shares outstanding after the offering 833,333 sold by
* Common Stock - shares outstanding if all Preferred Internet
shares are converted to Common shares (2 for 1) 5,719,775 Stock
* Use of Proceeds: Market
Offering expenses $ 80,000 Resources,
Marketing 500,000 Inc.
Salaries & Wages 850,000
Software & Equipment 200,000
Acquisitions 6,000,000
Reserve for Liquidation of Preferred at Par 8,333
Working Capital 694,997
Total proceeds of the offering $ 8,333,330
</TABLE>
<TABLE>
<CAPTION>
Planned Purchase Price
<S> <C>
* Delcor Industries assets $ 1,500,000
* Other companies' assets 4,500,000
---------
Total $ 6,000,000
</TABLE>
<TABLE>
<CAPTION>
Expense Type Projected Outlay
<S> <C>
* Property and Casualty Insurance $ 120,000
* Professional Fees 100,000
* Travel and Entertainment 75,000
* Communications 60,000
* Printing 50,000
* Office Expenses 25,000
* Supplies 5,000
* Cash 150,000
* Miscellaneous 109,997
-------
Total $ 694,997
</TABLE>
The proceeds would be $1,666,666 higher if all Preferred shares are converted
within the one-year conversion period. This would result in a total of
$9,999,996 raised during the year after and including the offering. The
Company cannot forecast how many shares, if any, will be converted during this
one-year period.
3
<PAGE>
RISK FACTORS
1. INTERNET STOCK MARKET RESOURCES IS USING A LARGE PORTION OF THE PROCEEDS
TO ACQUIRE ASSETS THAT MAY CREATE LOSSES.
Internet Stock Market Resources plans to buy assets to use as operating
units. In the case of one company's assets, those of Delcor Industries, which
manufactures and assembles electronic components, Internet Stock Market
Resources wants to buy the assets in such a way that it can earn revenue from
assembling and manufacturing electronic components, a business about which
Internet Stock Market Resources knows virtually nothing; therefore, to have
these assets actually maintain a revenue stream, Internet Stock Market
Resources personnel will either have to quickly learn how to manage such an
operating unit, or Internet Stock Market Resources will have to retain the
services of people who do, and those people may command pay so high that the
new operating unit will be a drain on cash flow and a threat to
recently-achieved profitability. Regardless of the assets that Internet Stock
Market Resources buys, these assets, even as separate operating units, will
have to be integrated into Internet Stock Market Resources' corporate
structure; this will necessarily divert senior-level management's attention
away from the core business area, Internet corporate profiling, the area where
Internet Stock Market Resources has actually achieved profitability.
2. IF THIS OFFERING IS NOT FULLY SUBSCRIBED, INTERNET STOCK MARKET
RESOURCES WILL NEED TO FIND ADDITIONAL CAPITAL TO CARRY OUT ITS BUSINESS PLAN.
A large portion of the proceeds of this offering will be used to buy the
assets of other companies. Internet Stock Market Resources is currently
working under a business model that defines its growth, in part, as coming
from creating new operating units out of the assets it will buy from other
companies. Buying these assets will require money Internet Stock Market
Resources plans to have available from this offering. If that money doesn't
come in, Internet Stock Market Resources will have to find another way to
generate capital to carry out the new operating units part of its overall
plan. This means that, if this offering isn't fully subscribed, those
investors who do subscribe may find themselves holding the stock of a company
that either can't fully realize its business plan or that has to sell more
stock or borrow money to bring in more capital.
3. INTERNET STOCK MARKET RESOURCES RELIES ON MAJOR CUSTOMERS FOR ITS
REVENUE, AND THE LOSS OF EVEN SEVERAL OF THESE CLIENTS COULD RESULT IN
OPERATING LOSSES.
As Internet Stock Market Resources now stands, it gets all of its
revenue from a base of fewer than fifty clients. The revenue lost by the exit
of any one of these clients is not offset dollar for dollar by a drop in
expenses; fixed costs of operation still have to be paid, regardless. Internet
Stock Market Resources wants to establish additional operating units whose
revenues do not depend on Internet Stock Market Resources' Internet client
base, but that means each of these operating units formed from the purchase of
a block of assets will have to acquire its own customers. In the case of
Delcor Industries' assets that Internet Stock Market Resources wants to buy,
the revenue stream created from those assets, which are for manufacturing and
assembling electronic components, could come, for the foreseeable future, from
a very small base of customers, the loss of any one of which would turn that
operating unit into a money-losing venture. Investors should assume that each
operating unit Internet Stock Market
4
<PAGE>
Resources creates will, at least for a long time to come, be the same way:
customer bases will be small, and profitability - if there is any - will hinge
on the retention of each and every customer.
4. INTERNET STOCK MARKET RESOURCES IS CURRENTLY CONTROLLED BY ONE MAJOR
SHAREHOLDER.
Chairman of the Board Anastasios N. Kyriakides runs Internet Stock
Market Resources. In conjunction with an off-shore company under his control,
he currently owns the largest single block of shares. Internet Stock Market
Resources' officers, all of whom are also directors, are in their executive
positions because of him. Investors must consider the independence of the
officers' decisions as board members in this light. Even though Mr.
Kyriakides' ownership position will be diluted through sales in this offering,
investors should assume that Mr. Kyriakides will continue to be the dominant
force, for better or worse, in Internet Stock Market Resources.
5. THESE SECURITIES MAY BE CONSIDERED PENNY STOCKS AND MAY BE HARD TO
RE-SELL.
As well as being regulated at the federal level by the Securities
Exchange Act of 1934, the sale and resale of securities like Internet Stock
Market Resources' is regulated at the state level through the Blue Sky laws.
* Internet Stock Market Resources is listed on a national exchange and
this offering has been the subject of a federally qualified registration
statement, but the stock still might not be salable by the resident of a state
in which Internet Stock Market Resources has not met the applicable Blue Sky
requirements.
* Various methods are available to brokers who want to fill buy or sell
orders for a resident of such a state, but the willingness to do this depends
heavily on the particular state or states involved and on the aggregate value
of the transaction. It also depends on the brokers involved. The compliance
departments of some brokerage firms routinely disallow trading in certain
stocks - especially penny stocks and others with inadequate levels of public
disclosure, low or suspiciously volatile prices, or market makers of less than
sterling reputation.
There are federal regulations that can also influence a broker's
willingness or ability to be involved in sales of certain low-priced stocks
like Internet Stock Market Resources'. The Securities and Exchange Commission
has adopted rules that regulate broker-dealer practices in connection with
transactions in these penny stocks. Generally speaking, penny stocks are
equity securities with a price of less than $5 per share, other than
securities listed on certain national exchanges, or quoted on the National
Association of Securities Dealers Automated Quotation system, provided that
current price and volume information with respect to transactions in such
securities is provided by such exchange or system.
If Internet Stock Market Resources' common stock is meets the definition
of a penny stock, before executing a transaction not otherwise exempt, a
broker dealer must do the following:
* Deliver a standardized risk disclosure document prepared by the
Securities and Exchange Commission that provides information about penny
stocks and the nature and level of risks in the penny stock market.
* Provide the customer with bid and offer quotations for Internet Stock
Market Resources' stock, the compensation of the broker-dealer and the
salesperson in the transaction, and
5
<PAGE>
monthly account statements showing the market value of each penny stock held
in the customer's account.
* Make a special, written determination that Internet Stock Market
Resources' 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 Internet Stock Market Resources'
stock if it is or becomes subject to the penny stock rules. If Internet Stock
Market Resources common stock is or becomes subject to the penny stock rules,
shareholders may find it more difficult to sell their the stock in their Units
because of the regulatory and paperwork burden a broker has to deal with.
Considering that it is unlikely that a broker will make much money off such
transactions, a shareholder might find it hard to get a broker to execute
trades of Internet Stock Market Resources stock.
Finally, the Units offered here have been qualified with the
Securities and Exchange Commission under the Securities Act of 1933 and
Regulation S-B, but the word "qualified" does not mean that the Securities and
Exchange Commission believes the offering is good or worthy, or that the price
is fair, or that stock is an appropriate investment; all it means is that the
offering has met the rules and requirements in the applicable federal laws.
Because the Units of this offering were registered, the common stock within
the Units is freely tradable under federal securities laws; however, just
because unrestricted trading in the stock is allowed does not mean that
unrestricted trading is possible. Internet Stock Market Resources common stock
trades on the Over-the-Counter Electronic Bulletin Board Service of the
National Association of Securities Dealers. The National Association of
Securities Dealers' Over-the-Counter market can be notoriously thin on any
given day due to one of the following factors:
* there may be no buyers or sellers at all for a particular
Over-the-Counter stock; or
* only one side of the market might have activity.
In the latter case, the market makers - those National Association of
Securities Dealers-qualified broker/dealers that post bids and offers for that
stock - would have every reason to move the stock price up, in the case of a
buy side-only market, or down, in the case of a sell side-only market. In the
month of January, 2000, Internet Stock Market Resources' common stock fell
more than 25% on a single sell order of fewer than a hundred shares. This was
probably because there was no buy side against which the sell order could be
matched. Dropping the price heavily and instantly - in other words, there were
no intermediate prices a shareholder could have sold at - was the only way the
market maker involved could get a buyer to acquire the stock being sold. This
situation is not unusual. Commonly, a selling shareholder may find, on any
given day, that a sell order cannot be executed at the bid price being quoted.
In fact, a selling shareholder might not be able to sell the stock at all, at
least for a period of days, and very likely not at a price anywhere near the
one quoted, much less at one near the price at which the stock was purchased.
6
<PAGE>
USE OF PROCEEDS
If all of the Units of this offering are sold, the net proceeds to Internet
Stock Market Resources from the sale of the Units will be at least $8,253,330
after deducting estimated offering expenses of $80,000.
The table below shows how proceeds from this offering would be used for
scenarios where Internet Stock Market Resources sells various amounts of the
Units*. Although Internet Stock Market Resources intends to use the proceeds
of this offering in the manner presented below, management may spend the funds
differently if it so chooses.
