As filed with the Securities and Exchange Commission on December 21, 2004
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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WWAP, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 7375 20-1372381
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation Industrial Classification Identification No.)
or Organization) Code Number)
Copies to:
WWAP, Inc.
c/o ActivePoint Ltd.
20 Giborel Israel St. Poleg Industrial Zone
Netanya Israel - 42504
Attn: Moshe Ofer / Rhona Morris
Telephone: (011) 972-9-8852484
Telecopier: (011) 972-9-8853233
(Address and telephone number of Principal
Executive Offices and Principal Place of Business)
Steven Schuster, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue, 18th Floor
New York, NY 10016
Telephone: (212) 448-1100
Telecopier: (212) 448-0066
(Name, address and telephone number of agent for service)
WWAP, Inc.
c/o Matthews & Co.
270 Madison Avenue, 16th Floor
New York, NY 10016
Telephone: (212) 293-5100
Telecopier: (212) 293-5560
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Securities Dollar Amount to Offering Price Per Aggregate Offering Amount of
to be Registered be Registered Share Price (2) Registration Fee
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1,436,103 shares of Common n/a n/a $1,436,103 $169.02
Stock, par value $.01 (1)
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(1) Of this amount 1,174,993 shares are being distributed to the stockholders of
Mobilepro, Inc. The remaining 261,110 shares may be sold in the future by
Mobilepro, Inc.
(2) No consideration will be received by Mobilepro, Inc. as a result of the
distribution. Accordingly, the registration fee is based on the amount of
shares being registered pursuant to this Registration Statement multiplied by
..0001177.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission (the "SEC") is effective. This prospectus is
not an offer to sell these securities and we are not soliciting offers to buy
these securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated December 20, 2004
WWAP, Inc.
1,436,103 Shares of Common Stock
This prospectus relates to (i) the distribution by dividend to all of the
stockholders of Mobilepro, Inc. ("Mobilepro") of up to 1,174,993 shares of WWAP,
Inc. ("WWAP") Common Stock and (ii) 261,110 shares of WWAP Common Stock to be
sold by Mobilepro. Mobilepro will not receive any proceeds from the distribution
to the stockholders Mobilepro of the 1,174,993 shares of WWAP Common Stock,
however, will receive compensation from the sale of the 261,110 shares Common
Stock. All costs associated with this registration will be borne by WWAP.
Upon this registration statement being declared effective by the SEC, WWAP
will be a public company.
The distribution will be pro rata to the Mobilepro stockholders based on
the number of shares owned by each.
Mobilepro shareholders may be required to pay income tax on the value of
the shares of WWAP Common Stock received by you in connection with this
distribution.
Currently, no public market exists for WWAP Common Stock.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 7.
No underwriter or person has been engaged to facilitate the distribution
of shares of Common Stock in this offering.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved of these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
Page Number
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Question and Answers about the Distribution and Related Matters ..........1
Prospectus Summary .......................................................2
Reasons for Furnishing this Document .....................................3
Summary of the Distribution ..............................................3
Summary of Consolidated Financial Information ............................6
Risk Factors .............................................................7
Cautionary Statement Regarding Forward-Looking Statements ................12
Use of Proceeds ..........................................................12
Selling Stockholder ......................................................12
The Distribution .........................................................13
Federal Income Tax Consequences of the Distribution ......................15
Relationship Between Mobilepro and WWAP Following the Distribution .......15
Legal Proceedings ........................................................15
WWAP Management ..........................................................16
Principal Stockholders ...................................................19
Description of Securities ................................................20
Business .................................................................20
Management's Discussion and Analysis of Financial Conditions
And Results of Operations ................................................25
Certain Relationships and Related Transactions ...........................27
Shares Eligible for Future Sale ..........................................28
Experts ..................................................................28
Legal Matters ............................................................29
Where You Can Find More Information ......................................29
Financial Statements .....................................................F-1
Part II - Information Not Required in Prospectus .........................II 1
Signatures ...............................................................II 3
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QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION AND RELATED MATTERS
The following section answers various questions that you may have about
the pro rata distribution to Mobilepro stockholders of 1,174,993 shares of WWAP
common stock owned by Mobilepro. We refer to this distribution in this document
as the "Distribution."
Q1: What is the Distribution?
A: The Distribution is the method by which Mobilepro will distribute a
significant portion of the shares held by it in WWAP resulting in WWAP becoming
a publicly-held company. According to the terms of the Distribution, Mobilepro
will distribute to its stockholders, as of the close of business on
[______________], 2005, in a dividend, shares of WWAP pro-rata based on the
number of shares owned by each. After the distribution Mobilepro will own
261,110 shares (1%) and the shareholders of Mobilepro will own 1,174,993 (4.5%)
of the issued and outstanding common stock of WWAP.
Q2: What is WWAP?
A: WWAP is a company that has the exclusive rights to market software
developed by ActivePoint Ltd. The software provides customers with a context
orientated natural language search engine for their website or database. The
software can guide and assist on-line customers and simultaneously provides the
website owner insight into their customers' opinions about their services and
their unfulfilled requests.
Q3: Why is Mobilepro effecting the Distribution?
A: Mobilepro is effecting the Distribution because it believes that the
Distribution may provide potential value to Mobilepro's stockholders.
Q4: What is the tax effect of the Distribution?
A: Dividends and distributions received are taxable as ordinary income for
federal income tax purposes pursuant to Section 311 of the Internal Revenue Code
provided that Mobilepro has current or accumulated earnings and profits. The
fair market value of WWAP's shares will be established by subsequent trading
that develops with respect to such shares. However, the Distribution is taxable
even if a trading market for the shares never develops.
The foreign, state and local tax consequences of receiving the
distribution may differ materially from the federal income tax consequences
described above. Shareholders should consult their tax advisor.
Q5: What will Mobilepro stockholders receive in the Distribution?
A: In the Distribution, Mobilepro stockholders will receive a pro-rata number
of shares of Common Stock of WWAP based on the number of shares owned by each
they own on [______________], 2005. Immediately after the Distribution,
Mobilepro's stockholders will still own their shares of Mobilepro common stock.
Shares of Mobilepro common stock will represent stockholders' interests in the
business of Mobilepro, and shares of WWAP common stock that stockholders receive
in the Distribution will represent their interests in the WWAP business.
Q6: What happens to Mobilepro shares after the Distribution?
A: After the Distribution, shares of Mobilepro common stock will continue to
represent ownership of the businesses of Mobilepro and will continue to be
quoted under the ticker symbol "MOBL.OB"
Q7: What does a Mobilepro stockholder need to do now?
A: Mobilepro stockholders do not need to take any action. The approval of the
Mobilepro stockholders is not required to effect the Distribution, and Mobilepro
is not seeking a proxy from any stockholders. Mobilepro stockholders should not
send in their Mobilepro share certificates to effect the Distribution. Mobilepro
stockholders will automatically receive their shares of WWAP common stock
shortly following the Distribution.
Q8: Where can Mobilepro stockholders get more information?
A: Mobilepro stockholders with additional questions related to the
Distribution should contact Kurt Gordon, CFO. Mobilepro's telephone number is
(301) 315-9040.
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PROSPECTUS SUMMARY
OVERVIEW
WWAP was incorporated in Delaware on July 14, 2004. In October 2004, WWAP
and shareholders of ActivePoint, Ltd. ("ActivePoint"), an Israeli corporation,
executed an exchange agreement whereby certain stockholders of ActivePoint
exchanged their shares of stock of Activepoint for a proportionate amount of
shares of WWAP common stock and preferred stock. As a result, WWAP now owns
approximately 94% of the outstanding capital stock of ActivePoint. In connection
with the exchange agreement, ActivePoint granted WWAP an exclusive and perpetual
right to use ActivePoint's products and to fund the research and development
efforts managed by ActivePoint and obtain sales rights of new technology and/or
products as developed by ActivePoint.
ActivePoint, formed in 1997, has developed context orientated Natural
Language search software (the "Software") which provides improvements for
consumer sales relationship systems (CRM), e-commerce providers and stand alone
internet stations ("Kiosks") and provides insight into each user's opinions and
desires based on the user's search activity. Many users of the Internet often
conduct searches using a natural language search method, which allows users to
conduct searches by simply typing certain keywords not conjoined by connectors
such as ampersand, etc. The Software is designed to enhance the natural language
search method by allowing users to navigate through websites more efficiently in
order to locate the desired information. For example, if a user, while
navigating within a website that sells cables requests to search for a "cable to
connect a keyboard to a laptop", the software will display the appropriate
cable, as opposed to the same question asked in using a common search engine
which will result in for example, a "keyboard for a laptop".
The Software is also intended to provide WWAP's customers with the ability
to compile a database of information relating to products that the customer's
users may look for but which are not provided by the customer. This information
will allow the customer to better evaluate what products or services to provide
to its users. For example, some merchants can only measure what was actually
ordered on its website but are unable to know what may have been requested but
not offered on the website. If a customer does not provide a certain product, by
utilizing the Software it can determine that users are unsuccessfully searching
for a particular product, and therefore the customer can better determine that
the product is in demand by its users and may provide the product.
The advantage of the Software is that users of WWAP's customer's websites
and kiosks can more easily find the requested information as opposed to search
engines that cannot respond to context related questions. WWAP's application
specific natural language engines are capable of understanding the nuances of
the language and the specific request. Since the Software will facilitate a
user's search process, it may limit the need for call-based customer service
centers which require an additional work force to service calls from customers
and which results in additional costs to the particular client.
WWAP, through ActivePoint, began commercial sales of its Software in
October 2004. ActivePoint generated limited revenues commencing in 2002 from
testing the software for potential customers.
WWAP'S MISSION
Increase the service level and productivity of our customers by improving
the customer experience management ("CEM") as a result of the implementation of
the Software.
Provide our Internet, Kiosks and CRM customers with enhanced, real-time,
natural language based information reports that are reflective of the needs and
requests of their users;
Produce our products at the highest possible quality and technical
sophistication;
Provide the best possible service for our customers so that users of the
customer are not burdened by having to use customer service call centers to find
what they are looking for; and
Provide a system that is highly advanced in several dimensions including
technical, application and business.
PRODUCT AND SERVICES
The Assistant For You ("TA4U") system encourages users to interact with it
as they have the ability to either "converse" with the system by telling it
their needs in natural language or by answering guided system questions. The
TA4U, like a trained representative, tries to find the product or service to
best match each request during the user's search. The TA4U system is designed to
give customers greater flexibility than other search engine systems which
require the customer to be more specific in their requests and cannot be context
related.
The TA4U system also provides marketing information that generates
tailored reports showing users' requests even if goods were not purchased. This
reporting enables our customers to better understand the general requests asked
by their users.
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MARKETING AND SALES STRATEGY
Our marketing and sales strategy emphasizes sales to companies that offer
various software products to operators of websites and internet service
providers and companies which offer their products and services through the
Internet. Our objective is to have such companies include our Software in their
product offerings Sales will be directed through sales staff in both North
America and Europe.
REASONS FOR FURNISHING THIS DOCUMENT
Mobilepro sent you this document because you were an owner of Mobilepro
common stock on the record date. This entitles you to receive a distribution of
shares of Common Stock of WWAP, based on the pro-rata amount of shares you owned
on that date. No action is required on your part to participate in the
Distribution and you do not have to pay cash or other consideration to receive
your WWAP Shares.
This document describes WWAP's business, the relationship between
Mobilepro and WWAP, and how this transaction benefits Mobilepro and its
stockholders, and provides other information to assist you in evaluating the
benefits and risks of holding or disposing of the WWAP Shares that you will
receive in the Distribution. You should be aware of certain risks relating to
the Distribution and WWAP's businesses, which are described in this document
beginning on page 7. This document is being furnished solely to provide
information to Mobilepro stockholders who will receive WWAP Shares in the
Distribution. It is not, and is not to be construed as, an inducement or
encouragement to buy or sell any securities of Mobilepro or WWAP. Neither
Mobilepro nor WWAP will update the information contained in this document except
in the normal course of their respective public disclosure practices. However,
this document will be amended if there is any material change in the terms of
the Distribution.
SUMMARY OF THE DISTRIBUTION
DISTRIBUTING COMPANY
Mobilepro, Inc., a Delaware corporation.