<TABLE>
<CAPTION>
Percent of Total Units Offered 25% 50% 75% 100%
($) ($) ($) ($)
<S> <C> <C> <C> <C>
Units Sold 208,334 416,667 625,000 833,333
Gross Proceeds from Offering 2,083,333 4,166,667 6,250,000 8,333,330
Less: Offering Expenses 20,000 40,000 60,000 80,000
Net Proceeds from Offering 2,063,333 4,126,667 6,190,000 8,253,330
Use of Net Proceeds
Salaries 212,500 425,000 637,500 850,000
Equipment & Software 75,000 100,000 150,000 200,000
Purchase of Assets 1,500,000 3,000,000 4,500,000 6,000,000
Marketing 123,000 246,000 369,000 500,000
Reserve for Preferred Par 2,083 4,167 6,250 8,333
Working Capital 363,250 351,500 526,251 694,997
--------- --------- --------- ---------
Total Use of Proceeds 2,063,333 4,126,667 6,190,000 8,253,330
</TABLE>
- -----------------------------
* It is possible that no proceeds may be raised from this offering. It is
also possible that some, but not all, of the 833,333 offered will be sold: if
fewer than all of the Units 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 Internet Stock Market Resources' 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.
7
<PAGE>
DETERMINATION OF OFFERING PRICE
Internet Stock Market Resources set the price of the Units in this offering
arbitrarily. 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 Internet Stock Market Resources' assets, sales, book value, or
other generally accepted criteria of value.
8
<PAGE>
DILUTION
The following table shows the difference between the shareholders' equity
before and after this offering. The table assumes that various percentages of
the Units offered in this prospectus are sold and calculates net book value
per share from the basis of November 30, 1999.
<TABLE>
<CAPTION>
Average Dilution
Ownership Total Price per of Each
Shares Percent Consideration Share New Share
(#) (%) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
If 25% of the Units are
sold
Existing Shareholders 719,777 46.3 560,933 0.78
New Investors 833,333 53.7 1,250,000 2.50
Deficit at November 30,
1999 (510,340)
--------- ----- --------- ----- ----
Total 1,553,110 100.0 2,111,842 1.36 1.14
If 50% of the Units are
sold
Existing Shareholders 719,777 30.2 560,933 0.78
New Investors 1,666,667 69.8 4,162,499 2.50
Deficit at November 30,
1999 (510,340)
--------- ----- ---------- ---- ----
Total 2,386,443 100.0 4,173,092 1.75 0.75
If 75% of the Units are
sold
Existing Shareholders 719,777 22.4 560,933 0.78
New Investors 2,499,999 77.6 6,243,748 2.50
Deficit at November 30,
1999 (510,340)
--------- ----- --------- ---- ----
Total 3,219,776 100.0 6,234,341 1.94 0.56
If 100% of the Units are
sold
Existing Shareholders 719,777 17.8 560,933 0.78
New Investors 3,333,332 82.2 8,324,997 2.50
Deficit at November 30,
1999 (510,340)
--------- ----- --------- ---- ----
Total 4,053,109 100.0 8,295,550 2.05 0.45
</TABLE>
* After reserving for par (liquidation) value of the preferred shares in
the Units sold.
** After deducting offering costs of $20,000 if 25% of the Units are sold,
$40,000 if 50% of the Units are sold, $60,000 if 75% of the Units are sold,
and $80,000 if all of the Units are sold.
As the table above shows, each share offered here would be immediately diluted
in net book value from $1.14, or 45.6%, if 25% of the Units are sold, on down
to $0.45, 18.0%, if all of the Units are sold. In aggregate, if 25% of the
Units are sold, the adjusted book value per share of common stock will be
about $1.36; if all the Units of this offering are sold, the adjusted book
value per share of common stock will be about $2.05. Net book value per share
is total assets minus total liabilities, divided by the number of shares
outstanding. The following table shows the dilution another way:
<TABLE>
<CAPTION>
($)
<S> <C>
Offering price per share of common stock 2.50
Net book value per share as of November 30, 1999 (0.71)
Net book value per share after the offering 2.05
Per share dilution to new investors 0.45
</TABLE>
For 25%, 50%, and 75% of the total Units offered, the last two rows of this
table would be, respectively, $1.36 and $1.14, $1.75 and $1.50, and $1.94 an
$0.56. The 719,777 common shares outstanding are as of January 18, 2000.
9
<PAGE>
SELLING SECURITY HOLDERS
There are no selling security holders in this offering.
10
<PAGE>
PLAN OF DISTRIBUTION
Internet Stock Market Resources intends through this offering to sell up to
833,333 Units at $10.00 per Unit.
* A Unit is four shares of common stock of plus one Class A preferred
stock share.
* Each preferred share may be exchanged for two shares of common stock
for a payment of $2 for one year from the issue date.
* After one year, the conversion price will be the bid price for two
shares of Internet Stock Market Resources common stock.
This offering is made on a basis sometimes called best efforts: this means
that Internet Stock Market Resources its best to sell all 833,333 Units during
the offering period, which will be 180 days from the date on the cover of this
prospectus. However, even if all of the Units do not get sold during the 180
days, Internet Stock Market Resources will keep the proceeds raised. This
basis is different from the one where a company has to sell a specific amount
of its securities during an offering period. Since no minimum number of Units
have to be sold in this offering before Internet Stock Market Resources can
use proceeds, there is no escrow account for the deposit of investors' funds,
and no funds will be returned just because all of the Units offered are not
sold.
As of the date of this prospectus, Internet Stock Market Resources plans
to sell the Units of this offering through its own officers and directors; in
other words, Internet Stock Market Resources will be acting as its own selling
agent for the offering. This is called a self-underwritten offering. No broker
or dealer has been retained or is under any obligation to buy or to sell any
Units. Internet Stock Market Resources officers and directors will contact
prospective investors through direct, personal meetings and telephone calls to
people they know. All such meetings and other contacts will include an
invitation to receive a copy of this prospectus. Internet Stock Market
Resources does not plan to do any general solicitations and will not accept
any subscription unless the subscriber has already received a prospectus.
After the Securities and Exchange Commission grants Internet Stock Market
Resources an effective date, Internet Stock Market Resources may find an
underwriter for this offering. If one is found, Internet Stock Market
Resources will file a post-effective amendment to the registration statement
of which this prospectus is a part. Such an amendment would include the
necessary information about the underwriter, what the underwriter will do, and
what it will charge as far as commissions and other fees. If an amendment of
this kind is filed, Internet Stock Market Resources will have to stop the
offering until the Securities and Exchange Commission has given its permission
to proceed under the new underwriting arrangement.
Internet Stock Market Resources' own officers and directors cannot be paid
any commissions or special fees for the Units they sell.
The proceeds table in the USE OF PROCEEDS section of this prospectus is
based on the assumption that no commissions will be paid.
To subscribe for Units, an investor must complete, execute, date, and
deliver to Internet Stock Market Resources a subscription agreement that
includes the purchase price in check or money order payable to "Internet Stock
Market Resources, Inc." A copy of the subscription agreement is provided with
this prospectus.
Internet Stock Market Resources reserves the right to reject any
subscription in its entirety, or to
11
<PAGE>
allocate Units among subscribers. If any subscription is rejected, the funds
included for that subscription would be returned to the subscriber without
interest or deduction. Internet Stock Market Resources might reject a
subscription in its entirety for one or more reasons:
* If a subscriber were a resident of a state in which this offering has
not been registered, Internet Stock Market Resources would reject the
subscription;
* Internet Stock Market Resources may determine that a subscription -
either on its own or in conjunction with subscriptions from related investors
- - constitutes an acquisition of a controlling interest that has not been
executed in the manner prescribed by applicable securities laws; or
* Internet Stock Market Resources may deem that the investment is not
suitable for the investor, or that the manner in which the investor was
solicited was in some way inappropriate.
The above reasons are not the only ones Internet Stock Market Resources
might have for rejecting a subscription in its entirety, but they are the ones
believed most likely to occur.
As stated above, Internet Stock Market Resources might have to allocate
shares among subscribers. As far as Internet Stock Market Resources can
foresee, there are two reasons this might happen:
* The issue might get oversubscribed; that is, at some point during the
offering, subscriptions for more than 833,333 Units are received. If that
happens, Internet Stock Market Resources will take the subscriptions that have
arrived on the business day that oversubscription occurs and allocate
remaining Units available, on a pro rata basis, among these last subscribers;
or
* If separate but related persons subscribe, and Internet Stock Market
Resources determines they are a control entity when considered as a group,
Internet Stock Market Resources might allocate a limited number of Units among
the individual investors of the group.
Internet Stock Market Resources common stock is listed on the
Over-the-Counter Electronic Bulletin Board Service of the National Association
of Securities Dealers under the trading symbol ISMR. Firms making a market in
Internet Stock Market Resources common stock include Sharp Capital, Weinn
Securities, Hill Thompson Securities, and Paragon Securities.
Internet Stock Market Resources is a reporting company: It is required to
make periodic filings on Forms 10-KSB and 10-QSB with the Securities and
Exchange Commission. Internet Stock Market Resources' filings are current, but
failure to stay current, or to make required filings when they're due, would
constitute grounds for being de-listed. In general, Internet Stock Market
Resources must comply with all applicable provisions of the Securities
Exchange Act of 1934 to maintain its stock listing. Internet Stock Market
Resources voluntarily sends its shareholders annual reports. Internet Stock
Market Resources information is also published in the Corporation Record of
Standard & Poor's.
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LEGAL MATTERS
No legal proceedings are pending or threatened to which Internet Stock Market
Resources, Inc. is a party. An opinion with regard to this offering under the
Securities Act of 1933, as amended, is provided by Internet Stock Market
Resources' special counsel, Thomas R. Todd, Jr., Esq., P.O. Box 88519,
Atlanta, Georgia 30356; telephone number (404) 630-7100. Internet Stock Market
Resources' Registered Agent is Anastasios Kyriakides, 405 Central Avenue, 102
Lobby Level, St. Petersburg, Florida 33701.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Internet Stock Market Resources' Directors and executive officers are as
follows:
Internet Stock Market Resources' Directors and executive officers are as
follows:
<TABLE>
<CAPTION>
Term Period
Name Age Other Office Held (Years) Served
- ------------- --- ----------------------------- ------- -----------------
<S> <S> <S> <S> <S>
Anastasios
Kyriakides 54 Chairman/Director/Secretary One 12 years 3 months
Budd Morris 53 President/Director One 2 years 11 months
Caroline Latta 45 Vice President/Director One 2 years
Chad Morris 26 Asst. Vice President/Director One 1 year
</TABLE>
The members of the Board of Directors are elected for a one-year term by the
shareholders at each annual meeting. Officers are appointed by the directors
for a one-year term at each annual meeting, or until otherwise replaced by the
Board of Directors. No director currently receives compensation from, or has a
compensation agreement with, Internet Stock Market Resources in his or her
capacity as a director. Below is more information about the officers,
directors, and other key employees.
BUSINESS EXPERIENCE OF OFFICERS AND DIRECTORS
Experience during the last five years:
Anastasios Kyriakides is the Chairman and Secretary of the Board of Directors
of Internet Stock Market Resources. Mr. Kyriakides received the degree
Bachelor of Science in business from Florida International University in 1989;
in 1997, he received a degree in investment banking from the American
Institute of 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 eight million Montgomery
Ward customers and credit card holders; he served in this capacity from 1994
to 1996.
* Mr. Kyriakides had previously organized the successful start-up of
Seawind Cruise Line in 1990; there, he 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. As the President and Chairman, Mr. Kyriakides guided Mylex from its
beginning as a private company to its becoming a public company traded on the
National Association of Securities Dealers Automated Quotations service under
the stock symbol MYLX.
Mr. Kyriakides divides his working time between his duties to Internet
Stock Market Resources and certain other business ventures in which he is
engaged. The majority of his business hours are spent either at the offices of
Internet Stock Market Resources doing company business or are spent working on
Company matters outside of the office. He estimates that he spends on average
approximately sixty hours per week engaged in work for Internet Stock Market
Resources, Inc. He
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receives no compensation for his efforts although he has been the beneficiary
of Internet Stock Market Resources stock.
Mr. Kyriakides is the owner of the common stock of the on-line brokerage
firm NowTrade, Inc.
Budd Morris is the President, Treasurer, and Chief Executive Officer. He is a
member of the Board of Directors. Budd Morris attended Southern Colorado State
College during the late 1960s.
* Budd Morris was employed by American Stores, Inc. where he served in
upper management; from 1987 to 1992, Jewel Osco of Florida, a subsidiary of
American Stores employed Mr. Morris as its Executive Vice President and
Officer.
* In 1993, Budd 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 was appointed 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 Chief
Executive Officer and Treasurer while retaining the office of President. His
duties now include monitoring strategic operations, controlling marketing
alliances and expenses, and other duties traditionally performed by the
President and chief executive officer of a public company.
Budd Morris is a full-time employee and his compensation is entirely
commission-based. There is no written compensation or employment agreement
with him.
Caroline Latta is a Vice President and Chief Financial Officer. She is a
member of the Board of Directors. Ms. Latta attended Drury College in
Springfield, Missouri until 1970.
* Before her current position, Ms. Latta 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, Ms. Latta served as a consultant for 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
Website and consulting with principals of public companies needing Internet
exposure. Ms. Latta was promoted to the office of chief financial officer in
January of 1999; her duties now include budgeting, disbursements, and
accounting procedures, as well as such other duties as she has carried since
she began her professional relationship with Internet Stock Market Resources.
Ms. Latta is a full-time employee and her compensation is entirely
commission-based. There is no written compensation or employment agreement
with Ms. Latta.
Chad Morris is an Assistant Vice President and Chief Operating Officer. He is
a member of the Board of Directors. Chad Morris is a recent graduate of the
Florida State University, having earned the degree Bachelor of Science in
Social Sciences.
* Chad Morris was the Financial Officer for a not-for-profit
organization, Kappa Alpha Order, from January of 1995 through May of 1997.
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* A private technology company, Aerotek Inc., employed Chad Morris in the
capacity of Technical Contracts Manager from 1997 through December of 1998.
* Internet Stock Market Resources employed Chad Morris in January of 1999
as chief operating officer; his duties include sales, marketing, and
operations.
Chad Morris is a full-time employee and his compensation is partially
commission-based. There is no written compensation or employment agreement
with him.
None of Internet Stock Market Resources' officers and directors serves as an
officer or director of another public corporation.
FAMILY RELATIONSHIPS AMONG OFFICERS AND DIRECTORS
Caroline Latta and Budd Morris are married. Chad Morris is their son.
CERTAIN SIGNIFICANT EMPLOYEES
Internet Stock Market Resources currently has no non-officer employees.
PROMOTERS
There are, at the date of this prospectus, no promoters of this Issue.
Internet Stock Market Resources 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 has a
controlling interest in M.C.K. Marine Enterprises, Inc.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table displays the security ownership of Internet Stock Market
Resources beneficial owners and managers as of January 18, 2000.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Class of Beneficial Owner Beneficial Ownership Percent
- -------------- -------------------------- -------------------- -------
<S> <S> <C> <C>
Common M.C.K. Marine Enterprises*
c/o Anastasios Kyriakides
204 37th Ave., Suite 332
St. Petersburg FL 33704 49,333 6.85%
Common Anastasios Kyriakides
204 37th Avenue, Suite 302
St. Petersburg FL 33704 222,223 30.87%
------- ------
271,556 37.73%
</TABLE>
* Anastasios Kyriakides controls M.C.K. Marine Enterprises.
As a group, the officers and directors beneficially own approximately 271,556
shares at January 18, 2000.
There have been no changes in control of the Company during the past two
years.
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<PAGE>
DESCRIPTION OF SECURITIES
Common stock
Internet Stock Market Resources has authorized 50,000,000 shares of common
stock, with a par value of $0.0001 per share, and has also authorized
10,000,000 shares of preferred stock, with a par value $0.01 per share. There
are 719,777 shares of common stock issued and outstanding, and there are no
shares of preferred stock are issued.
Preferred stock
The Board of Directors has designated 933,333 of Internet Stock Market
Resources' preferred stock as Class A. Of these, 833,333 Class A preferred
stock shares are included in the Units offered in this prospectus. The
remaining 100,000 of the 933,333 designated as Class A are reserved as
additional compensation for broker-dealers who sell Units of this offering.
The main features of the Class A preferred shares are as follows:
* Each Class A preferred stock share is exchangeable into two shares of
Internet Stock Market Resources common stock.
* For one year from the issue date, the exchange price is $2.
* After one year, the exchange price is the market bid price for two
shares of Internet Stock Market Resources common stock.
* The market bid price to be used otherwise in calculation of exchange
price is the bid price at 4:00 p.m. on the previous business day on the
national exchange on which Internet Stock Market Resources common stock
trades.
* The previous day will be the day prior to notification via United
States Postal Service.
* Class A preferred stock has no voting rights.
* Other than liquidation rights to the extent of par value, which is
$0.01 per share preferred, the Class A preferred stock has no preemptive or
other special rights unless granted by law or statute.
* Class A preferred stock has no rights to dividends of any kind.
* The Board of Directors can declare a Class A preferred stock dividend
if it wishes to, but if it does declare such a dividend, that does not mean
the Class A preferred stock has any right to dividends after that.
* If any part of the designation of the Class A preferred stock is held
invalid, the rest of the class's designation is still valid.
Units
The Units in this offering are each composed of four shares of common stock
and one share of Class A preferred stock.
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INTEREST OF NAMED EXPERTS AND COUNSEL
None of the experts named in this Prospectus owns any of Internet Stock Market
Resources' securities.
19
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Internet Stock Market Resources has no insurance or other instrument of
indemnity against liability under the amended Securities Act of 1933. The
Company has taken the general position that the Securities and Exchange
Commission considers such indemnification not in the public interest.
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<PAGE>
ORGANIZATION WITHIN THE LAST FIVE YEARS
Operating under the name Trans America Enterprises, Inc., Internet Stock
Market Resources became a public entity when, in 1989, it filed with the
United States Securities and Exchange Commission a registration statement on
Form S-18. On February 9, 1989, it was merged with Sea Venture Cruises, Inc.,
a close, Delaware corporation, in a tax-free reorganization that resulted in
the re-domiciling of the corporation from Texas to Delaware. Trans America
Enterprises, Inc., the surviving corporation of the merger, changed its name
to Sea Venture Cruises, Inc., and conducted business under that name until
early 1998.
Because Internet Stock Market Resources was unsuccessful in the cruise
business, it started looking for a merger partner in a new line of enterprise.
After determining that substantial opportunities existed in the burgeoning
area of Internet information services, Internet Stock Market Resources'
controlling shareholder began to develop a separate, private, Florida
corporation called Internet Stock Market Corp., which was engaged in providing
information on the World Wide Web through a Website with the Web address
http://www.InternetStockExchange.com. That Web address was later revised to
www.InternetStockMarket.com. On March 26, 1998, Internet Stock Market
Resources' name was changed to Internet Stock Exchange Corp. by an amendment
to the Articles of Incorporation. On April 14, 1998, Internet Stock Market
Resources executed a reverse-split of all shares of its common stock on a
1-for-1000 basis, with fractional shares being canceled. This reverse-split
resulted in the total number of shares issued and outstanding becoming
487,001.
On August 17, 1998, Internet Stock Market Resources 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 presented
in this prospectus and in periodic filings with the Securities and Exchange
Commission reflect the financial effect of the merger as if it were similar to
a pooling of interests because of common ownership and control. The effective
date of the merger coincides with the first day, September 1, 1998, of the
second quarter of Internet Stock Market Resources' fiscal year that began on
June 1, 1998 and ended on May 31, 1999.
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<PAGE>
DESCRIPTION OF BUSINESS
Principal products or services and their markets
Internet Stock Market Resources is in the business of providing business
and advertising information on the Internet about client companies. The
information posted is provided by the companies, and may include information
about their goods and services as well as other information. End users are
also able, through the Website, to link to other information services that
carry data about a specific client company; these links include the Securities
and Exchange Commission's EDGAR database, PR Newswire, the client company's
own Website, etc.