DISTRIBUTED COMPANY
WWAP, Inc., a Delaware corporation. As used in this
prospectus, the term WWAP, we, our, us, and similar
terms means WWAP, Inc., as of the relevant date, unless
the context otherwise requires.
WWAP SHARES TO BE
DISTRIBUTED
Mobilepro will distribute to Mobilepro stockholders an
aggregate of 1,174,993 shares of Common Stock, par value
$.01 per share, of WWAP.
RECORD DATE
If you own Mobilepro shares at the close of business on
_________, 2005 (the Record Date), then you will receive
WWAP Shares in the Distribution. The Record Date will be
a date shortly after the registration statement, of
which this prospectus is a part, is declared effective
by the SEC.
DISTRIBUTION DATE
We currently anticipate that the Distribution will occur
near the effective date of the registration statement.
If you are a record holder of Mobilepro stock, instead
of physical stock certificates you will receive from
WWAP's transfer agent shortly after the effective date
of the registration statement a statement of your book
entry account for the WWAP shares distributed to you. If
you are not a record holder of Mobilepro stock because
such shares are held on your behalf by your stockbroker
or other nominee, your WWAP Shares should be credited to
your account with your stockbroker or other nominee
after the effective date of the registration statement.
Following the Distribution, you may request physical
stock certificates if you wish, and instructions for
making that request will be furnished with your account
statement.
DISTRIBUTION
On the Distribution Date, the distribution agent
identified below will begin distributing certificates
representing our Common Stock to Mobilepro stockholders.
You will not be required to make any payment or take any
other action to receive
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your shares of our Common Stock. The distributed shares
of our Common Stock will be freely transferable unless
you are one of our affiliates or you are issued shares
in respect of restricted shares of Mobilepro common
stock.
DISTRIBUTION RATIO
Mobilepro will distribute to Mobilepro stockholders an
aggregate of 1,174,993 shares of Common Stock of WWAP
pro-rata to the shareholders of Mobilepro, based
pro-rata on each shareholder's ownership of Mobilepro on
the Record Date.
DISTRIBUTION AGENT Liberty Transfer Co.
274B New York Avenue
Huntington, New York 11743
TRANSFER AGENT AND REGISTRAR Liberty Transfer Co.
FOR THE WWAP SHARES 274B New York Avenue
Huntington, New York 11743
FRACTIONAL SHARES OF OUR
COMMON STOCK
Mobilepro will not distribute any fractional shares of
WWAP Common Stock. In lieu of distributing a fraction of
a share of our Common Stock to any Mobilepro
stockholder, fractional shares will be rounded up to the
next higher whole number of shares.
TRADING MARKET
We anticipate that our Common Stock will be traded on
the Over The Counter Bulletin Board under the proposed
symbol WWAP. We expect that a market maker will apply
for quotation on the Over the Counter Bulletin Board on
our behalf prior to the Distribution. No public trading
market for our Common Stock currently exists. However, a
trading market for the entitlement to receive shares of
our Common Stock in the distribution, referred to as a
when-issued market, may develop on or after the record
date for the distribution.
DIVIDEND POLICY
Mobilepro has not paid dividends in the past, and we
anticipate that following the Distribution, neither WWAP
nor Mobilepro will pay cash dividends. However, no
formal action has been taken with respect to future
dividends, and the declaration and payment of dividends
by WWAP and Mobilepro will be at the sole discretion of
their respective boards of directors.
RISK FACTORS
The distribution and ownership of our Common Stock
involve various risks. You should read carefully the
factors discussed under Risk Factors beginning on page
7. Several of the most significant risks of the
Distribution include:
o The Distribution may cause the trading price of
Mobilepro Common Stock to decline.
o Substantial sales of WWAP Shares may have an
adverse impact on the trading price of the WWAP
Common Stock.
o There has not been a prior trading market for WWAP
Shares and a trading market for the WWAP Shares
may not develop.
o The Distribution of WWAP Shares may result in
substantial tax liability.
FEDERAL INCOME TAX
CONSEQUENCES
Mobilepro and WWAP do not intend for the Distribution to
be tax-free for U.S. federal income tax purposes. You
may be required to pay income tax on the value of your
shares of WWAP Common Stock received as a dividend. We
expect that the dividend will be taxed as ordinary
income to the extent of the value of the shares you
receive. You are advised to consult your own tax advisor
as to the specific tax consequences of the Distribution.
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OUR RELATIONSHIP WITH MOBILEPRO
AFTER THE DISTRIBUTION
Prior to the Distribution, Mobilepro and WWAP entered
into a Business Development Agreement dated as of August
26, 2004 whereby Mobilepro is obligated to provide WWAP
with certain services to enhance the business of WWAP.
As compensation for the services, WWAP issued Mobilepro
1,436,103 shares or 5.5% of its issued and outstanding
common stock on a fully diluted based. Under the terms
of the Business Development Agreement, Mobilepro is
required to complete the Distribution. Upon completion
of the Distribution, Mobilepro will retain 261,110
shares of WWAP's issued and outstanding common stock.
Mobilepro's affiliate, Lighthouse Advisors, Inc.
("Lighthouse"), also entered into a Business Development
Agreement with WWAP and as compensation for this
agreement, was issued 522,219 shares of WWAP common
stock or 2% of its issued and outstanding common stock
on a fully diluted basis. Thus, upon completion of the
Distribution, Mobilepro, through Lighthouse, will own an
aggregate of 783,329 shares of WWAP's common stock which
will represent 3% of its issued and outstanding common
stock on a fully diluted basis. Upon completion of the
Distribution, Mobilepro and Lighthouse will continue to
provide the services contemplated in the Business
Development Agreement.
STOCKHOLDER INQUIRIES
Any persons having inquiries relating to the
distribution should contact the Shareholder Service
department of the distribution agent at (631) 385-1616
or Mobilepro at (301) 315-9040.
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
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For the nine months For the nine months For the year ended
ended September 30, 2004 ended September 30, 2003 December 31, 2003
------------------------ ------------------------ -----------------
Statement of Operation Data: $ $ $
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Sales -- 22,873 31,590
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Cost of sales -- -- --
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Gross profit -- 22,873 31,590
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Selling, general, and
administrative expenses 332,548 352,183 499,018
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Loss from operations 332,548 329,310 467,428
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Net Loss 333,692 331,553 469,575
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September 30, 2004 September 30, 2003 December 31, 2003
------------------ ------------------ -----------------
Balance Sheet Data:
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Assets 28,422 84,935 37,921
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Liabilities 478,153 355,929 396,937
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Stockholders' equity (deficiency) (449,731) (270,994) (359,016)
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6
RISK FACTORS
You should carefully consider each of the following risk factors and all
of the other information in this information statement. The following risks
relate principally to the Distribution and WWAP's business.
If any of the following risks and uncertainties develops into actual
events, the business, financial condition or results of operations of WWAP could
be materially adversely affected. If that happens, the trading prices of WWAP
shares could decline significantly.
The risk factors below contain forward-looking statements regarding the
Distribution and WWAP. Actual results could differ materially from those set
forth in the forward-looking statements. See Cautionary Statement Regarding
Forward-Looking Statements below.
RISKS RELATED TO OUR BUSINESS
WWAP WILL FACE MANY OF THE DIFFICULTIES THAT COMPANIES IN THE EARLY STAGE MAY
FACE.
As a result of WWAP's limited operating history, you may have difficulty
assessing our growth and earnings potential. We have faced many of the
difficulties that companies in the early stages of their development in new and
evolving markets often face. These have included, among others:
o Substantial delays and expenses related to testing and development of our
new products,
o Marketing and distribution problems encountered in connection with our new
and existing products and technologies,
o Competition from larger and more established companies,
o Delays in reaching our marketing goals,
o Difficulty recruiting qualified employees for management and other
positions;
o Lack of sufficient customers, revenues and cash flow;
o Limited financial resources;
We may continue to face these and other difficulties in the future, some
of which may be beyond our control. If we are unable to successfully address
these problems, our future growth and earnings will be negatively affected.
CONTROL BY EXISTING STOCKHOLDERS
Topschutter Holdings B.V. ("Topschutter") (27.94%), Michel Harvey ("Harvey")
(40.69%) and Moshe Ofer ("Ofer") (19.15%) beneficially own an aggregate of
approximately 87% of the outstanding shares of the WWAP's capital stock.
Although none of these stockholders have formal voting agreements to vote their
shares, a combination of either Topschutter and Harvey or Harvey and Ofer can
exercise control over matters requiring shareholder approval, including the
election of directors, and the approval of mergers, consolidations and sales of
all or substantially all of the assets of the Company. This may prevent or
discourage tender offers of the Company's capital stock unless the terms are
approved by these shareholders.
WE HAVE A NEED FOR ADDITIONAL FINANCING, GOING CONCERN OPINION.
We have not had a sufficient source of working capital and will have a
need additional financing to operate in the future. The report of our
independent accountants that accompanies our audited financial statements states
that as a result of WWAP's limited revenues and retained deficit raise
substantial doubt about the Company's ability to continue as a going concern.
Furthermore, there can be no assurance that we can get additional financing
based on the financing transactions with Cornell Capital Partners, L.P. as such
financing depends on the price of our stock and certain other limitations
imposed by the terms of these transactions, including Cornell's inability to
invest in WWAP if such investment would result in Cornell owning more than 9.9%
of our common stock.
WE MAY HAVE DIFFICULTY EVALUATING OUR PROSPECTS BECAUSE WE ARE IN THE
DEVELOPMENTAL STAGE AND HAVE A LIMITED OPERATING HISTORY FOR INVESTORS TO
ANALYZE
WWAP obtained its first customer in October 2004. We have only fairly
recently begun development of our business and the services we intend to offer.
WWAP has a limited history of revenue or financial results upon which investors
may base an assessment of its potential. There can be no assurance that WWAP's
proposed operations will be successful or that it will succeed in meeting its
stated business objectives.
WWAP HAS NO OPERATING HISTORY AS A PUBLIC COMPANY AND MAY BE UNABLE TO OPERATE
PROFITABLY.
WWAP does not have an operating history as a public company. WWAP may not
be able to successfully put in place the financial, administrative and
managerial structure necessary to operate as a public company, and the
development of such structure will not require a significant amount of
management's time and other resources.
WWAP's OPERATIONS DEMONSTRATE A HISTORY OF NET LOSSES AND A NEED FOR CONTINUED
ADDITIONAL FINANCING.
WWAP's operations (including those of ActivePoint), has incurred recurring
operating losses and has a working capital deficiency and a need for additional
financing. WWAP received a report from its independent auditors for their fiscal
year ended December 31, 2003 containing an explanatory paragraph that describes
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substantial doubt about it's ability to continue as an ongoing concern.
Additionally, management anticipates that WWAP will continue to incur
significant operating costs and losses in connection with the development of its
product and that it has not yet generated any significant revenues from its
operations and is, therefore, dependent on outside financing and the continuing
support of its investors.
Any inability to raise capital may require us to reduce the level of our
operations. Such actions would have a material adverse effect on our business
and operations and result in charges that could be material to our business and
results of operations.
WWAP'S FUTURE REVENUE AND OPERATING RESULTS ARE UNPREDICTABLE AND MAY FLUCTUATE
Our short operating history and the rapidly changing nature of the market
in which we compete make it difficult to accurately forecast our revenues and
operating results. Our operating results are unpredictable and we expect them to
fluctuate in the future due to a number of factors. These factors may include,
among others:
o the timing of sales of our products and services
o difficulty in keeping current with changing technologies,
o unexpected delays in introducing new products, new product features and
services,
o increased expenses, whether related to sales and marketing, product
development or administration,
o deferral of recognition of our revenue in accordance with applicable
accounting principles due to the time required to complete projects,
o the mix of product license and services revenue,
o costs related to possible acquisitions of technology or businesses.
IF WWAP LOSES THE SERVICES OF ANY KEY PERSONNEL, INCLUDING ITS PRESIDENT OR OUR
DIRECTORS, OUR BUSINESS MAY SUFFER
We are dependent on our key officers, directors and employees, especially
Moshe Ofer, our President and Treasurer and a member of our board of directors.
The loss of any of our key personnel could materially harm our business because
of the cost and time necessary to retain and train a replacement. Such a loss
would also divert management attention away from operational issues.
Furthermore, although most of ActivePoint's employees are subject to employment
agreements containing non-competition agreements, Moshe Ofer, the President and
CEO of WWAP and ActivePoint, is not subject to such an agreement. As a result,
Mr. Ofer could cease working for WWAP and work with WWAP's competitors.
Furthermore, there can be no assurances that the non-competition agreements are
enforceable.
WWAP'S INDUSTRY IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND FAILURE TO
ADAPT OUR PRODUCT DEVELOPMENT TO THESE CHANGES MAY CAUSE OUR PRODUCTS TO BECOME
OBSOLETE
We participate in a highly dynamic industry characterized by rapid change
and uncertainty relating to new and emerging technologies and markets. Future
technology or market changes may cause some of our products and services to
become obsolete more quickly than expected.
WWAP STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION IF FUTURE EQUITY OFFERINGS
ARE USED TO FUND OPERATIONS
If WWAP obtains working capital by issuing equity securities, such as
through the Equity Line of Credit with Cornell Capital Partners, LP (see Certain
Relationships and Related Transactions beginning on page 27), WWAP stockholders
could experience significant dilution. In addition, securities issued in
connection with future financing activities may have rights and preferences
senior to the rights and preferences of the WWAP Shares. Further, the conversion
of outstanding debt obligations into equity securities could have a dilutive
effect on WWAP shareholders.
THE TREND TOWARD CONSOLIDATION IN WWAP'S INDUSTRY MAY IMPEDE ITS ABILITY TO
COMPETE EFFECTIVELY
As consolidation in the software industry continues, fewer companies
dominate particular markets, changing the nature of the market and potentially
providing consumers with fewer choices. Also, many of these companies offer a
broader range of products than us, ranging from desktop to enterprise solutions.
We may not be able to compete effectively against these competitors.
Furthermore, we may seek strategic acquisitions, as necessary, to acquire
technology, people and products for our overall product strategy. The trend
toward consolidation in our industry may result in increased competition in
acquiring these technologies, people or products, resulting in increased
acquisition costs or the inability to acquire the desired technologies, people
or products. Any of these changes may have a significant adverse effect on our
future revenues and operating results.
WWAP FACES INTENSE PRICE-BASED COMPETITION FOR LICENSING OF ITS PRODUCTS WHICH
COULD REDUCE PROFIT MARGINS
Price competition is often intense in the software market. Price
competition may continue to increase and become even more significant in the
future, resulting in reduced profit margins.
OUR ABILITY TO OFFER TO OPERATE OUR SOFTWARE MAY BE AFFECTED BY A VARIETY OF
U.S. AND FOREIGN LAWS.
WWAP is subject to various laws and governmental regulations relating to
its business operations. There are few laws or regulations directly applicable
to commercial activities over the Internet. However, due to increasing
popularity and use of the Internet, laws and regulations may be adopted with
respect thereto. These laws and regulations may cover issues such as user
privacy, liability for information retrieved from or
8
transmitted over the Internet, online content regulation, user privacy, taxation
and domain name registration. Moreover, the applicability to the Internet of
existing laws governing issues such as intellectual property ownership and
infringement, copyright, patent, trademark, trade secret and personal privacy is
uncertain and developing. Any new legislation or regulation or the application
of existing laws and regulations to the Internet could have a material and
adverse effect on the Company's business.
WWAP MAY BE UNSUCCESSFUL IN DEVELOPING NEW DISTRIBUTION CHANNELS
We may not be able to effectively develop our own network of salespeople
and resellers to distribute our software products. We may also be unsuccessful
in utilizing rapidly evolving distribution and marketing technologies to develop
these distribution channels. The adoption of new channels may adversely impact
existing channels and/or product pricing, which may reduce our future revenues
and profitability.
IF WWAP MUST RESTRUCTURE ITS OPERATIONS VALUABLE RESOURCES WILL BE DIVERTED FROM
OTHER BUSINESS OBJECTIVES
We continually evaluate our product and corporate strategy. We have in the
past undertaken, and will in the future undertake, organizational changes and/or
product and marketing strategy modifications. These organizational changes
increase the risk that objectives will not be met due to the allocation of
valuable limited resources to implement changes. Further, due to the uncertain
nature of any of these undertakings, these efforts may not be successful and we
may not realize any benefit from these efforts.
POTENTIAL SOFTWARE DEFECTS AND PRODUCT LIABILITY COULD RESULT IN DELAYS IN
MARKET ACCEPTANCE, UNEXPECTED COSTS AND DIMINISHED OPERATING RESULTS
Software products frequently contain errors or defects, especially when
first introduced or when new versions or enhancements are released. Defects and
errors could be found in current versions of our products, future upgrades to
current products or newly developed and released products. Software defects
could result in delays in market acceptance or unexpected reprogramming costs,
which could materially adversely affect our operating results. Most of our
license agreements with customers contain provisions designed to limit our
exposure to potential product liability claims. It is possible, however, that
these provisions limiting our liability may not be valid as a result of federal,
state, local or foreign laws or ordinances or unfavorable judicial decisions. A
successful product liability claim may have a material adverse effect on our
business, operating results and financial condition.
WWAP RELIES ON THIRD PARTY TECHNOLOGIES WHICH MAY NOT SUPPORT WWAP PRODUCTS
Our software products are designed to run on the Microsoft(R) Windows(R)
operating system and with industry standard hardware. Although we believe that
the operating systems and necessary hardware are and will be widely utilized by
businesses in the corporate market, businesses may not actually adopt such
technologies as anticipated or may in the future migrate to other computing
technologies that we do not support. Moreover, if our products and technology
are not compatible with new developments from industry leaders such as
Microsoft, our business, results of operations and financial condition could be
materially and adversely affected.
WWAP FACES COMPETITION AND WWAP WILL BE HARMED IF WWAP FAILS TO COMPETE
EFFECTIVELY
We encounter competition from other competitors in the area of our
business. Many of our current and potential competitors have longer operating
histories, greater name recognition and substantially greater financial,
technical and marketing resources than we have. We may not be able to compete
effectively with these competitors. To remain competitive, we must develop new
products and periodically enhance our existing products in a timely manner. We
anticipate that we may have to adjust the prices of many of our products to stay
competitive. In addition, new competitors may emerge, and entire product lines
may be threatened by new technologies or market trends that reduce the value of
these product lines. The market in which we compete is influenced by the
strategic direction of major computer hardware manufacturers and operating
system software providers. Our competitiveness depends on our ability to enhance
existing products and to offer successful new products on a timely basis. We
have limited resources and must restrict software development efforts to a
relatively small number of projects.
QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS WHICH COULD
CAUSE WWAP'S STOCK PRICE TO DECLINE
We expect that we will be subject to substantial fluctuations in quarterly
net revenues and operating results. Fluctuations may be caused by a number of
factors including, but not limited to, the following:
o the timing and volume of customers;
o the timing and amount of our expenses;
o the introduction of competitive products by existing or new competitors;
and
o reduced demand for any given product
Due to these factors, forecasts may not be achieved, either because
expected revenues do not occur or because they occur at lower prices or on terms
that are less favorable to us. In addition, these factors increase the chances
that our results could diverge from the expectations of investors and analysts.
If so, the market price of our stock would likely decline.
9
WWAP, THROUGH ACTIVEPOINT, RELIES ON INTELLECTUAL PROPERTY AND PROPRIETARY
RIGHTS WHICH MAY NOT REMAIN UNIQUE TO WWAP
We regard our software as proprietary and underlying technology as
proprietary. We seek to protect our proprietary rights through a combination of
confidentiality agreements and copyright, patent, trademark and trade secret
laws. ActivePoint has three patents that have been awarded protection, and a
fourth whose patent application is pending. All of these patents and proposed
patents are based in the United States and a patent application on our key
patent has been filed in the European Union.
We have patents and statutory copyrights on our proprietary technology
that we believe to be material to our future success. Our patents, however, may
be successfully challenged and may not provide us with any competitive
advantages. We may also not develop future proprietary products or technologies
that are patentable and other parties may have prior claims.
Patent, trademark and trade secret protection is important to us because
developing and marketing new technologies and products is time-consuming and
expensive. We may not obtain issued patents or other protection from any future
patent applications owned by or licensed to us.
Our competitive position is also dependent upon un-patented trade secrets.
Trade secrets are difficult to protect. Our competitors may independently
develop proprietary information and techniques that are substantially equivalent
to ours or otherwise gain access to our trade secrets, such as through
unauthorized or inadvertent disclosure of our trade secrets.
Our means of protecting our proprietary rights may not be adequate and our
competitors may independently develop similar technology substantially
equivalent or superseding proprietary technology. Furthermore, any
confidentiality agreements between us and our employees may not provide
meaningful protection of our proprietary information, in the event of any
unauthorized use or disclosure thereof. As a consequence, any legal action that
we may bring to protect proprietary information could be expensive and may
distract management from day-to-day operations.
WWAP MAY BECOME INVOLVED IN FUTURE LITIGATION, WHICH MAY RESULT IN SUBSTANTIAL
EXPENSE AND MAY DIVERT OUR ATTENTION FROM THE IMPLEMENTATION OF OUR BUSINESS
STRATEGY
We believe that the success of our business depends, in part, on obtaining
intellectual property protection for our products, defending our intellectual
property once obtained and preserving our trade secrets. Litigation may be
necessary to enforce our intellectual property rights, to protect our trade
secrets and to determine the validity and scope of our proprietary rights. Any
litigation could result in substantial expense and diversion of our attention
from our business, and may not adequately protect our intellectual property
rights.
In addition, we may be sued by third parties which claim that our products
infringe the intellectual property rights of others. This risk is exacerbated by
the fact that the validity and breadth of claims covered in technology patents
involve complex legal and factual questions for which important legal principles
are unresolved. Any litigation or claims against us, whether valid or not, could
result in substantial costs, place a significant strain on our financial
resources, divert management resources and harm our reputation. Such claims
could result in awards of substantial damages, which could have a significant
adverse impact on our results of operations. In addition, intellectual property
litigation or claims could force us to the following:
o cease licensing, incorporating or using any of our products that
incorporate the challenged intellectual property, which would adversely
effect our revenue;
o obtain a license from the holder of the infringed intellectual property
right, which license may not be available on reasonable terms, if at all;
and
o redesign our products, which would be costly and time-consuming.
IF WE DO NOT CONTINUE TO INNOVATE AND PROVIDE PRODUCTS AND SERVICES THAT ARE
USEFUL TO USERS, WE MAY NOT REMAIN COMPETITIVE, AND OUR REVENUES AND OPERATING
RESULTS COULD SUFFER.
Our success depends on providing products and services that people use for
a high quality Internet experience. Our competitors are constantly developing
innovations in web search, online advertising and providing information to
people. As a result, we must continue to invest significant resources in
research and development in order to enhance our web search technology and our
existing products and services and introduce new high-quality products and
services that people will use. If we are unable to predict user preferences or
industry changes, or if we are unable to modify our products and services on a
timely basis, we may lose users. Our operating results would also suffer if our
innovations are not responsive to the needs of our users are not appropriately
timed with market opportunity or are not effectively brought to market. We
consider ourselves to be context orientated Natural Language software. However,
given that there are those that compare this to search technology, as search
technology continues to develop, our competitors may be able to offer search
results that are, or that are perceived to be, substantially similar or better
than those generated by our services. This may force us to compete on bases in
addition to quality of search results and to expend significant resources in
order to remain competitive.
10
If we fail to maintain an effective system of internal controls, we may
not be able to accurately report our financial results or prevent fraud. As a
result, current and potential stockholders could lose confidence in our
financial reporting, which would harm our business and the trading price of our
stock.
Effective internal controls are necessary for us to provide reliable
financial reports and effectively prevent fraud. If we cannot provide reliable
financial reports or prevent fraud, our brand and operating results could be
harmed. In the future we may discover areas of our internal controls that need
improvement.
SYSTEM FAILURES COULD HARM OUR BUSINESS.
Our customers are vulnerable to damage or interruption from earthquakes,
terrorist attacks, floods, fires, power loss, computer viruses, Internet
failures, computer denial of service attacks or other attempts to harm our
system, and similar events. Any damage to or failure of the systems of our
clients could result in interruptions in our service. Interruptions in our
service could reduce our revenues and profits, and our brand could be damaged if
people believe our system is unreliable.