Distribution methods of products or services
Internet Stock Market Resources provides its primary service by taking
information provided by client companies and preparing it in such a manner
that it is viewable by Internet users with industry-standard Internet browsers
like Microsoft Internet Explorer and Netscape Navigator. The preparation
process generally entails translating the client company's information into
the Web language HTML. In the case of a client that elects for the more
expensive banner listing, the HTML is supplemented with client
company-provided graphics. All client companies are presented, alphabetically
by industry, in the Listed Members section of the Internet Stock Market
Resources Website, where end users visit to review a company by name and by
graphic, when applicable, and then jump to more detailed information if
desired.
The more detailed information consists of a selection including a core,
summary profile, as well as an EDGAR database link, PR Newswire press releases
from Internet Stock Market Resources, etc., when these are available. Internet
Stock Market Resources supports its Website complex with its own server.
Status of any new publicly announced product or service
Internet Stock Market Resources has not publicly announced any new
services, although the Website's front page has a link button to an on-line
trading service.
Sources and availability of raw materials and the names of principal suppliers
Internet Stock Market Resources' business does not rely on raw materials
in the traditional sense, other than the human resources required for
maintenance of the Website complex; it does, however, depend upon access to
telephonic communications lines for the transmittal of data, as well as for
communications by voice and data with customers. Internet Stock Market
Resources' primary long distance carrier is AT&T.
Patents, trademarks, licenses, franchises, concessions, royalty agreements or
labor contracts, including duration
Internet Stock Market Resources holds no patents, licenses, franchises,
concessions, or royalty agreements, and has no labor contracts. Internet Stock
Market Resources has applied to the U.S. Patent Office for a trademark on the
name "Internet Stock Market" (Application No. 75/422259).
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Need for any government approval of principal products or services
Government approval for Internet Stock Market Resources' products and
services is not currently required.
Competition
The corporate information storage and retrieval aspect of the Internet is
intensely competitive, with 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 links to the companies' own
Websites. There are also links 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 Exchange
Commission's massive EDGAR database. Further, 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 have available to them a huge array of information resources from
which to select. The result for Internet Stock Market Resources, which is and
has been attempting to carve out a profitable niche in the business, is that
it must offer to interested Internet users features of such magnitude as to
attract them in such numbers that prospective clients will pay Internet Stock
Market Resources to be profiled on the Website complex. There is no assurance
that Internet Stock Market Resources will not be overwhelmed by competitors
offering similar, or possibly even better, corporate information access, and
at prices to clients below what Internet Stock Market Resources charges.
Effect of existing or probable governmental regulations on the business
The Internet itself is largely unregulated. Internet Stock Market
Resources expects that federal and state regulations might be enacted in the
future, but the extent and type of such regulations are unknown.
Amount spent during each of the last two fiscal years on research and
Development Activities
Internet Stock Market Resources 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 Internet Stock Market
Resources.
Number of total employees and number of full time employees
Internet Stock Market Resources currently has three full-time employees:
* President and chief executive officer Budd Morris,
* Vice President and chief financial officer Caroline Latta,
* Vice President and chief operating officer Chad Morris.
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<PAGE>
These officers earn most of their compensation through commissions; all were
paid as independent contractors until Internet Stock Market Resources
converted them to statutory employees as of January 1, 2000. Anastasios N.
Kyriakides, the only director who is not currently an officer, receives no
monetary compensation for his work on behalf of Internet Stock Market
Resources; however, Internet Stock Market Resources will begin paying him a
salary as an employee or consultant at some time in the near future.
Cyclicality of the industry
General public use of the Internet has developed within the past five
years. As such, the industry has not experienced a recession yet. Hence, there
is no empirical data on the industry's sensitivity to the business cycle.
Nevertheless, management of Internet Stock Market Resources assumes that the
Internet industry in general, and Internet Stock Market Resources in
particular, will experience a decline in revenues during a recessionary phase
of the economic cycle. To the extent that Internet Stock Market Resources is
dependent on payments from its business clients, many of which are in other
industries, Internet Stock Market Resources' revenues may be eroded, possibly
severely, by any economic downturn's effect on clients' revenues. Further,
Internet Stock Market Resources has not experienced any cyclical nature in the
business as yet.
Economic dependence
Internet Stock Market Resources has no single source for 10% or more of
its revenues and does not expect any such relationship to develop in the near
future.
Recent developments
Through the end of the current fiscal year, Internet Stock Market
Resources had largely conducted business in the normal course, having added
three to four new clients per month to its Listed Members service. Internet
Stock Market Resources had 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. That plan has since changed, and now Internet
Stock Market Resources is making plans to acquire operating assets of such
companies.
Year 2000 issues
The year 2000, or Y2K, 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
clients' transactions, order supplies, or engage in similar, normal business
activities. Internet Stock Market Resources has conducted an initial
assessment of its computer system and software applications and believes that
the systems will be Year 2000 compliant. Internet Stock Market Resources has
been communicating with key suppliers, financial institutions, and clients
during 1999 to identify, coordinate, and resolve any Y2K issues that might
arise from these constituencies. Based on Company management's initial
assessment, Internet Stock Market Resources believes the cost of addressing
the Y2K issue will not
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<PAGE>
have a material impact on Internet Stock Market Resources' 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:
* State of readiness;
* Costs;
* Risks; and
* Contingency plans.
Accordingly, Internet Stock Market Resources is including the following
discussion in this prospectus, in addition to the Year 2000 disclosures
previously filed in Internet Stock Market Resources' periodic Securities and
Exchange Commission reports.
State Of readiness
All equipment and computer systems currently used in-house are believed to
be Y2K compliant. Most of Internet Stock Market Resources' vendors are large
companies and Internet Stock Market Resources expects that these companies
will be Y2K compliant, too; however, it has not received written notification
from all vendors affirming their Year 2000 compliance. Therefore, there is no
assurance that the systems of other companies with which Internet Stock Market
Resources does business are or will be Y2K compliant. None of Internet Stock
Market Resources' systems interface directly with any third-party vendors,
except for Internet services, and management has been informed that those
systems are Year 2000 compliant. None of Internet Stock Market Resources'
services is believed to be subject to Year 2000 compliance, and Internet Stock
Market Resources does not expect to incur any liability in this area; however,
the failure on the part of vendors, or other companies with whom Internet
Stock Market Resources transacts or may transact business, to be Y2K compliant
on a timely basis may have an adverse impact on Internet Stock Market
Resources' operations.
Costs
The total cost to Internet Stock Market Resources of Year 2000 compliance
activities has not been and is not anticipated to be material to Internet
Stock Market Resources' financial position or results of operations in any
given year. Company 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 are
realistic: actual results could be different, possibly higher. Internet Stock
Market Resources plans to inventory sufficient quantities of supplies from
outside suppliers to be capable of operating for several months should third
parties incur Y2K problems. The cost of increasing the supply levels is not
expected to exceed $5,000, and any excess purchases will be paid 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
Internet Stock Market Resources uses computers and software in various
aspects of its business, principally Internet access, billing and accounting.
Internet Stock Market Resources' management believes that its computers and
software comply with the Y2K standards. Internet Stock Market Resources does
not expect any material adverse impact on operations because of Y2K-related
problems. However, as discussed above, Internet Stock Market Resources is also
exposed to the risk
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<PAGE>
that one or more of its clients, suppliers, or vendors could experience Year
2000 problems that could affect the ability of such clients 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 on the
extent of the disruption - potentially have a material adverse impact on
Internet Stock Market Resources' operations.
Contingency plans
Internet Stock Market Resources is in the process of identifying and
developing contingency plans for any problems that might be experienced by
suppliers, clients, or vendors. This includes identifying alternate suppliers.
As of the third week of January, 2000, Internet Stock Market Resources had
experienced no Y2K-related incidents, either in its own systems or in any of
those of its major suppliers or vendors.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
For Internet Stock Market Resources' Fiscal Year Ending May 31, 1999
Internet Stock Market Resources' revenues for the 12 months ending May 31,
1999 were $214,175 against revenues of $382,775 for the 12 months ending May
31, 1998, representing a decline of 44%. Much of the better results for fiscal
1998 were because of revenues earned from some one-time services Internet
Stock Market Resources performed during fiscal 1998 and to virtually no
revenue being earned during part of the third quarter of fiscal 1999. That
collapse of revenues was the result of Internet Stock Market Resources'
suspension of sales activities during a regulatory investigation that resulted
in no findings adverse to Internet Stock Market Resources. This temporary halt
to new business development was overcome in fiscal 1999's fourth quarter as
continuing clients remained with Internet Stock Market Resources while new
clients were being added at the rate of approximately three to four per month.
From fiscal '98 to fiscal '99, operating expenses declined by only 13.3%,
reflecting certain fixed costs of operations that did not drop when revenues
did. Company management believes that, as operating revenues grow, total
expenses will also do so, but at a lower rate.
Total cash balances declined 22.1% from their year-previous levels. At
fiscal year-end 1998, almost one-third of Internet Stock Market Resources'
total cash was in restricted form, earmarked for a specific purpose and not
available for general use; therefore, considering only cash available for
general purposes, Internet Stock Market Resources' cash balances increased by
14.2% over fiscal year-end-previous levels, meaning somewhat better liquidity
for day-to-day needs at the end of fiscal year 1999. 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 Internet Stock Market Resources' 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 a lot to a drop of 55%
from the level at the end of the previous fiscal year. Management is
encouraged by the improvement in Internet Stock Market Resources' current
ratio, which is current assets divided by current liabilities, used as a
measure of ability to cover short-term obligations with liquid assets: that
ratio rose 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,
total liabilities have fallen 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, Internet Stock Market
Resources' total deficiency in assets fell by approximately 37%, giving
management reason to believe that the entirety of that asset deficiency can
continue to decrease.
With respect to cash flows, Internet Stock Market Resources' operating
activities used net cash of more than $102,000 during the fiscal year 1999,
while operating activities provided almost $96,000 during the preceding fiscal
year. This is the result, among other, lesser factors, of Internet Stock
Market Resources' aggressive reduction in accrued liabilities, as well as a
$136,000 rise in deferred income, the second factor being the result of
changes in the recognition of sales revenues.