MORE INDIVIDUALS ARE USING NON-PC DEVICES TO ACCESS THE INTERNET, AND VERSIONS
OF OUR WEB SEARCH TECHNOLOGY DEVELOPED FOR THESE DEVICES MAY NOT BE WIDELY
ADOPTED BY USERS OF THESE DEVICES.
The number of people who access the Internet through devices other than
personal computers, including mobile telephones, hand-held calendaring and email
assistants, and television set-top devices, has increased dramatically in the
past few years. The lower resolution, functionality and memory associated with
alternative devices make the use of our products and services through such
devices difficult. If we are unable to attract and retain a substantial number
of alternative device users to our web search services or if we are slow to
develop products and technologies that are more compatible with non-PC
communications devices, we will fail to capture a significant share of an
increasingly important portion of the market for online services.
RISKS RELATING TO THE DISTRIBUTION
THE DISTRIBUTION OF WWAP SHARES MAY RESULT IN SUBSTANTIAL TAX LIABILITY
You may be required to pay income tax on the value of your shares of WWAP
Common Stock received as a dividend. The dividend will be taxed as ordinary
income to the extent of the value of the shares you receive. In addition, you
may have to pay taxes on any shares that you receive as a result of the rounding
up of fractional shares. You are advised to consult your own tax advisor as to
the specific tax consequences of the Distribution.
THE DISTRIBUTION MAY CAUSE THE TRADING PRICE OF MOBILEPRO COMMON STOCK TO
DECLINE
Following the Distribution, Mobilepro expects that its common stock will
continue to be listed and traded on the Over The Counter Bulletin Board under
the symbol MOBL.OB. A trading market may not develop for the WWAP Shares. As a
result of the Distribution, the trading price of Mobilepro common stock
immediately following the Distribution may be lower than the trading price of
Mobilepro common stock immediately prior to the Distribution.
Further, the combined trading prices of Mobilepro common stock and the
WWAP Shares after the Distribution may be less than the trading price of
Mobilepro common stock immediately prior to the Distribution.
SUBSTANTIAL SALES OF WWAP SHARES MAY HAVE AN ADVERSE IMPACT ON THE TRADING PRICE
OF THE WWAP COMMON STOCK
Based on the number of shares of Mobilepro common stock anticipated to be
outstanding on the record date, Mobilepro will distribute to Mobilepro
stockholders a total of approximately 1,174,993 WWAP shares. Under the United
States federal securities laws, substantially all of these shares may be resold
immediately in the public market, except for (1) WWAP Shares held by affiliates
of WWAP or (2) shares which are issued in respect of restricted shares of
Mobilepro common stock. WWAP cannot predict whether stockholders will resell
large numbers of WWAP Shares in the public market following the Distribution or
how quickly they may resell these WWAP Shares. In addition, WWAP anticipates
issuing significant numbers of shares of Common Stock to Cornell Capital
Partners, L.P. under the terms of two convertible debentures in the aggregate
principal amount of $465,000 and a standby equity distribution agreement for a
maximum of $10,000,000, which shares we will be required to register under the
United States federal securities laws. If WWAP stockholders sell large numbers
of WWAP Shares over a short period of time, or if investors anticipate large
sales of WWAP Shares over a short period of time, this could adversely affect
the trading price of the WWAP Shares.
THERE HAS NOT BEEN ANY PRIOR TRADING MARKET FOR THE WWAP SHARES AND A TRADING
MARKET FOR THE WWAP SHARES MAY NOT DEVELOP
There is no current trading market for the WWAP Shares, although a
when-issued trading market may develop prior to completion of the Distribution.
We anticipate that the WWAP Shares will be listed on the Over The Counter
Bulletin Board under the proposed symbol WWAP.
WWAP Shares may not be actively traded or the prices at which the WWAP
Shares will trade may be low. Until the WWAP Shares are fully distributed and an
orderly market develops, the prices at which the WWAP Shares trade may fluctuate
significantly and may be lower than the price that would be expected for a fully
distributed
11
issue. Prices for WWAP Shares will be determined in the marketplace and may be
influenced by many factors, including the depth and liquidity of the market for
the shares, WWAP's results of operations, what investors think of WWAP and
general economic and market conditions. Market fluctuations could have a
material adverse impact on the trading price of the WWAP Shares.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Information included in this prospectus may contain forward-looking
statements. This information may involve known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or
achievements to be materially different from the future results, performance or
achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe our future
plans, strategies and expectations, are generally identifiable by use of the
words "may," "will," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project" or the negative of these words or other variations on
these words or comparable terminology.
This prospectus contains forward-looking statements, including statements
regarding, among other things, (a) our projected sales and profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our future
financing plans, and (e) our anticipated needs for working capital. These
statements may be found under "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" and "Our Business," as well as in this
prospectus generally. Actual events or results may differ materially from those
discussed in forward-looking statements as a result of various factors,
including, without limitation, the risks outlined under "Risk Factors" and
matters described in this prospectus generally. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this prospectus will in fact occur.
USE OF PROCEEDS
Mobilepro will receive no proceeds from the distribution of securities in
this Distribution, however, may receive proceeds from the sale of the 261,110
shares after the Distribution.
SELLING STOCKHOLDER
This prospectus also relates to the resale of 261,110 shares of WWAP
common stock not being distributed by the selling stockholder, Mobilepro.
The following table provides certain information concerning the resale of
shares of common stock by the selling stockholder and assumes that all shares
offered by the selling stockholder will be sold. WWAP will not receive any
proceeds from the resale of the common stock by the selling stockholders.
Common Stock
----------------------------------------------
Beneficially Number Beneficially
Owned Before Offering Owned After Offering
----------------------- --------------------
Selling Stockholder Number % Number %
- ------------------- ------ - ------ --
Mobilepro, Inc 1,436,103 5.5% 783,329 (1) 3%
(1) Upon completion of the Distribution. Includes the 522,219 shares (2%) of
Common Stock held by Lighthouse not being registered pursuant to this offering.
The selling stockholder may from time to time offer any or all of its
shares in one or more of the following transactions (which may include block
transactions):
o in the over-the-counter market;
o in negotiated transactions other than in such markets;
o by pledge to secure debts and other obligations;
o in any combination of any of the above transactions.
The selling stockholder may sell its shares at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The selling stockholder may sell its
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals.
12
The selling stockholder may compensate broker-dealers in the form of
commissions, discounts or selling concessions. The broker-dealers may also
receive compensation from any purchaser of the shares for whom the
broker-dealers acts as agent or to whom it sells as a principal.
The selling stockholder may also resell all or a portion of its shares in
open market transactions in reliance on Rule 144 under the Securities Act, as
long as they meet the criteria and comply with the requirements of that rule.
The selling stockholder has advised WWAP that it has not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of its shares, and WWAP does not intend to
enter into any arrangement with any underwriter or coordinating broker-dealer
with respect to sales of the shares by the selling stockholder.
The selling stockholder and any broker-dealers that participate in the
distribution of their shares may be deemed to be "underwriters" within the
meaning of section 2(11) of the Securities Act. Any commissions received by such
broker-dealers and any profits realized on the resale of shares by them may be
considered underwriting discounts and commissions under the Securities Act. The
selling stockholder may agree to indemnify any agent, dealer or broker-dealer
that participates in sales of the shares against certain liabilities, including
liabilities arising under the Securities Act.
The selling shareholder will be required to comply with the prospectus
delivery requirements of the Securities Act and applicable provisions of and
regulations under the Exchange Act that may limit the timing of sales of shares.
WWAP is required to pay all costs, expenses and fees incident to the
registration of the shares, excluding fees and disbursements of counsel to the
selling stockholders, and the selling stockholders are required to pay any
brokerage commissions or similar selling expenses incurred by them in connection
with the sales of their shares.
As used in this prospectus, "selling stockholder" includes donees,
pledges, transferees or other successors-in-interest who are selling shares they
received after the date of this prospectus from a selling stockholder named in
this prospectus as a gift, pledge, partnership distribution or other
nonsale-related transfer.
Upon being notified by a selling stockholder that the selling stockholder
has entered into a material arrangement with a broker-dealer for the sale of the
selling stockholder's shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, we
will file a supplement to this prospectus, if required by Rule 424(b) under the
Securities Act, disclosing certain information about the arrangement and the
sale of the shares involved. In addition, upon being notified by a selling
stockholder that a donee, pledgee, transferee or other successor-in-interest
intends to sell more than 500 shares, we will file an appropriate supplement to
this prospectus.
THE DISTRIBUTION
INTRODUCTION
On [DATE TO BE INSERTED], 2004, Mobilepro's Board of Directors declared a
distribution payable to the holders of record of outstanding Mobilepro common
stock at the close of business on the Record Date. Mobilepro will distribute to
Mobilepro stockholders an aggregate of 1,174,993 WWAP Shares. Accordingly, the
Distribution be made pro-rata to Mobilepro shareholders on the Record Date. We
currently anticipate that the Distribution will be effected near the effective
date of the registration statement.
Mobilepro and Lighthouse, its affiliate, currently own 7.5% of the issued
and outstanding Common Stock of WWAP, on a fully diluted basis. As a result of
the Distribution, 4.5% of the issued and outstanding shares of Common Stock will
be distributed to Mobilepro stockholders. Immediately following the
effectiveness of this registration statement by the SEC, WWAP will be a public
company and upon completion of the Distribution, Mobilepro and its affiliate
Lighthouse will continue to own an aggregate of 3% of the WWAP capital stock on
a fully diluted basis. . The WWAP shares will be distributed by book entry.
Instead of stock certificates, each Mobilepro stockholder that is a record
holder of Mobilepro shares will receive a statement of such stockholder's book
entry account for the WWAP Shares distributed to such stockholder. Account
statements reflecting ownership of the WWAP Shares will be mailed shortly after
the Distribution Date. WWAP Shares should be credited to accounts with
stockbrokers, banks or nominees of Mobilepro stockholders that are not record
holders after the effective date of the distribution.
REASONS FOR THE DISTRIBUTION
The board of directors and management of Mobilepro believe that the
Distribution is in the best interests of Mobilepro and Mobilepro stockholders.
Mobilepro believes that the Distribution will enhance value for Mobilepro
stockholders and give WWAP the financial and operational flexibility to take
advantage of potential growth opportunities.
Mobilepro's board of directors and management believe that the
Distribution will enhance the ability of
13
each of WWAP and Mobilepro to focus on strategic initiatives and new business
opportunities.
MANNER OF EFFECTING THE DISTRIBUTION
The Distribution will be made pro-rata to the Mobilepro shareholders. An
aggregate of 1,174,993 WWAP Shares will be distributed to Mobilepro stockholders
regardless of the number of shares of Mobilepro common stock outstanding as of
the Record Date. Immediately following the Distribution, Mobilepro (and through
Lighthouse) will own 3% of the issued and outstanding WWAP Shares.
The WWAP Shares will be fully paid and non-assessable and the holders
thereof will not be entitled to preemptive rights. See Description of Securities
beginning on page 20.
Mobilepro will use a book entry system to distribute the WWAP Shares in
the Distribution. Following the Distribution, each record holder of Mobilepro
stock on the Record Date will receive from the Distribution Agent a statement of
the WWAP Shares credited to the stockholder's account. If you are not a record
holder of Mobilepro stock because your shares are held on your behalf by your
stockbroker or other nominee, your WWAP shares should be credited to your
account with your stockbroker or nominee after the effective date of the
registration statement. After the Distribution, stockholders may request stock
certificates from WWAP's transfer agent instead of participating in the book
entry system.
No fractional WWAP Shares will be issued. If you own a fractional share of
Mobilepro common stock as of the Record Date you will receive the next higher or
lower whole number of WWAP Shares in the Distribution
No Mobilepro stockholder will be required to pay any cash or other
consideration for the WWAP Shares received in the Distribution, or to surrender
or exchange Mobilepro shares in order to receive WWAP Shares. The Distribution
will not affect the number of, or the rights attaching to, outstanding Mobilepro
shares. No vote of Mobilepro stockholders is required or sought in connection
with the Distribution, and Mobilepro stockholders will have no appraisal rights
in connection with the Distribution.
In order to receive WWAP Shares in the Distribution, Mobilepro
stockholders must be stockholders at the close of business on the Record Date.