Internet Stock Market Resources has embarked on an aggressive plan of
expansion involving two separate, but related, parts. First, it is fully the
intention of management to continue to develop new clients for Internet Stock
Market Resources' flagship business information Website while maintaining the
existing Listed Members base. This component of management's plan requires the
active, on-going efforts of the executive officers acting in their capacities
as producers, making
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<PAGE>
prospective new clients aware of the benefits of the Internet Stock Market
Resources Website portal at the same time as providing a high level of service
and responsiveness to current clients. The second part of Internet Stock
Market Resources' business model involves acquiring the operating assets of
other going concerns: the assets bought would generally constitute distinct
operating units of Internet Stock Market Resources. Although management is
looking for asset purchases within Internet Stock Market Resources' areas of
expertise, Internet Stock Market Resources has made overtures to a variety of
potential holdings. It is management's intention to use a group of financing
vehicles to buy assets: among these may be cash, debt, and/or equity
securities. To the end of having cash available for purchases, Internet Stock
Market Resources must raise the proceeds of this offering.
EFFECTS OF INFLATION
Company management believes that Internet Stock Market Resources' 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 have been reflected in Internet
Stock Market Resources' business and its industry.
GOING CONCERN
Internet Stock Market Resources 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 Internet Stock Market
Resources' 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 Internet Stock Market Resources'
financial situation by the following:
* A sale of $72,000 additional shares of common stock, as part of
Internet Stock Market Resources' foreign private placement, was completed in
July of 1999.
* A note payable to a stockholder has been restructured and will not be
satisfied until Internet Stock Market Resources has an acceptable level of
working capital.
* This offering is expected to generate up to $5,000,000 from the public.
* Purchase of the assets 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, Internet Stock Market Resources is in the process of
searching for companies with appropriate assets to acquire.
* Increased promotional expenditures in an effort to increase revenues.
Subsequent to the end of the May 31, 1999 fiscal year, Internet Stock Market
Resources announced that it had entered into a letter of intent with the
private, close corporation Delcor Industries, Inc., which manufactures and
assembles electronic components. That letter of intent has expired, and
Internet Stock Market Resources now contemplates using proceeds from this
offering to acquire certain assets of Delcor.
28
<PAGE>
Management further notes that negotiations for the purchase of other firms'
assets are on going at this time.
For Internet Stock Market Resources' Three- and Six-Month Periods Ending
November 30, 1999
First, readers of this prospectus are cautioned that, while the Management
Discussion and Analysis above was based on audited financial statements, the
discussion below is for financial statements that are unaudited. While
management does not believe that the quarterly financials are unreliable, they
have not been subject to the independent review of Internet Stock Market
Resources' auditing firm.
On August 17, 1998, Internet Stock Market Resources changed its name to
Internet Stock Market Resources, Inc. and subsequently announced that it had
merged with the private, close Florida corporation Internet Stock Market Corp.
The financial statements presented here of the surviving corporation reflect
the transaction as if it were a pooling of interests of the private
corporation, which was the non-surviving corporation, with that of Internet
Stock Market Resources, which was 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 Internet Stock Market
Resources' previous fiscal year. The discussion that follows will exclusively
address the financial statements of the pooled, surviving corporation.
Internet Stock Market Resources' fiscal year ends on May 31; as such, the
financial statements herein presented are for the six months ended November 30
of the current fiscal year.
Revenues for the six months were $233,826 against revenues for the
year-previous period of $97,361, marking a rise of 140%. For the second
quarter of the current fiscal year, revenues were $82,735, down from $151,091
for the first three months of this fiscal year. The rise in revenue for the
current six-month period over that of the previous fiscal year is entirely
attributable to the expansion of Internet Stock Market Resources' client base.
Management believes that the drop in this quarter's revenue compared to last
quarter's is the result of certain temporary responsibilities Internet Stock
Market Resources' senior officers assumed during the Autumn that depressed new
client development activities, which are their primary tasks.
Expenses fell 3.7% from the year-previous period's, the majority of this
reduction due to the internalization of costs of professional services now
handled by management personnel. From the first quarter to the second quarter
of the current fiscal year, total expenses declined 11.4%, this decrease being
the net result of increasing general and administrative expenses and bad debt
expense increasing against a continuing decline in professional fees. For the
year-previous six months, total expenses were 183% of revenues, while they are
73% of revenues for the current fiscal year to date.
As stated in previous reports, management believes that this is the result
of certain fixed costs of operation being spread over a larger base of
revenues. Management believes that this process will continue, provided
revenues from operations continue to grow.
Internet Stock Market Resources' cash position rose to $16,603 at November
30, 1999, from -$2,820 at August 31, 1999, this marked improvement being the
result of several factors, the primary one being a more aggressive management
of receivables and payables. It is management's full intention to maintain
this discipline over cash. From November 30, 1998 to November 30, 1999, cash
declined by almost 83%; however, management believes that certain temporary
factors resulted in a cash position that was unnecessarily high in the Autumn
of 1998, and considers its cash position
29
<PAGE>
now more in line with the level of operations and Internet Stock Market
Resources' current need for liquidity.
Current assets at November 30, 1999 were 48.4% less than they were one
year earlier, and they were 10.2% less than they were at August 31, 1999. The
decline from the previous year is attributable to the drop in cash noted
above, as well as to certain changes in the recognition of current assets.
The decline in current assets from August to November of the current year
is largely the net effect of a contraction in accounts receivable to provide
cash.
With respect to current liabilities, as mentioned above, management
allowed accounts payable to rise by $12,000, or 59%, from the August, 1999
level to conserve cash. The level at November 30, 1999 is also 40.6% higher
than it was at November 30, 1998. Management is currently analyzing the
increase in Internet Stock Market Resources' accounts payable as a percentage
of current liabilities to determine if the recent increases in operational
activity warrant the rise.
Current liabilities at November 30, 1999 were $64,885, which represents a
decline of 56% from November 30, 1998 current liabilities, and a decline of
37% from current liabilities at August 31, 1999. Note that the year-previous
level of current liabilities discussed here does not include a note payable
that has, since year-previous results were reported, been re-assigned to
long-term liabilities. Internet Stock Market Resources' current ratio, which
is current assets divided by current liabilities, a measure of Internet Stock
Market Resources' ablity to meet short-term obligations with relatively liquid
resources, has improved to 1.14X from 0.80X at August 31, 1999 and 0.97X at
November 30, 1998.
Internet Stock Market Resources' sole long-term liability - a note payable
to a shareholder - has declined by 37% from November 30, 1998, but rose about
$20,000, or less than 4%, from August 31, 1999. Management is committed to
maintaining a schedule of retirement of this obligation, but will do so in a
manner consistent with maintaining adequate cash for operations.
Internet Stock Market Resources' total liabilities have declined 34.5%
since November 30, 1998, and have declined 2.9% from August 31, 1999.
Management's current strategy is to keep downward pressure on total
liabilities to reduce the financial risk. To the extent that current
liabilities can be maintained within a reasonable range of their current
levels, and the outstanding balance on the note payable can continue to be
retired, management believes that total liabilities can continue to be
lessened.
Internet Stock Market Resources' deficiency in assets has fallen to
- -$510,340, 32.8% less than it was at November 30, 1998, and 10.0% less than it
was at August 31, 1999. It is management's judgment that the reduction of
Internet Stock Market Resources' deficiency in assets will continue, but that
the time frame in which the deficiency will be eliminated is unpredictable at
this time, depending on both the results of operations and on the results of
certain external equity financing discussed below.
On June 30, 1999, a letter of intent was signed by Internet Stock Market
Resources and Delcor Industries, Inc. to acquire 100% of Delcor for cash and
debt. The letter of intent gave the parties until August 1, 1999 to sign a
purchase agreement to finalize the acquisition. The letter of intent has
expired, and Internet Stock Market Resources is now negotiating to buy the
operating assets of Declor. Delcor manufactures and assembles electronic
components, and employs approximately 75 people. The purchase of Delcor's
assets, or those of any suitable company, will require cash that Internet
Stock Market Resources will have only if this offering that is successful.
30
<PAGE>
DESCRIPTION OF PROPERTY
Until July 31, 2000, Internet Stock Market Resources is committed to lease
approximately 1,200 square feet of office space for $1,050 per month at 405
Central Avenue in St. Petersburg, Florida. The office building is
approximately 7 years old, and in good condition.
31
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 15, 1990, Internet Stock Market Resources issued 49,333
restricted common shares to M.C.K. Marine Enterprises, Inc. in exchange for
cancellation of a $1,605,800 loan. M.C.K. Marine Enterprises, Inc. was, and
still is, owned and controlled by Internet Stock Market Resources', Chairman
and Secretary Anastasios N. Kyriakides.
As a result of the merger of Internet Stock Market Resources, Inc. and
Internet Stock Exchange Corp. - effective on September 1, 1998 - Mr.
Kyriakides, through affiliate parties, received consideration of 222,222
shares of Internet Stock Market Resources' common stock plus a $1,000,000 note
payable. The terms of repayment of that loan have recently been restructured.
32
<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The principal United States market in which Internet Stock Market
Resources common stock is and has been traded is the Over-the-Counter
Electronic Bulletin Board Service of the National Association of Securities
Dealers. Internet Stock Market Resources common stock began trading in 1989
under the symbol SVCR, which was subsequently changed to ISMR. Through
December 1, 1999, the high sales price was $5.00, adjusted for all stock
splits, and the low sales price was $0.0001. Market makers in Internet Stock
Market Resources common stock include Sharp Capital, Weinn Securities, Hill
Thompson Securities, and Paragon Securities.
Internet Stock Market Resources' common stock 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 $0.87 ** **
Third Quarter $1.25 $0.56 ** **
Fourth Quarter $0.75 $0.25 ** **
</TABLE>
* The prices presented above are bid prices which represent prices between
broker-dealers and do not include retail markups and markdowns or any
commission to the dealer. These prices may not reflect actual transactions.
** Bid prices during this time period were insignificant.
On January 26, 2000, there were approximately 419 holders of record of
Internet Stock Market Resources common stock. This number does not include any
adjustment for stockholders owning Internet Stock Market Resources common
stock in street name.
The stock transfer records of the corporation indicate that, as of January
18, 2000, there were 719,777 common shares outstanding, of which 496,483 were
free trading and 223,294 were restricted. Internet Stock Market Resources has
never paid dividends, and it does not anticipate paying any dividends in the
near future; instead, it intends to retain earnings, if any, to provide funds
for general corporate purposes and the expansion of business. Florida law
restricts the payment of dividends for corporations with a deficiency in
assets; however, the $1,000,000 note issued in connection with the merger
described above was treated as a distribution.
33
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation of officers, directors, and other
key personnel for the fiscal years (ending on May 31, respectively) 1997,
1998, and 1999.
Summary Compensation Table
Long Term Compensation
____________________________
Annual compensation | Awards |Payouts|
_________________________________________|__________________|_______|
(a) (b) (c) (d) (e) | (f) (g) | (h) | (i)
Name Other |Restrctd Securtis | |All Other
and Annual | Stock Underlying| LTIP | Compen-
Principal Compen- |Award(s) Options/ |Payouts| sation
Position Year Salary($)Bonus($)sation($) | ($) SARs (#)| ($) | ($)
_________________________________________|__________________|_______|_________
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
- ------------- | | |
34
<PAGE>
(1) Anastasios Kyriakides had the title of President until Budd Morris was
appointed to the capacity, and had held that title for Internet Stock Market
Resources' predecessor, Internet Stock Exchange Corp.
(2) John Bramis served as an uncompensated officer and director for
approximately the first two quarters of fiscal year 1999, and served similarly
for Internet Stock Market Resources' predecessor, Internet Stock Exchange
Corp. In that latter role, he served as uncompensated President.
(3) John Karavasiles served as an uncompensated officer and director for
approximately the first two quarters of fiscal year 1999, and served similarly
for Internet Stock Market Resources' predecessor, Internet Stock Exchange
Corp. In that latter role, he served as uncompensated President.
Internet Stock Market Resources executive officers currently earn their
compensation primarily through commissions on sales. There are currently no
contracts with any of the executive officers; moreover, no compensation is
provided to any person in his or her capacity as a director, and there is no
reimbursement for expenses incurred by directors in their capacities as such.
The Board of Directors plans to appoint an independent compensation review
panel to make recommendations regarding the compensation structure of Internet
Stock Market Resources' officers and will take that panel's findings into
account in establishing salaries, benefits, and incentives appropriate for
Internet Stock Market Resources' key personnel.
35
<PAGE>
INTERNET STOCK MARKET RESOURCES, INC.
FINANCIAL STATEMENTS
MAY 31, 1999 and 1998 (audited)
and November 30, 1999 and 1998 (unaudited)
36
<PAGE>
Contents Page
- ------------------------------------- -----------
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
37
<PAGE>
Dohan and Company 7700 North Kendall Drive, #204
Certified Public Accountants Miami, Florida 33156-7564
A Professional Association Telephone: (305) 274-1366
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 our operations
and our cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 9 to the
financial statements, the Company has suffered recurring losses from
operations, has a working capital deficit and has a deficiency in assets that
raise substantial doubt about our ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 9.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/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
[Page F-1]
38
<PAGE>
Internet Stock Market Resources, Inc.
Balance Sheets
<TABLE>
<CAPTION>
May 31, November 30,
1999 1998 1999 1998
(Unaudited)
($) ($) ($) ($)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 122,786 107,653 16,603 96,602
Restricted cash - 50,000 - -
Accounts receivable, less
allowance for doubtful
accounts of $37,320 and
$19,493 at May 31, 1999 and
1998, and $3,381 and $2,143
at November 30, 1999 and
1998 22,343 32,193 52,974 47,164
Recoverable income taxes 5,928 - 4,539 -
Accrued interest receivable
from stockholder - 4,920 - -
--------- --------- --------- ---------
TOTAL CURRENT ASSETS 151,057 194,766 74,116 143,766
PROPERTY AND EQUIPMENT 40,244 49,973 34,504 45,354
DEFERRED TAX ASSET, LESS
VALUATION ALLOWANCE OF
$1,030,376 AND $995,651 AT
MAY 31, 1999 AND 1998, AND
$995,651 AT NOVEMBER 30,
1999 - - - -
DEPOSITS 1,000 1,000 1,000 500
--------- --------- --------- ---------
TOTAL ASSETS 192,301 245,739 111,009 189,620
========= ========= ========= =========
LIABILITIES AND DEFICIENCY
IN ASSETS
CURRENT LIABILITIES
Accounts payable 11,197 8,995 32,053 22,804
Accrued and other
liabilities 20,998 57,096 3,083 12,328
Deferred income 112,084 124,444 29,749 -
Current portion of note
payable to stockholder 113,550 385,385 - -
Other 1,146 - - 33,397
--------- --------- --------- ---------
TOTAL CURRENT LIABILITIES 258,975 575,920 64,885 68,529
NOTE PAYABLE TO STOCKHOLDER,
6%, DUE JUNE 1, 2000 564,965 678,515 556,464 880,000
--------- --------- --------- ---------
TOTAL LIABILITIES 823,940 1,254,435 621,349 948,529
--------- --------- --------- ---------
COMMITMENTS AND
CONTINGENCIES (NOTE 8)
DEFICIENCY IN ASSETS
Convertible Preferred Stock,
$.01 par value; 10,000,000
shares authorized; none
issued and outstanding - - - -
Common Stock;$.0001 par
value; 50,000,000 shares
authorized; 586,444 and
275,333 shares issued and
outstanding at May 31, 1999
and 1998, and 719,777
and 496,089 shares issued
and outstanding at November
30, 1999 and 1998 59 28 72 50
Additional paid-in capital 505,126 3,458,278 560,861 2,655,662
Deficit (1,136,824) (4,467,002) (1,071,273) (3,414,621)
--------- --------- --------- ---------
TOTAL DEFICIENCY IN ASSETS (631,639) (1,008,696) (510,340) (758,909)
--------- --------- --------- ---------
TOTAL LIABILITIES AND
DEFICIENCY IN ASSETS 192,301 245,739 111,009 189,620
========= ========= ========= =========
</TABLE>
See accompanying notes.
[Page F-2]
39
<PAGE>
Internet Stock Market Resources, Inc.
Statements Of Operations
<TABLE>
<CAPTION>
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 & related taxes 97,890 156,709
Telephone 20,668 23,470
---------- ----------
TOTAL EXPENSES 343,638 396,397
---------- ----------
INCOME (LOSS) FROM OPERATIONS (129,463) (13,622)
OTHER INCOME 1,583 5,332
---------- ----------
INCOME (LOSS) FROM OPERATIONS
BEFORE INCOME TAXES (127,880) (8,290)
PROVISION FOR INCOME TAXES - -
TAX BENEFIT FROM UTILIZATION
OF NET OPERATING LOSS
CARRYFORWARDS - -
---------- ----------
NET INCOME (LOSS) (127,880) (8,290)
---------- ----------
BASIC NET INCOME
(LOSS) PER SHARE (0.32) (0.03)
========== ==========
</TABLE>
<TABLE>
<CAPTION>
|-Average Number of Shares-|
Twelve Months Ended
May 31,
1999 1998
<S> <C> <C>
WEIGHTED AVERAGE SHARES
OUTSTANDING* 398,045 275,333
======= =======
</TABLE>
<TABLE>
<CAPTION>
Internet Stock Market Resources, Inc.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
1999 1998 1999 1998
($) ($) ($) ($)
<S> <C> <C> <C> <C>
REVENUES 82,735 48,680 233,826 97,361
EXPENSES
Bad debts 4,188 - 9,081 -
Depreciation & amortization 2,870 2,762 5,740 5,553
Office rent 1,686 3,371 6,106 6,741
General and administrative 49,553 37,191 100,420 74,353
Interest 8,223 5,696 16,952 11,392
Professional fees 7,120 34,736 20,879 69,473
Telephone 4,718 5,318 12,293 10,637
------- ------- ------- -------
TOTAL EXPENSES 78,338 89,074 171,471 178,149
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS BEFORE
TAXES 4,377 (40,394) 62,355 (80,788)
PROVISION FOR INCOME TAXES (CREDITS) 1,463 (14,138) 20,827 (28,275)
------- ------- ------- -------
TAX BENEFIT FROM UTILIZATION OF NET
OPERATING LOSS CARRYFORWARDS (1,463) - (20,827) -
NET INCOME (LOSS) 4,377 (26,256) 62,355 (52,513)
======= ======= ======= =======
BASIC NET INCOME (LOSS) PER COMMON
SHARE* 0.01 (0.05) 0.09 (0.14)
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
|------Average Number of Shares-------|
Three Months Ended Six Months Ended
November 30, November 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES OUTSTANDING* 719,778 496,089 686,445 385,711
======= ======= ======= =======
</TABLE>
*Common Stock shares outstanding have been retroactively adjusted to reflect
a one-for-nine reverse split of all Common shares that occurred on June 30,
1999.
See accompanying notes.
[Page F-3]
40
<PAGE>
Internet Stock Market Resources, Inc.
Statements Of Deficiency In Assets
For the years ended May 31, 1999 and 1998
and for the period ended November 30, 1999
<TABLE>
<CAPTION>
Additional
Paid-in
Shares Amount Capital Deficit Total
# ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Balances May 31, 1997 53,111 5 3,454707 (3,458,712) (4,000)
Stock issued for merger 222,222 23 977 1,000
Debt issued in con-
nection 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 275,333 28 3,458,278 (4,467,002) (1,008,696)
Private stock placement 311,111 31 504,906 504,937
Recapitalization of
deficit (3,458,058) 3,458,058 -
Net loss for 1999 (127,880) (127,880)
Balances May 31, 1999 586,444 59 505,126 (1,136,824) (631,639)
Private stock placement 133,333 13 54,947 54,960
Recapitalization of
deficit 788 3,196 3,984
Net income for fiscal
year to date 62,355 62,355
Balances November 30,
1999 719,777 72 560,861 (1,071,273) (510,340)
</TABLE>
See accompanying notes.
[Page F-4]
41
<PAGE>
Internet Stock Market Resources, Inc.