RESULTS OF THE DISTRIBUTION
Upon this registration statement being declared effective by the SEC, WWAP
will be a public company. Upon completion of the Distribution, WWAP expects to
have approximately 5,400 holders of record of WWAP Shares, and 26,110,970 WWAP
Shares outstanding, regardless of the number of stockholders of record and
outstanding Mobilepro shares as of the Record Date. The Distribution will not
affect the number of outstanding Mobilepro shares or any rights of Mobilepro
stockholders.
LISTING AND TRADING OF THE WWAP SHARES
Neither WWAP nor Mobilepro makes recommendations on the purchase,
retention or sale of shares of Mobilepro common stock or WWAP Shares. You should
consult with your own financial advisors, such as your stockbroker, bank or tax
advisor.
If you do decide to purchase or sell any Mobilepro or WWAP shares, you
should make sure your stockbroker, bank or other nominee understands whether you
want to purchase or sell Mobilepro common stock or WWAP Shares, or both. The
following information may be helpful in discussions with your stockbroker, bank
or other nominee.
There is not currently a public market for the WWAP Shares, although a
when-issued market may develop prior to completion of the Distribution.
When-issued trading refers to a transaction made conditionally because the
security has been authorized but is not yet issued or available. Even though
when-issued trading may develop, none of these trades would settle prior to the
effective date of the Distribution, and if the Distribution does not occur, all
when-issued trading will be null and void. On the first trading day following
the date of the Distribution, when-issued trading in respect of WWAP Shares will
end and regular-way trading will begin. Regular-way trading refers to trading
after a security has been issued and typically involves a transaction that
settles on the third full business day following the date of a transaction. We
anticipate that the WWAP Shares will trade on the Over the Counter Bulletin
Board under the proposed symbol WWAP.
The WWAP Shares distributed to Mobilepro stockholders will be freely
transferable, except for (1) WWAP Shares received by persons who may be deemed
to be affiliates of WWAP under the Securities Act of 1933, as amended (the
Securities Act), and (2) WWAP Shares received by persons who hold restricted
shares of Mobilepro common stock. Persons who may be deemed to be affiliates of
WWAP after the Distribution generally include individuals or entities that
control, are controlled by, or are under common control with WWAP and may
include certain directors, officers and significant stockholders of WWAP.
Persons who are affiliates of WWAP will be permitted to sell their WWAP Shares
only pursuant to an effective registration statement under the Securities Act or
an exemption from the registration requirements of the Securities Act, such as
the exemptions afforded by Section 4(1) of the Securities Act and the provisions
of Rule 144 thereunder.
There can be no assurance as to whether the WWAP Shares will be actively
traded or as to the prices at which the WWAP Shares will trade. Until the WWAP
Shares are fully distributed and an orderly market develops,
14
the prices at which the WWAP Shares trade may fluctuate significantly and may be
lower than the price that would be expected for a fully distributed issue.
Prices for WWAP Shares will be determined in the marketplace and may be
influenced by many factors, including the depth and liquidity of the market for
the shares, WWAP's results of operations, what investors think of WWAP and
general economic and market conditions.
Following the Distribution, Mobilepro expects that its common stock will
continue to be listed and traded on the Over The Counter Bulletin Board under
the symbol WWAP. As a result of the Distribution, the trading price of Mobilepro
common stock immediately following the Distribution may be lower than the
trading price of Mobilepro common stock immediately prior to the Distribution.
Even though Mobilepro is currently a publicly held company, there can be
no assurance as to whether an active trading market for Mobilepro common stock
will be maintained after the Distribution or as to the prices at which the
Mobilepro common stock will trade. Mobilepro stockholders may sell their
Mobilepro common stock following the Distribution. These and other factors may
delay or hinder the return to an orderly trading market in the Mobilepro common
stock following the Distribution. Whether an active trading market for Mobilepro
common stock will be maintained after the Distribution and the prices for
Mobilepro common stock will be determined in the marketplace and may be
influenced by many factors, including the depth and liquidity of the market for
the shares, Mobilepro's results of operations, what investors think of Mobilepro
and its industries, changes in economic conditions in its industries and general
economic and market conditions.
In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. Market fluctuations could have a material
adverse impact on the trading price of the WWAP Shares and/or Mobilepro common
stock.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
The following discussion summarizes the material U.S. federal income tax
consequences resulting from the Distribution. This discussion is based upon the
U.S. federal income tax laws and regulations now in effect and as currently
interpreted by courts or the Internal Revenue Service and does not take into
account possible changes in such tax laws or such interpretations, any of which
may be applied retroactively.
The following summary is for general information only and may not be
applicable to stockholders who received their shares of Mobilepro stock pursuant
to an employee benefit plan or who are not citizens or residents of the United
States or who are otherwise subject to special treatment under the Code. Each
stockholder's individual circumstances may affect the tax consequences of the
Distribution to such stockholder. In addition, no information is provided with
respect to tax consequences under any applicable foreign, state or local laws.
Consequently, each Mobilepro stockholder is advised to consult his own tax
advisor as to the specific tax consequences of the Distribution and the affect
of possible changes in tax laws.
This Distribution does not qualify as a tax-free distribution under
Section 355 of the Code. The corporate-level tax would be based upon the excess
of the fair market value of the WWAP Shares on the Distribution Date, over
Mobilepro's adjusted tax basis for such shares on such date. Each Mobilepro
stockholder who receives WWAP Shares in the Distribution would generally be
treated as receiving a taxable distribution in an amount equal to the fair
market value of such shares on the Distribution Date. Stockholders which are
corporations may be subject to additional special provisions dealing with
taxable distributions, such as the dividends received deduction and the
extraordinary dividend rules.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES OF THE
DISTRIBUTION TO YOU, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX
LAWS.
RELATIONSHIP BETWEEN MOBILEPRO AND WWAP FOLLOWING THE DISTRIBUTION
For purposes of governing certain of the ongoing relationships between
Mobilepro and WWAP after the Distribution and to provide for an orderly
transition to the status of two independent companies, Mobilepro and WWAP have
entered or will enter into the Administrative Services Agreement described in
this section.
Prior to the Distribution, WWAP entered into a business development
agreement with Mobilepro. This agreement will state that Mobilepro will provide
WWAP services in such areas as product and service development, customer growth
and other areas where WWAP may need transitional assistance and support. The
agreement will extend for an eighteen (18) month term and may be renewed on a
month-to-month basis, but may be terminated earlier upon thirty (30) days
notice. Upon completion of the Distribution, Mobilepro will still be obligated
to carry out it services pursuant to the business development agreement.
LEGAL PROCEEDINGS
ActivePoint is involved in litigation with Onn Tavor, ActivePoint's former
chief executive officer. In March 2004, Mr. Tavor filed a lawsuit in the
Regional Labor Court of Tel-Aviv against ActivePoint for damages in the amount
of approximately U.S. $225,000 alleging that ActivePoint owed him unpaid salary,
severance pay and social benefits. Mr. Tavor was granted a temporary attachment
over ActivePoint's bank accounts, real property and software programs, but not
over funds owed to ActivePoint from its customers. In June 2004, ActivePoint
filed a counter-claim against Mr. Tavor alleging negligence which resulted in a
loss of approximately U.S. $900,000.00. Subsequent settlement proposals between
Mr. Tavor and the Company were rejected by Mr. Tavor and
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in July 2004, the attachment was expanded to include ActivePoint's intellectual
property. On November 1, 2004, after further settlement proposals were rejected,
Mr. Tavor field a claim in the Tel Aviv District Court to liquidate ActivePoint
on the grounds that ActivePoint was insolvent and could not pay Mr. Tavor's
claim. ActivePoint is of the opinion that the filing of this motion was done
solely to put pressure on it to settle the litigation and that there is no merit
to the filing of this motion for a number of reasons. First, counsel to
ActivePoint in Israel believes that in ruling on a motion of this type, the
court must determine that the debt is indisputable however, based on the ongoing
litigation, the debt is still in dispute. Second, ActivePoint believes that Mr.
Tavor's claim, coupled with all other liabilities of ActivePoint, do not exceed
the value of its assets. Counsel to ActivePoint in Israel is of the opinion that
plaintiff's motion to liquidate has no legal basis. Although WWAP and
ActivePoint believe its defenses to both actions by Mr. Tavor are meritorious,
there can be no assurances as to the outcome of this lawsuit. Furthermore, an
adverse judgment or settlement may have a material adverse affect on ActivePoint
and WWAP.
WWAP'S MANAGEMENT
WWAP initially intends to have a board of directors that will consist of
two directors listed below is certain information concerning individuals who are
expected to serve as directors and executive officers of WWAP and ActivePoint
following the Distribution.
WWAP
NAME AGE POSITION
Ofer Moshe 52 President & Treasurer & Director
Stephen Dumbrell 57 Director
ACTIVEPOINT
NAME AGE POSITION
Ofer Moshe 52 CEO & Director
Stephen Dumbrell 57 Director
Vadim Shevchenko 40 Chief Architect & Project Manager
Evgeniy Zusmanov 42 Chief Scientist
Rhona Morris 40 Operations and Application Manager
Raz Zaibert 37 Design Expert
Alexey Pavlovitz 25 Internet Expert
Kristina Abramov 24 Application & Logic Programmer
Moshe Ofer. Mr. Ofer became President and Treasurer of WWAP in July 2004 and has
been CEO of Activepoint since November 2003. Mr. Ofer was appointed to the
Boards of Directors by Michel Harvey pursuant to the terms of the Stockholder's
Agreement (see "Certain Relationships and Related Transactions" Prior to joining
ActivePoint, Ofer was Manager of the Banking Division at Getronics Ltd from 2001
to 2004 and VP sales and Marketing at Deltasys from 1999 to 2001. Mr. Ofer is
the cousin of Mr. Harvey, WWAP's largest stockholder.
Stephen Dumbrell. Mr. Dumbrell was appointed to the Board of Directors of WWAP
in July 2004 and ActivePoint in December 2001. Mr. Dumbrell was appointed to the
Boards of Directors by Topschutter Holdings B.V. pursuant to the terms of the
Stockholder's Agreement (see "Certain Relationships and Related Transactions").
Heis employed full time by Pearlglobe Limited, a company which he formed in 1993
to provide management and business consultancy and project management services.
In this capacity, he is frequently required to serve on the Board of Directors
of client companies and/or their associates and is currently a director of a
number of European and United States based companies, all of which are privately
owned and registered in the UK. In addition to directorships arising from his
services provided by Pearlglobe Limited, Stephen is the owner and Managing
Director of Petersfield Instruments Limited, a UK company established in the
early 1980s to source and supply specialized electronic and other industrial
components. He is also Director of a small UK contracting company in which he
has an interest and which supplies contract labor to the electronics and
engineering sector.
Vadim Shevchenko, Chief Architect & Project Manager. Mr Shevchenko has 14 years
of experience in Internet and communication technologies as well as real time
programming. Mr. Shevchenko has been employed with ActivePoint since January
1998.
Dr. Evgeniy Zusmanov, Chief Scientist. Dr. Zuzmanov has 13 years of programming
experienceDr. Zusmanov has worked for ActivePoint since October 1998. Prior to
joining ActivePoint, Evgeniy worked as a Researcher for the
16
Institute of Semiconductor Physics at the Ukraine Academy of Sciences where he
was responsible for developing algorithms for the analysis and computer
simulation of magnetic resonance spectra.
Rhona Morris, Operations and Application Manager. Ms. Morris has over 14 years
experience in Business Development in Canada, the US and Israel. She has been
with ActivePoint since June 2000 and leads its customer knowledge analysis and
the linguistic application design.
Raz Zaibert, Design Expert. Mr. Zaibert is experienced with advanced web graphic
design and commercial design. Mr. Zaibert has been working with ActivePoint
since September 2000 and is part of the development team dealing with the fast
loading YourRep graphics. Prior to joining ActivePoint, he worked at Print
Express, a publishing house.
Alexey Pavlovitz, Internet Expert. Mr. Pavlovitz has been with ActivePoint since
February 2000 and has provided work and research in the areas of web protocols
and programming, as well as the latest browsers technology. Prior to this, he
worked at Daronnet, an Internet company.
Kristina Abramov, Application & Logic programmer. Ms. Abramov is the technical
liaison of the Application Department of ActivePoint. Kristina has been with
ActivePoint since April 2001. Prior to this, she worked at Liat Eden Advocates,
LLB as an information systems expert.