Statements Of Cash Flows
<TABLE>
<CAPTION>
Years ended Six months ended
May 31, November 30,
1999 1998 1999 1998
($) ($) ($) ($)
(Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) (127,880) (8,290) 62,355 (52,513)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 11,307 5,553 5,740 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) (3,308) (3,877)
Decrease in other current
assets - - - 27,223
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 20,857 27,025
Increase (decrease) in
accrued and other
liabilities (36,098) 53,096 (53,001) 6,400
Increase (decrease) in
deferred income (12,360) 124,444 (79,137) -
Increase in other
liabilities 1,146 - - -
--------- --------- --------- ---------
NET CASH (USED) PROVIDED
BY OPERATING ACTIVITIES (102,841) 96,685 (39,880) 17,565
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Common Stock issuance 504,937 3,594 54,960 80,000
Capital contributions - - 788 -
Proceeds of stockholder
loan - 63,900 - -
Principal payments on
note payable stockholder (385,385) - (122,051) -
--------- --------- --------- ---------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES 119,552 67,494 (66,303) 80,000
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of equipment (1,578) (55,526) - (963)
Security deposits - (1,000) - -
--------- --------- --------- ---------
NET CASH USED BY
INVESTING ACTIVITIES (1,578) (56,526) - (963)
--------- --------- --------- ---------
(DECREASE) INCREASE IN
CASH 15,133 107,653 (106,183) 96,602
CASH, beginning 107,653 - 122,786 107,653
--------- --------- --------- ---------
CASH, ending 122,786 107,653 16,603 204,255
========== ========== ========== =========
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 222,222 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 to stockholder."
See accompanying notes.
[Page F-5]
42
<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., provides business
and advertising information and design on behalf of its clients, which are
generally smaller, growing public companies, to end users using the Internet.
Internet Stock Market Resources' portal includes links to other financial
Websites.
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 222,222 restricted shares of Internet Stock
Market Resources' common 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 the 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 under common control in
accordance with Accounting Interpretations of the Accounting Principles Board
Opinion No. 16, "Transfers and Exchanges Between Companies Under common
Control," which requires the assets and liabilities so transferred to be
accounted for at historical cost in a manner similar to that used in pooling
of interests accounting. Accordingly, financial information for periods prior
to the merger reflect retroactive restatement of the companies' combined
financial position and operating results.
UNAUDITED FINANCIAL STATEMENTS The unaudited financial statements as of August
31, 1999 and for the three months ended August 31, 1999 and 1998 have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three-month
period ended August 31, 1999 are not necessarily indicative of the results
that may be expected for the year ending May 31, 2000.
[Page F-6]
43
<PAGE>
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. Also, issued and outstanding common stock shares reported for
prior periods have been adjusted for a June, 1999, one-for-nine reverse split
of all outstanding common stock shares.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows,
Internet Stock Market Resources 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
Internet Stock Market Resources 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, Internet Stock Market Resources 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. Internet Stock Market Resources' 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.
PROPERTY AND EQUIPMENT Property and equipment, consisting of furnishings and
equipment used in 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 as the services are rendered,
when the collection of sales proceeds is reasonably assured and all other
material conditions of the sales are met. Services paid in advance on
contracts in excess of one month are deferred and recognized monthly,
pro-rata, over the term of the agreement.
ADVERTISING Advertising and business development costs are charged to
operations in the period incurred.
[Page F-7]
44
<PAGE>
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
Internet Stock Market Resources' 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 Internet Stock Market Resources' 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.
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 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 Internet Stock Market Resources.
3. RESTRICTED CASH
In May 1998, the Board of Directors authorized Internet Stock Market Resources
to offer and sell shares of its common stock under a private placement, which
was subsequently canceled. Prior to the year end, May 31, 1998, Internet
Stock Market Resources received $50,000 from an investor to purchase shares of
its common stock, which was subsequently returned to the investor.
[Page F-8]
45
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
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 $11,307 and $5,553, respectively.
5. ACCRUED AND OTHER LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
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
Internet Stock Market Resources has authorized 50,000,000 shares of common
stock with a par value of $.0001 per share. At May 31, 1999 and 1998, 586,444
shares and 275,333 shares, respectively, were issued and outstanding.
The Company has authorized 1,000,000 shares of preferred stock with a par
value of $.01 per share. The Board of Directors has designated 933,333 of
these shares of preferred stock as Class A. The primary features of the Class
A preferred shares are as follows: (a) Each issued and outstanding Class A
preferred stock share is exchangeable for two shares of Internet Stock Market
Resources common stock; (b) for one year from the issue date, the exchange
price is $2; (c) after one year, the exchange price is the market bid price
for two shares of Internet Stock Market Resources common stock; (d) the
market bid price to be used otherwise in calculation of exchange price is the
bid price at 4:00 p.m. on the previous business day on the national exchange
on which Internet Stock Market Resources common stock trades; (e) the
previous day will be the day prior to notification via United States Postal
Service; (f) Class A preferred stock has no voting rights; (g) other than
liquidation rights to the extent of par value, which is $0.01 per share
preferred, the Class A preferred stock has no preemptive or other special
rights unless granted by law or statute; (h) Class A preferred stock has no
rights to dividends of any kind; (i) the Board of Directors can declare a
Class A preferred stock dividend if it wishes to, but if it does declare such
a dividend, that does not mean the Class A preferred stock has any right to
dividends after that; (j) if any part of the designation of the Class A
preferred stock is held invalid, the rest of the class's designation is still
valid.
[Page F-9]
46
<PAGE>
PRIVATE OFFERING In August 1998, the Board of Directors authorized Internet
Stock Market Resources to offer and sell to foreign investors up to 444,444
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
prepared prior to the Merger (although no stock was sold nor proceeds received
before the Merger, and the offering was neither legally binding nor probable
until such time after the merger as the offering was consummated), 311,111
shares were issued at prices ranging from $1.08 to $2.25 generating net
proceeds of $504,937 prior to May 31, 1999. Additional shares of 133,333 were
sold in June 1999 for $54,960, with payment in July 1999.
7. INCOME TAXES
For the year ended May 31, 1999, Internet Stock Market Resources 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
Internet Stock Market Resources 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 Internet Stock Market Resources' ability to generate sufficient
taxable income during the carryforward periods and no further significant
changes in ownership.
Internet Stock Market Resources 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 Internet Stock Market Resources 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:
[Page F-10]
47
<TABLE>
<S> <C>
2000 $13,488
2001 2,248
-------
$15,736
=======
</TABLE>
CONSULTING AGREEMENTS From time-to-time, Internet Stock Market Resources
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 of and negotiation with potential
sellers of assets.
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. Internet Stock Market Resources
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, Internet Stock Market Resources believes the cost of
addressing the Year 2000 issue should not have a material impact on Internet
Stock Market Resources' financial position or results of operations.
On June 30, 1999, a letter of intent was signed by Internet Stock Market
Resources and Delcor Industries, Inc. (Delcor) to acquire 100% of Delcor for
cash and debt. The letter of intent has since expired, and Internet Stock
Market Resources is now discussing with Delcor the purchase of its operating
assets. Delcor manufactures and assembles electronic components, and employs
approximately 75 people.
GOING CONCERN The accompanying financial statements have been prepared
assuming Internet Stock Market Resources will continue as a going concern.
Internet Stock Market Resources 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 substantial doubt about Internet Stock Market
Resources' 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 Internet Stock Market
Resources' financial situation by the following:
* Sale of 133,333 additional shares of common stock for $72,000 as part
of its foreign private placement, expected to be received in July 1999.
* The note payable stockholder has been restructured and will not be
satisfied until Internet Stock Market Resources has an acceptable working
capital.
* An SB-2 has been filed with the United States Securities and Exchange
Commission, which would provide for Internet Stock Market Resources to raise
approximately $8,333,000 from the general public.
[Page F-11]
48
<PAGE>
* Purchase of the operating assets 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. The procurement of such assets would be significant to Internet Stock
Market Resources but would be improbable if Internet Stock Market Resources is
unable to fund the purchases.
* Increase promotional expenditures in an effort to increase revenues.
9. SUBSEQUENT EVENTS
REVERSE STOCK SPLIT During the first fiscal quarter of Internet Stock Market
Resources' 1998 fiscal year, the common stock of Internet Stock Market
Resources 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 Internet Stock Market Resources' ability to make
acquisitions or asset purchases using Internet Stock Market Resources' common
stock. As a result of the above, effective on June 30, 1999, Internet Stock
Market Resources reverse split its common stock at a ratio of one new share
for each nine old shares issued and outstanding. Retroactive recognition of
the reverse stock split has been given to all share amounts reported in the
May 31, 1999, and 1998 financial statements.
SALE OF COMMON STOCK On June 14, 1999, Internet Stock Market Resources sold
the remaining 133,333 shares of its common stock from its private placement
for $54,960; payment was made received in July of 1999.
[Page F-12]
49
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Internet Stock Market Resources has had no disagreements with its independent
accountants. There been no material changes in Internet Stock Market
Resources' financial statements because of disagreements between Internet
Stock Market Resources and its accountants with respect to accounting or with
respect to financial disclosures.
50
<PAGE>
51
<PAGE>
<TABLE>
<CAPTION>
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.
<S> <C> <S>
TABLE OF CONTENTS 833,333 Units
Summary Information 3
Risk Factors 5
Use of Proceeds 11
Determination of Offering Price 13
Dilution 15 $10.00 Per Unit
Selling Security Holders 17
Plan of Distribution 19
Legal Proceedings 21
Directors, Executive Officers, Promoters
and Control Persons 23
Security Ownership of Certain Beneficial
Owners and Management 27 Internet Stock Market
Description of Securities 29 Resources, Inc.
Interest of Named Experts and Counsel 31
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities 33 ----------
Organization Within Last Five Years 35 Prospectus
Description of Business 37 ----------
Management's Discussion and Analysis or
Plan of Operation 43
Description of Property 47
Certain Relationships and Related Internet Stock Market
Transactions 49 Resources, Inc.
Market for Common Equity and Related 405 Central Avenue
Stockholder Matters 51 102 Lobby Level
Executive Compensation 53 St. Petersburg, Florida 33701
Financial Statements 55 (727) 896-9696
Changes In and Disagreements With
Accountants on Accounting and
Financial Disclosure 71 Dated: XXXX XX, 19XX
</TABLE>
52
<PAGE>
INDEMNIFICATION OF OFFICERS AND DIRECTORS
At this time Internet Stock Market Resources, Inc. has no provisions within
its charter or by-laws that insure or indemnify the directors or officers,
either jointly or severally, of the Company for their actions in such
capacities. Neither are the officers and directors insured or indemnified by
contract or other arrangement. The Company is not aware of any statute that
insures or indemnifies a controlling person, director, or officer, or
otherwise affects his or her liability in that capacity.
<PAGE>
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company estimates offering expenses related to issuance and distribution
will be $80,000 if all 833,333 Units are sold; for purposes of presentation in
the Prospectus of this registration statement, the Company has estimated that
the foregoing expenses will be proportionately less for fewer Units sold.
The table below shows the effect on proceeds from this offering, considering
the Company's issuance and distribution costs on all 833,333 being registered
on this Form SB-2.
<TABLE>
<S> <C>
Gross Proceeds $ 8,333,330
Costs of Offering 80,000
---------
$ 8,253,330
</TABLE>
As of the date of this registration statement, the Company has no agreement
with any broker/dealer to sell Units of this offering.
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
In August 1998, the Board of Directors authorized Internet Stock Market
Resources to offer and sell to foreign investors up to 444,444 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 prepared prior to the
Merger (although no stock was sold nor proceeds received before the Merger,
and the offering was neither legally binding nor probable until such time
after the merger as the offering was consummated), 311,111 shares were issued
at prices ranging from $1.08 to $2.25 generating net proceeds of $504,937
prior to May 31, 1999.
Additional shares of 133,333 were sold in June 1999 for $54,960, with payment
in July 1999.
<PAGE>
UNDERTAKINGS
Pursuant to Item 512(e) of Regulation S-B:
As permitted under Rule 461, Internet Stock Market Resources, Inc. is
requesting an accelerated effective date. As such, Internet Stock Market
Resources herewith warrants as follows:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, Internet Stock Market Resources, Inc. has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Internet Stock Market Resources of expenses
incurred or paid by a director, officer or controlling person of Internet
Stock Market Resources in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Internet Stock Market
Resources, Inc. will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
EXHIBITS
Exhibit No. Description of Exhibit
----------- ------------------------------
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
4.4 Designation of Class A Preferred Stock*
10 Letter of Intent Between the Company and Delcor Industries*
23.1 Letter of Consent and Opinion of Thomas R. Todd, Jr., Esq.
23.2 Letter of Consent of Independent Auditors
27 Financial Data Schedule
* To be filed supplementally.
<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, Amendment 2 to be signed on its behalf by the undersigned in the
City of St. Petersburg, State of Florida, on January 26, 2000.
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> <S> <S>
/s/Budd Morris Director and Chief Executive Officer January 26, 2000
- -----------------------
Budd Morris
/s/Anastasios KyriakidesDirector and Secretary January 26, 2000
- ------------------------
Anastasios Kyriakides
/s/Caroline Latta Director and Vice President January 26, 2000
- ------------------------
Caroline Latta
/s/Chad Morris Director and Vice President January 26, 2000
- ------------------------
Chad Morris
</TABLE>
Subscription Agreement
(Pro Forma)
SUBSCRIPTION AGREEMENT
for Units of
Internet Stock Market Resources, Inc.
405 CENTRAL AVENUE * 102 LOBBY LEVEL * ST. PETERSBURG, FLORIDA 33701
This Subscription Agreement is to purchase Units of Internet Stock
Market Resources, Inc. from Internet Stock Market Resources. Each Unit
consists of four shares of Internet Stock Market Resources' common stock, par
value $0.0001 per share, plus one share of its preferred stock; for $2.00,
each of the preferred shares can be exchanged for two shares of Internet Stock
Market Resources' common stock, as long as the exchange is made within one
year of the subscription date. The minimum subscription is 100 Units. These
Units are being offered by Internet Stock Market Resources through Internet
Stock Market Resources' prospectus dated XXXX XX, 20XX. This offering is not
valid in any jurisdiction where prohibited by law or statute.
The undersigned hereby warrants that a copy of Internet Stock Market
Resources' prospectus dated XXXX XX, 20XX has been delivered. The undersigned
furthermore warrants that he/she/it is a resident of/incorporated in one of
the following states:
XX, XX, XX, XX, XX
The undersigned hereby irrevocably subscribe(s) for the following number
of Units of Internet Stock Market Resources, Inc. upon the terms and
conditions set forth in the prospectus, receipt of which is acknowledged by
signature(s) below. Number of Units subscribed for:
_________________X $10.00 per Unit = $____________________.00
----------------- -----------------------
(Number of Units) (Total Subscription Price)
Subscription price is payable to: "Internet Stock Market Resources, Inc."
Certificates in the name(s) written below, for the number of shares
represented by the Units written above, will be printed and sent by Internet
Stock Market Resources' stock transfer agent.
INDICATE FORM OF OWNERSHIP:
[ ] Individual.
[ ] Joint Tenants with Right of Survivorship.(Both names must be stated
and signed.)
[ ] Tenants in Common.(All names must be stated and signed.)
[ ] Trust. Trustee signs For Benefit Of:
[ ] Corporation.(Name of Company must be stated and signed by an
authorized officer.)
[ ] Partnership.(Name must be set forth and signed by an authorized
partner.)
[ ] Other Entity.(Name must be stated and signed properly by an authorized
person.)
PRINT OR TYPE THE FOLLOWING INFORMATION:
(Press firmly; you are making 2 copies)
1.
------------------------------------------------------------------------
Name
------------------------------------------------------------------------
Address
( ) -
-----------------, ----- -------- --- --- ----- ----------------
City State ZIP Code Telephone Number Social Security
Number or FEIN
x
--------------------------------- ----------------------, ------
Signature Date
2.
------------------------------------------------------------------------
Name
------------------------------------------------------------------------
Address
( ) -
----------------, ----- -------- --- --- ----- ----------------
City State ZIP Code Telephone Number Social Security
Number or FEIN
x
---------------------------------- ----------------------, ------
Signature Date
January 26, 1999
Thomas R. Todd, Jr., Esq.
P.O. Box 88519
Atlanta, Georgia 30356
Internet Stock Market Resources, Inc.
405 Central Avenue
102 Lobby Level
St. Petersburg, Florida 33701
Dear Members of the Board of Directors:
You have asked me to provide you my legal opinion with regard to certain
matters concerning the following described securities of Internet Stock Market
Resources, Inc. (the "Company"), which securities are the subject of a Form
SB-2 Registration Statement, as that document is amended by Amendment 1
thereto (the "Registration Statement") filed with the Securities and Exchnage
Commission by the Company in electronic form on or about December 3, 1999 for
the purpose of registering such securities under the Securities Act of 1933:
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 Class A
Preferred Stock.
<PAGE>
In rendering this opinion, I have examined certain corporate records of
the Company, including the Company's Articles of Incorporation and amendments
thereto, the By-laws, the minutes of meetings of the board of directors and
shareholders, the Registration Statement, and such other documents and records
as furnished to me by officers of the Company, originals or photocopies,
certified or otherwise identified to my satisfaction, and certificates of
public officials, as I deemed relevant and appropriate. I have also relied
upon the representations made to me by the Company's officers and directors.
Based upon the foregoing, my opinion is as follows:
1. The Company is duly and validly organized and is validly existing
and in good standing under the laws of the State of Delaware, as evidenced by
a certificate of the Corporations Division of the State of Delaware.
2. The Units, 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.
This opinion letter speaks of the date hereof and there is no obligation
on my part to update this opinion letter even though matters which
subsequently occur may affect my analysis or conclusions in this opinion
letter.
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,
/s/ Thomas R. Todd, Jr.
-----------------------
Thomas R. Todd, Jr
Dohan and Company, CPA's
A Professional Association
7700 North Kendall Drive, #204
Miami, Florida 33156-7564
Telephone: (305) 274-1366
Facsimile: (305) 274-1368
Stockholders and Board of Directors
Internet Stock Market Resources, Inc.
St. Petersburg, Florida
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated July 9, 1999, in Amendment No. 1 to the Registration
Statement (Form SB-2 No. 33-68051) and related Prospectus of Internet Stock
Market Resources, Inc. for the registration of 833,333 units, each unit
consisting four shares of its Common Stock and one share of its Preferred
Stock.
/s/ Dohan and Company, P.A., CPA's
- --------------------------------
Miami, Florida
January 26, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE PERIODS ENDED MAY 31, 1999 AND 1998, AND FOR THE
PERIODS ENDED NOVEMBER 30, 1999 AND 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 6-MOS 6-MOS
<FISCAL-YEAR-END> MAY-31-1999 MAY-31-1998 MAY-31-2000 MAY-31-1999
<PERIOD-START> JUN-01-1998 JUN-01-1997 JUN-01-1999 JUN-01-1998
<PERIOD-END> MAY-31-1999 MAY-31-1998 NOV-30-1999 NOV-30-1998
<CASH> 122,786 157,653 16,603 96,602
<SECURITIES> 0 0 0 0
<RECEIVABLES> 59,663 51,686 56,355 49,307
<ALLOWANCES> (37,320) (19,493) (3,381) (2,143)
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 151,057 194,766 74,116 143,766
<PP&E> 57,104 55,526 57,104 56,489
<DEPRECIATION> (16,860) (5,553) (22,600) (11,135)
<TOTAL-ASSETS> 192,301 245,739 111,009 189,620
<CURRENT-LIABILITIES> 258,975 575,920 64,885 68,529
<BONDS> 564,965 678,515 621,349 948,529
0 0 0 0
0 0 0 0
<COMMON> 59 28 72 50
<OTHER-SE> (631,698) (1,008,724) (510,340) (758,909)
<TOTAL-LIABILITY-AND-EQUITY> 192,301 245,739 111,009 189,620
<SALES> 214,175 382,775 233,826 97,361
<TOTAL-REVENUES> 214,175 382,775 233,826 97,361
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> (308,691) 396,397 (154,519) (166,757)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> (36,363) 0 (16,952) (11,392)
<INCOME-PRETAX> (127,880) (8,290) 62,355 (80,788)
<INCOME-TAX> 0 0 0 28,275
<INCOME-CONTINUING> (127,880) (8,290) 62,355 (52,513)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (127,880) (8,290) 62,355 (52,513)
<EPS-BASIC> (0.32) (0.08) 0.09 (0.14)
<EPS-DILUTED> (0.32) (0.08) 0.09 (0.14)
</TABLE>