DIRECTOR'S COMPENSATION
Neither WWAP nor ActivePoint have paid any cash compensation to our
directors for their service on the Board of Directors; nor have either made any
commitments with respect to the payment of future cash compensation for such
services.
EXECUTIVE COMPENSATION
The following table and discussion sets forth information with respect to
all compensation earned by or paid by ActivePoint to our President and Chief
Executive Officer, Moshe Ofer, and our most highly compensated executive
officers other than the CEO, for all services rendered in all capacities to us
for each of the last two (2) fiscal years. No disclosure has been named for any
executive officer, other than Mr. Ofer, whose total annual salary and bonus does
not exceed $100,000.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
Other All
Annual Other
Compen- Restricted LTIP Compen-
Name and Principal Salary Bonus sation Stock Award(s) Options/ Payouts sation
Position Year ($) ($) ($) ($) SARs ($) ($)
Moshe Ofer, President/CEO 2001 -0-
2002 -0- -0- -0- -0- -0- -0- -0-
2003 $1,500 -0- -0- -0- -0- -0- -0-
Onn Tavor 2001 $42,147 -0- -0- -0- -0- -0- -0-
2002 $52,332
2003 -0- -0- -0- -0- -0- -0- $66,390
SALARY TO MR. OFER
The Board of Directors of WWAP has approved a salary to Mr. Ofer of
$125,000 per year, together with an annual bonus of up to $115,000 based on
WWAP's performance. Payment of the salary shall commence upon the first of the
following events to occur: (1) WWAP's registering the shares to be issued to
Cornell Capital Partners, L.P. pursuant to that certain Standby Equity
Distribution Agreement or (2) the sale of a majority of WWAP's capital stock or
substantially all of its assets for an aggregate purchase price of no less than
$5,000,000. In October 2004 Mr. Ofer also received 500,000 shares of common
stock. We have not obtained any key man life insurance on any of our executive
officers.
EMPLOYMENT AGREEMENTS
All employees of WWAP and ActivePoint, with the exception of Mr. Ofer,
have written employment agreements. These agreements provide that the employee
shall not, for a period of eighteen (18) months from the date of termination of
employment, will not engage in any other work or own any business that competes
with ActivePoint. The agreements further provide that the employees will not
cause any employee of ActivePoint to leave ActivePoint.
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2004 LONG-TERM EQUITY COMPENSATION PLAN
In November, 2004, our board of directors adopted and our shareholders
have approved a long-term incentive plan (the "2004 Long-Term Equity
Compensation Plan") in order to optimize our profitability and growth through
incentives which are consistent with our goals and which link the interests of
select employees, directors and consultants with those of our shareholders. We
believe the plan also promotes teamwork and provides employees, directors and
consultants with an incentive to strive for excellence.
The plan provides for the granting of non-qualified stock options,
incentive stock options (within the meaning of Section 422 of the Code), stock
appreciation rights ("SARs"), restricted stock and restricted stock unit awards,
performance shares and other cash or share-based awards. The maximum number of
shares of common stock that may be issued in connection with awards under the
plan is 2,000,000. In the event of any merger, reorganization, recapitalization,
stock split, stock dividend, or other change in corporate structure that affects
our common stock, an adjustment may be made to the (a) maximum number of shares
available for grants under the plan and/or kind of shares that may be delivered
under the plan, (b) the individual award limits under the plan and (c) number,
kind and/or price of shares subject to outstanding awards granted under the
plan, by the board of directors of WWAP, to prevent dilution or enlargement of
rights. Shares of stock covered by an award under the plan that is cancelled,
expired, forfeited or settled in cash will again be available for issuance in
connection with future grants of awards under the plan. As of the date of this
prospectus, no awards have been made under the plan.
Our board of directors has broad authority to administer the plan,
including the authority to determine when and to whom awards will be made,
determine the type and size of awards, determine the terms and conditions of
awards, construe and interpret the plan and award agreements, establish rates
and resolutions for the plan's administration, and amend outstanding awards.
Generally, the plan is open to directors, employees and consultants who are
selected by the board of directors.
STOCK OPTIONS. Options granted under the plan may be "incentive stock
options," as defined in Section 422 of the Code, or "nonqualified stock options"
which are stock options that do not qualify as incentive stock options. An
incentive stock option must expire within ten years from the date it is granted
(five years in the case of options granted to holders of more than 10% of the
total combined voting power of all classes of our stock and the stock of our
subsidiaries). The exercise price of an incentive stock option must be at least
equal to the fair market value on the date such incentive stock option is
granted (110% of fair market value in the case of options granted to holders of
more than 10% of the total combined voting power of all classes of our stock).
The exercise price of a non-qualified stock option must be at least equal to the
fair market value of the shares on the date such option is granted. Subject to
such restrictions as the Compensation Committee may impose, the exercise price
of options granted under the plan may be paid (i) in cash or its equivalent,
(ii) by delivery, or attesting to the ownership, of previously-acquired shares
of our common stock, (iii) pursuant to a cashless exercise program, (iv) by such
other methods as the compensation committee may permit or (v) by any combination
of (i), (ii), (iii) and (iv). As of the date of this prospectus, no
non-qualified stock options had been granted under the plan.
SARS. The board of directors may grant a SAR in connection with all or any
portion of an option grant as well as independent of any option grant. A SAR
entitles the participant to receive the amount by which the fair market value of
a specified number of shares on the exercise dates exceeds an exercise price
established by the committee. The excess amount will be payable in common stock,
in cash, or in a combination of shares and cash.
RESTRICTED STOCK. Restricted Stock Units and Performance Shares. These
awards may be granted in such amounts and subject to such terms and conditions
as determined by the board of directors. Holders of restricted stock may
generally exercise full voting rights and may be credited with regular dividends
paid with respect to the underlying shares while they are so held; however,
stock dividends or other non-cash distributions made with respect to restricted
stock awards generally will be subject to the same restrictions as the
restricted stock award. Generally, after the last day of the applicable period
of restriction, the shares become freely transferable. As of the date of this
prospectus, 68,832 restricted shares have been granted under the plan.
Restricted stock units and performance shares are conditional grants of a
right to receive a specified number of shares of common stock or an equivalent
amount of cash (or a combination of shares and cash) if certain conditions are
met. Each restricted stock unit and performance share must have an initial value
equal to the fair market value of a share on the date of grant. Restricted stock
units may have conditions relating to continued service or employment only or
continued employment or service and attainment of performance goals, as
determined by the Compensation Committee. Performance shares may be granted
based on a performance period of one or more years or other periods, as
determined by the Compensation Committee.
The board of directors must determine the performance objectives for
grants of performance shares and the range of the number of shares to be paid to
an employee if the relevant measure of performance is met within the performance
period. Recipients of restricted stock units and performance shares may receive
dividend equivalents with respect to their awards.
OTHER AWARDS. Subject to the terms of the plan, the board of directors may
grant other awards such as deferred share, share or cash awards based on
attainment of performance or other goals or shares in lieu of cash under other
incentive or bonus programs. Payment under such awards may be made in such
manner and at such times as the board of directors may determine.
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Except as otherwise provided in a participant's award agreement, upon the
occurrence of a change in control of WWAP, all outstanding stock options and
SARs become immediately exercisable, any restriction imposed on restricted
stock, restricted stock units, performance shares or other awards will lapse,
and any performance shares or other awards with performance-related vesting
conditions will be deemed earned at the target level (or if no target level is
specified, the maximum level). Unless a participant's award agreement provides
otherwise, if a participant's employment or service terminates following a
change in control, any of the participant's stock options or SARs that were
outstanding on the date of the change in control and that were vested as of the
date of termination of employment or service will remain exercisable for a
period ending not before the earlier of the first anniversary of the termination
of the participant's employment or service or the expiration of the stated term
of the award.
The 2004 Long-Term Equity Compensation Plan may be amended, suspended or
terminated at any time by our board of directors, provided that no amendment
that requires shareholder approval in order for the plan to comply with any
applicable stock exchange listing standards or securities laws will be effective
unless the requisite shareholder approval is obtained, and no amendment or
termination may be made without approval of a participant to the extent the
amendment or termination materially adversely affects the participant's
outstanding awards.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of December 1, 2004, information with
respect to the beneficial ownership of our common stock by (i) persons known by
us to beneficially own more than five percent of the outstanding shares, (ii)
the directors, (iii) the executive officers and (iv) all directors and executive
officers as a group.
- -----------------------------------------------------------------------------------------
Common Stock Common Stock
Beneficially Beneficially
Owned Before Percentage Owned After Percentage
Name Distribution Ownership Distribution (4) Ownership
---- ------------ --------- ---------------- ---------
- -----------------------------------------------------------------------------------------
Ofer Moshe 5,000,000 (1) 19.15% 5,000,000 19.15%
- -----------------------------------------------------------------------------------------
Stephen Dumbrell -0- -0- -0- -0-
- -----------------------------------------------------------------------------------------
Topschutter Holdings B.V. 7,233,334 (2) 27.94% 7,233,334 27.94%
- -----------------------------------------------------------------------------------------
Michel Harvey(3) 10,625,560 (3) 40.69% 10,625,560 40.69%%
- -----------------------------------------------------------------------------------------
Mobilepro, Inc 1,958,323 (5) 7.5% 783,329 (5) 3%
- -----------------------------------------------------------------------------------------
All directors and
executive officers as 5,000,000 19.15% 5,000,000 19.15%
a group (2 persons)
- -----------------------------------------------------------------------------------------
(1) Includes 4,500,000 shares of Common Stock issuable upon conversion of
450,000 shares of Class A Convertible Preferred Stock which Harry Farnesby Ltd
has agreed to transfer to Ofer Moshe or a trust designated by him.
(2) Consisting of 61, 308 shares of Common Stock and an additional 7,233,345
shares of Common Stock issuable upon conversion of the 723,334 shares of Class A
Convertible Preferred Stock held by Topschutter.
(3) Consisting of 10,625,557 shares of Common Stock issuable upon conversion of
the 1,062,555 shares of Class A Convertible Preferred Stock. Although Harry
Farnesby is the record owner of the shares, Michel Harvey claims beneficial
ownership of such shares as the sole shareholder of Harry Farnesby. Michel
Harvey disclaims ownership of 4,500,000 shares of Common Stock issuable upon
conversion of 450,000 shares of Class A Convertible Preferred Stock which he has
agreed to transfer to Ofer Moshe.
(4) Pursuant to the financing transactions with Cornell Capital Partners, L.P.
as described in "Certain Relationships and Related Transactions", Cornell has
the right to convert any amounts due to it pursuant to the Debentures into
shares of Common Stock. Cornell will also be issued additional shares under the
Standby Equity Distribution Agreement. Since the conversion ratio and pricing
for the shares to be issued under the Debentures and the Standby Equity
Distribution Agreement are based on the market price of the Common Stock, and
since
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WWAP's stock has yet to be traded, WWAP is unable to estimate the number of
shares that Cornell beneficially owns.
(5) Includes the 522,219 shares held by Lighthouse. Mobilepro and Lighthouse are
affiliates of each other based on the following relationship: Mr. Jay Wright and
Mr. Kurt Gordon, the only two (2) shareholders of Lighthouse and are also the
President/Chief Executive Officer and Chief Financial Officer of Mobilepro
respectively. Messrs. Wright and Gordon own 4.6% of the issued and outstanding
common stock of Mobilepro.
DESCRIPTION OF SECURITIES
Pursuant to WWAP's certificate of incorporation, as amended, we are
authorized to issue 100,000,000,000 shares of Common Stock, par value $0.01 per
share and 10,000,000 shares of Preferred Stock of which 3,000,000 shares have
been designated as Class A Convertible Preferred Stock (the "Class A Preferred
Stock"). Below is a description of WWAP's outstanding securities, including
Common Stock and Series A Preferred Stock.
COMMON STOCK
Each holder of our Common Stock is entitled to one vote for each share
held of record. Holders of our Class A Common Stock have no preemptive,
subscription, conversion, or redemption rights. Upon liquidation, dissolution or
winding-up, the holders of Common Stock are entitled to receive our net assets
pro rata. Each holder of Common Stock is entitled to receive ratably any
dividends declared by our board of directors out of funds legally available for
the payment of dividends. We have not paid any dividends on our Common Stock and
do not contemplate doing so in the foreseeable future. We anticipate that any
earnings generated from operations will be used to finance our growth. As of
December 1, 2004, there are 11 record holders of Common Stock and WWAP had
26,110,970 shares of Common Stock outstanding, on a fully diluted basis after
converting the 2,337,500 issued and outstanding shares of Class A Preferred
Stock.
CLASS A PREFERRED STOCK
The Class A Preferred Stock has a liquidation preference over the holders
of the common stock, the amount equal to the greater of (i) the issue price of
the Class A Preferred Stock plus accrued and unpaid interest on the issue price
at a rate of 3% commencing on the date of payment of the Class A Preferred Stock
issue price or (ii) the pro-rata distribution on the Common Stock had a holder
of the Class A Preferred Stock converted his/her/its Class A Preferred Stock
prior to a liquidation, dissolution or winding up of the Corporation
(appropriately adjusted for any stock split or stock combination of the Class A
Preferred Stock) for each share of Class A Preferred Stock then held by them
and, in addition, in each case an amount equal to all cumulated and unpaid
dividends on the Class A Preferred. Each share of Class A Preferred Stock is
convertible into ten (10) shares of Common Stock and the holder of each share of
Class A Preferred Stock shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such share of Class A Preferred
could be converted. Each share of Class A Preferred Stock shall automatically be
converted into shares of Common Stock at the then effective conversion rate upon
(i) this registration statement being declared effective by the SEC and (ii) the
quotation of the Corporation's securities on the Over-the-Counter Bulletin Board
or the listing of the Corporation's securities on a securities exchange. Holders
of Class A Preferred Stock are entitled to protective provisions, including the
right to approve the creation of any class of stock that ranks superior to the
Class A Preferred Stock.
TRANSFER AGENT
WWAP'S transfer agent is Liberty Transfer Co. whose offices are at 274B
New York Avenue, Huntington, New York 11743.
OUR BUSINESS
OVERVIEW
WWAP's business is the development and sale of the TA4U software that (i)
enhances the natural language search method used by many search engines by
allowing users to navigate through websites more efficiently in order to locate
the desired information and (ii) provides WWAP's customers with the ability to
compile a database of information relating to products that the customer's users
may look for but which are not provided by the customer. This information will
allow the customer to better evaluate what products or services to provide to
its users. The user reports afford the retailer/service provider with the
ability to immediately be aware of changing demand and/or customer preferences.
Unlike many search engines, the TA4U natural language capability can understand
the context of a sentence and will not provide answers based on unrelated words.
WWAP's management believes that the Software can also provide a solution
that will reduce the number and length of calls to a customer service
representative should reduce the cost of operating service centers.
The TA4U system can be used for many different businesses and is not
limited to any specific
20
industry. WWAP's first customer for the "TA4U" product is a furniture
manufacturer and retail operator in the United Kingdom. The services will be
provided within specific departments found on the website. The agreement shall
terminate on September 30, 2007 but it may be terminated by either party on six
(6) months notice.
OUR VISION
We intend to become a leader in advanced tools for easy interaction (e.g.,
Virtual Sales/Service representative) with computer systems such as Customer
Sales Relationship Management (CRM - Sales) systems, Internet web sites, kiosks
and other networks.
THE COMPANY'S MISSION:
o To increase the service level and consequently the revenues and
productivity of our customers by improving CEM (Customer Experience
Management). WWAP provides enhanced software solutions that create
smart, friendly and simple to use shopping advisers / service
representatives and CRM (help desk) systems.
o Provide our Internet, Kiosks and CRM customers with enhanced,
real-time, natural language based information reports that are
reflective of the needs and requests of their users from the web
site / kiosk / network users.
o Produce our products at the highest possible quality and technical
sophistication.
o Provide the best possible service for our customers.
o Provide a system that is highly advanced in several dimensions:
technical, application and business wise as a marketing
differentiator to our customers.
THE PRODUCT
The TA4U encourages users to interact with the system as they have the
ability to either "communicate" with the system by telling it their needs in
natural language text or by answering guided system questions. The TA4U will,
like a trained representative, try to find the best possible product or service
to match each request. The system will then present the product(s) using
different techniques such as product comparisons in order to help the customer
make the best personal decision. WWAP also has the right to market and sell the
TA4U chat system which connects users via a chat system to a live operator. This
is a stand-alone product which connects to the TA4U Virtual Sales Advisor
solution.
Due to its interactive functionality, our TA4U system is able to provide
detailed marketing information and statistics by generating custom reports based
on users' demands, requests and choices. This detailed and interesting
information allows operators to understand their customers' needs and requests
in real-time, thereby enabling them to provide products and services that match
the demand. As Precision Marketing has indicated, customer data is being
catapulted to the top of the boardroom agenda, according to a report by data
accuracy group QAS.
WWAP recognizes that there are industries where users have specific
knowledge of what they need, such as books or computer components and therefore
our products may not provide added value to a user. The TA4U is especially
beneficial in assisting where users who aren't quite sure what they are looking
for or are unsure about the information/questions that they must ask so as to
make the correct decisions on the products/services that will best suit their
needs.
PATENTS
ActivePoint has obtained three (3) patents with respect to its products,
and has applied for a fourth patent. The patents are all based in the United
States. ActivePoint has also applied for patent protection in Europe.
Furthermore, since ActivePoint did receive funds from the office of the Israel
Chief Scientist, ActivePoint is obligated to keep the IT development in Israel
until these funds are repaid. The following patents protect the Software:
1. TITLE: Virtual Sales Representative
PATENT NUMBER: 09/109,726
ABSTRACT:
A method for enabling users of the Internet to interact with an
interactive sales representative system for providing sales guidance. The
system offers the user products, services, or ideas based on parameters
collected from the user. The system guides the customer to retrieve the
desired products. If the system does not have a product matched to the
customer requests, it will generate a alternatives, which such
alternatives are the closest to the customer requests. The system will
execute various sales tools and techniques to help and assist the customer
to purchase a product. By guiding the customer to the target product, the
system will shorten the search cycle for the customer as well as find
products better-matched to what the customer is looking for. The system
will provide market advisory services and suggestions and recommendations.
The system adds graphics, animation, 3D, movie clips, voice and other
effects to make the session enjoyable for the customer. The system is
capable of executing various tools and techniques to improve its sales
capabilities and bring better sales results.
21
2. TITLE: Internet Credit Card Security
PATENT NUMBER: 09/200,719
ABSTRACT:
A method for transmitting credit card numbers in a secure manner through
an electronic medium such as the Internet. Credit card numbers typically
consist of a string of 10-20 digits, with the exact number of digits
depending upon the provider of the credit card. The security is provided
by transmitting the credit card number in a plurality of different
transmissions, each transmission containing at least one digit of the
credit card number, but fewer than all of the digits of the credit card
number. Preferably, the user selects the number of digits from the credit
card number to send with each transmission. Thus, the entire credit card
number can only be determined by receiving all of the transmissions from
the user, thereby significantly increasing the difficulty of intercepting
the credit card number.
3. TITLE: Automatic Virtual Negotiations
PATENT NUMBER: 09/317,956
ABSTRACT:
A method for conducting "one to one" commercial negotiations through an
electronic medium such as the Internet. The negotiation process consists
of sending persuasive texts to the user through the system, including
discounts given by the system and responses to price offers of the user.
The user can send a natural language query to the system which can (i)
express the user's desire to purchase or not purchase a product or (ii)
offer a suggested price or an opinion about the product. The system will
then offer the product for a specific price which may be decreased as
negotiations continue. Based on the user's input and the negotiations, the
system may accept the offer or, after one or more unacceptably low inputs
from the user, may alternatively end the process of negotiation. The
system will negotiate on many more parameters than simply the price
itself.
4. TITLE: Comparison in natural language
PATENT NUMBER: Not assigned yet
PARTS OF ABSTRACT:
A method and apparatus for performing a concise and meaningful comparison
between an unlimited amount of products while presenting the user with a
natural language response. The apparatus is encapsulated as a stand-alone
web server application and does not require the use of an external third
party tools and can be used by any web site with no need for a significant
change in the structure or the backbone technology deployed by said web
site. Many shoppers may find themselves facing great difficulty when it
comes to making a decision between two or more products of the same kind,
with nearly identical features and this program will offer customers
different facts to facilitate in making a decision.
COLLABORATION AGREEMENT
Pursuant to the Collaboration Agreement between WWAP and ActivePoint,
ActivePoint granted an exclusive and perpetual license to WWAP to use its
patents, however, the laws of Israel put certain restrictions on such use. These
restrictions require that the Office of the Chief Scientist must first be repaid
all monies loaned to ActivePoint under the initial funding for the development
of its technology. In consideration for the license granted under the
Collaboration Agreement, WWAP will pay to ActivePoint a royalty of 65% out of
all proceeds received by WWAP from all Licensed Products sold, licensed, leased
or otherwise disposed of, and of all services performed with respect to the
products licensed under this agreement.
INDUSTRY ANALYSIS
WWAP desires to benefit from opportunities presented by the expansion of
e-commerce, CRM and Kiosks and specifically the inter-connectivity that defines
these markets. WWAP believes that e-commerce, Kiosk and CRM providers can use
and benefit from our system and services. WWAP's initial focus will be
e-commerce.
E-COMMERCE AND COMMERCIAL WEB SITES, KIOSKS AND CRM ON THE RISE
Due to the intangible nature of the Internet, a precise estimate is not
available for the amounts being spent online. However, market study research
reports posted on e-commerceinfocenter.comshow that revenues in 2005 in the
United States and worldwide from business to consumer e-commerce are likely to
surpass USD $133 billion.
Until recently, the programs for most Internet, Kiosks and CRM systems
have generally been menu driven operations where the user is guided to the
perceived information by having to make choices from long lists of data. While
operators of websites may know where and for what their online users have been
searching, they have very little knowledge of what their users are looking for
but not finding unless purchases are made because no convenient tool exists that
can provide this information. The TA4U system encourages the User to ask
questions in natural language and the TA4U reporting tool gathers these queries
and presents them to the client.
CRM/CEM INDUSTRY
Hewson Group CRM Market Research assesses the total CRM market size in
2003 to be $8.8bn, as opposed to $7.4 billion in 2001.
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The mid-market for CRM, which is WWAP's intended focus extends at the low
end from companies with about 30 employees to companies with approximately
2000-3000 employees at the higher end of the market. The mid-market also
includes some departments or divisions of large companies. The demands of those
businesses for IT infrastructure and applications will vary greatly according to
size, sector and geography.
Hewson Group believes that a major challenge is for businesses to better
understand their customer's behaviors and expectations. Hewson Group contends
that CEM is a large obstacle of CRM, and that while companies have focused on
CRM, they have largely overlooked the area of maximum leverage on the customer's
experience. As a result, companies often fail to understand the customer
perspective. WWAP's reporting capabilities can help with this need.
OPEN COMPETITIVE ENVIRONMENT
One characteristic of our market is that despite some of the larger search
engines, such as Google and Yahoo, no company dominates our target market.
Furthermore, due to the nature of the Internet and e-commerce, geographical
borders are not important
Some examples of companies with the closest technical and/or business
solutions to our niches are: ATG (Art Technology Group), Broadvision Inc, Net
Perceptions,Inc., Kana,Inc., Verity, Inc., 2004 Egain Communications, Siebel
Systems,Inc., VirtuOz and 2003 Celebros. The CRM Market is defined, for example,
by companies or their products such as Blexel Virtual Assistant by Blexel,ltd.,
Absolute Live Support by 2004 Xigla Software Ltd., Banter Solutions from Banter,
, eGain Live from 2004 Egain Communications, Live2support, and Amdocs'
ClarifyCRM.
Most of these companies are not direct competitors of WWAP. The most
direct competitors are Verity, Inc., 2003 Celebros and Virutoz (a French
company). We believe that no single competitor provides our services. We
envision cooperation with some competitors because we can provide added value to
their existing product range. The companies that provide sales/service adviser
solutions generally provide only passive natural language solutions and,
therefore, cannot match our system, which includes many other elements.
Additionally, our setup tools help provide for a relatively quicker system setup
time.
WWAP's application specific natural language context engine capabilities
are extremely advanced compared to many other currently available search
engines. Our advantages include:
ADVANTAGES OVER COMPETITION:
o Product A superior technology that helps customers to easily
find the required information. As opposed to today's
search engines that cannot respond to context related
questions, WWAP's application specific natural language
engines are capable of understanding the nuances of the
language and the specific request. For example,
searching for a cable to connect a keyboard to a laptop
via common known search engines will result in laptops,
keyboards or laptop keyboards. WWAP's systems can
understand the request and will provide the cable that
can connect the keyboard to the laptop.
o Patent Patent protected.
o Know how aAccumulated knowledge on the industry.
o Statistics Customers' requests produce statistical data and reports
that provide in-depth information about. Users. This
type and depth of information cannot be acquired from
traditional surfing/interactions on systems because
current-day reporting derived from classical tracking
only allows our customers to see where their customers
have been but not what they want. WWAP's natural
language interface provides an ability to better measure
what users are looking for.
MARKET
MARKET DESCRIPTION - TARGET MARKET
WWAP's initial target market was commercial Internet activity. We believe
that our product can be utilized in its present format for other market
segments, such as CRM providers and Kiosks.
According to a study by COMSCORE MEDIA METRIX of The Online Publishers
Association (OPA) in its 2003 Paid Online Content U.S. Market Spending Report,
consumer spending for online content in the U.S. grew to nearly $1.6 billion in
2003, an increase of 18.8 percent over 2002.
Research by Jupiter Research has shown that even when items are not
actually purchased online, the Internet plays a valuable role in assisting in
making a purchase. According to Jupiter Research, the influence of online
research assisting in offline purchases (i.e. purchases made in retail stores)
continues to grow, so that by 2008 nearly 30 percent of all offline purchases
will have been influenced by research done online.
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We envision global growth of commercial web sites and online services.
Site operators want users to undergo a positive experience in which the required
services and products can be easily found. WWAP's anticipates that its typical
customer is either an e-commerce operation or a conventional business with a web
site (a web site used to provide information and not direct sales. Both
operations need to know who are the people that surf through their web site. Our
customers and potential customers have advised us that they want more
information about their users.
Our enhanced natural language contextual engines will be useful and cost
efficient to our customers. A call center is a central place where customer and
other telephone calls are handled by an organization, usually with some amount
of computer automation. Assisted service involves making company representatives
available to customers real-time as they visit a web site. However, assisted
service, although reducing the need for phone calls and long email discussions,
still involves labor cost. The TA4U system, being an online, automatic system,
should reduce the number of users transferred over to online assistance and
therefore should reduce associated labor costs. The system is also available
twenty-four hours a day.
According to Gartner, Inc., a research and analysis company,, more than 5
million small to midsize enterprises are in Europe and the majority of those
have yet to deploy a CRM solution. Increasingly, sales and customer service
professionals at these organizations, as well as those in divisions of larger
companies or those with geographically distributed operations, must support
global operations or do business with customers in diverse local markets.
Integrated CRM support is useful regardless of where or how they conduct
business.
LIMITATIONS OF TODAY'S SELF-SERVICE APPLICATIONS
Self-service applications are those Internet-based ERM applications, which
allow customers to find information and execute the self service/purchase
process by themselves via the Internet. Some self-service applications available
today include e-commerce solutions, automated email response systems, search
engines, and personalization tools. In fact, these solutions may hinder the
sales/self-service process by interacting poorly with customers, consuming
customers' valuable time, and providing NON real-time responses.
E-COMMERCE SOLUTIONS
E-commerce solutions are designed to provide customers with the means to
order and pay for products via the web, without the intervention of a sales
representative. A sample of companies offering these solutions include
Broadvision Inc., CommerceOne Operations, Inc., Intershop Communications,
Microsoft, Netscape, Kana Inc. and 2003 Celebros.
E-commerce solutions are more convenient and effective when customers know
exactly what they are looking for. However, they were not designed to perform
functions that typify a salesperson such as to help a customer identify products
that would best suit their needs and consequently, they are less effective at
selling when customers are uncertain about what to buy. According to Forrester
Research, nearly 96.5% of online shopping browsers do not ultimately make any
purchases.
PERSONALIZATION APPLICATIONS
Some Internet commerce ERM/CEM solutions have begun to focus on
personalized service to improve customer satisfaction. Examples of these
solutions are personalized marketing, marketing automation and customer
profiling. Companies active in providing personalization solutions include Art
Technology Group, Inc., Broadvision Inc., NetPerceptions, Kana Inc., and
Vignette Corporation. According to their company websites we do see that they
are providing these solutions
Personalized solutions can be effective in reducing the amount of time
that the customer spends searching for items. Today's personalized service
applications are inherently static and consequently, they cannot take advantage
of customers' varied interests and changing needs to increase sales.
PHONE-BASED WEB-ENABLED CALL CENTERS
These applications allow customers to access a company representative via
a push-to-talk button on the Internet site. Some of the key vendors offering
these applications are Acuity, Business Evolution, eFusion, Silknet, SMART, and
Webline. These applications are labor intensive as they must utilize
well-informed personnel, who may not be available at all hours of the day.
CHAT-BASED WEB-ENABLED CALL CENTERS
These applications allow customers to access a company representative via
text-based chat. Some vendors that do offer these applications (e.g. Boldchat,
Live2Support, Liveperson). These applications are labor intensive as they must
utilize a large number of well-informed personnel, who may not be available at
all hours of the day.
PRODUCT DEVELOPMENT
In order to limit the work required by WWAP for each application sold to a
customer, WWAP intends to
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prepare "industry application databases" for each major market segment. The set
up time for each company specific application will be reduced as we draw upon
existing, market pertinent and readily available natural language wording, and
abbreviations. An example of this would be the Cable Finder system that and
electronics distributor is testing. The base knowledge incorporated within the
system can be transferred to other applications within the same field. We intend
that the next industry to be incorporated will be mobile phones.
The product for CEM interaction is intended to be one a series of products
designed for commercial users. Another product under consideration is would be
statistical data analysis based on the huge amount of data that can be collected
from our systems.
MARKETING
WWAP plans to market the Software in the United Kingdom through a newly
formed, wholly owned subsidiary, WWAP UK and to market the software directly in
the United States. WWAP intends to hire sales people in the United States and
the United Kingdom. We intend to hire a public relations agency to promote our
product and estimate that the cost of hiring such an agency will be between
$5,000 and US$7,000 per month. We also envision that these public relations
efforts will help the Company find strategic partners to assist in marketing the
software.
BUSINESS DEVELOPMENT AGREEMENTS
Pursuant to the financing agreements with Cornell Capital Partners, L.P.,
WWAP entered into Business Development Agreements with Mobilepro and Lighthouse.
Pursuant to the agreements, Mobilepro and Lighthouse are providing WWAP with
business consulting services, including, but not limited to assisting WWAP with
identifying customers, product development and overall services designed to
improve the business of WWAP. As consideration for the services provided by
these agreements, WWAP issued Mobilepro its 1,436,103 shares and Lighthouse its
522,219. WWAP intends to register the shares issued to Lighthouse at the same
time it registers the shares to be issued to Cornell pursuant to the financing
agreements.
EMPLOYEES
As of December 1, 2004, WWAP did not have any employees except for Moshe
Ofer, our President and Treasurer. ActivePoint has 7 full time employees in
Israel, including Mr. Ofer. These consist of 5 technical employees and 2
administrative employees.
PROPERTIES
Our principal office at 270 Madison Avenue in New York is being occupied
on a month to month basis at no charge. Our principal operations are conducted
in Israel at 20 Gibroei Israel, Poleg Industrial Area, Netanya Our monthly rent
in Israel is US$900 per month plus a tax of approximately $150 per month. We
lease this property on a month-to-month basis.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our audited
financial statements and related notes included elsewhere in this information
statement. WWAP's fiscal year currently ends on December 31, and each of our
fiscal quarters ends on the final day of a calendar quarter (each March 31, June
30 and September 30). The following discussion contains forward-looking
statements. (See Risk Factors and Forward-Looking Statements for a discussion of
uncertainties, risks and assumptions associated with these statements)
BACKGROUND OF INCORPORATION OF WWAP
WWAP was incorporated in July 2004 to market the technology of
ActivePoint. ActivePoint was incorporated in Israel in 1997 and received loans
under an incubator program sponsored by the office of the Chief Scientist of
Israel to encourage research and development. As of December 31, 2003,
ActiePoint had an obligation to repay approximately $258,000 thru royalties from
the net sales of software developed under the incubator program. Since its
participation in the incubator program ended, ActivPoint has been principally
financed by its two principal shareholders - Topschutter Holdings B.V. and Mr.
Michel Harvey.
ActivePoint's initial concept was to develop a web based virtual sales
advisor that would provide its customer's users the same type of guidance and
service that is received when a customer enters an actual store. ActivePoint
spent 5 years developing the technology which includes the ability to build
systems utilizing neural network programming, a negotiation engine offering
alternative choices engines, fast and easy download with no plug ins and context
related natural language ability.
ActivePoint has tried marketing its technology only since 2002.
Prospective customers were presented with technology to serve as a web based
virtual sales agent to increase sales over the web. The technology, fixed cost
and high monthly fees discouraged sales.
After hiring Moshe Ofer in November 2003, management concluded that
internet e-commerce had been steadily increasing despite the lack of virtual
salespersons and that the TA4U software would have to be re-
25
defined to provide additional added value. Management concluded that investment
in internet technology for websites had subsided and thus many companies were
reluctant to undertake additional purchases of unproven software or applications
programs.
Management reached several conclusions regarding its products. First, the
TA4U software encourages users to interact with the system via its highly
developed context orientated natural language engines that respond in dialogue
fashion. Therefore the TA4U solution not only directs users to products that
best suit their needs but can also provide website operators with the ability to
see what their customers would like to see but are unable to find on the
website. Market research could be provided for which customers would generally
have to pay to outside market research companies. Second, the TA4U solutions
could reduce a customer's need for live operators and reduce fixed costs.
RESULTS OF OPERATIONS FOR THE INTERIM PERIOD THROUGH SEPTEMBER 30, 2004 AS
COMPARED WITH THE INTERIM PERIOD THROUGH SEPTEMBER 30, 2003
The revenues generated for the nine months ended September 30, 2004 and
September 30, 2003 were $0 and $22,873 respectively, a decrease of 100%. This
decrease in sales for the nine month period is attributable to ActivePoint's
management change and product re-definition. New management and a redefined
product may increase the sales of the TA4U systems. Management also plans to
allocate more financial and operational resources towards the sales and
marketing of the products.
Total operating expenses decreased, from $352,183 for the nine months
ended September 30, 2003 to $332,548 for the nine months ended September 30,
2004, a decrease of $19,635, or (5.6%). Specific line items that reflect the
change in total operating expenses for the nine months ended September 30, 2004,
include an increase in general and administrative expenses of $103,820 due to
the finalizing of the financing agreements, an increase in research and
development costs of $831, and a decrease in selling expenses of $124,286.
The loss from operations for the nine months ended September 30, 2004 was
$332,548 compared to $352,183 for the nine months ended September 30, 2003, a
decrease of 5.6%.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 AS COMPARED WITH THE
YEAR ENDED DECEMBER 31, 2002
The revenues generated for the twelve months ended December 31, 2003 and
December 31, 2002 were $31,590 and $22,874 respectively, an increase of 38.1%.
The increase in sales for the twelve month period is attributable to WWAP
starting marketing in the UK. However, only minimal resources have been
available for the sales and marketing of the TA4U system.
Total operating expenses increased, from $314,907 for the twelve months
ended December 31, 2002 to $499,018 for the twelve months ended December 31,
2003, an increase of $184,111, or 58%. Specific line items that reflect the
increase in total operating expenses for the twelve months ended December 31,
2003, include increase in general and administrative expenses of $510,500,
increase in research and development costs of $28,644, and increase in selling
expenses of $144,967.
The loss from operations for the twelve months ended December 31, 2003 was
$467,428 compared to $292,033 for the twelve months ended December 31, 2002, an
increase of 60%.
LIQUIDITY AND CAPITAL RESOURCES
WWAP has incurred substantial losses, and will require financing for
working capital to meet its operating obligations. We anticipate that we will
require financing on an ongoing basis for the foreseeable future. The report of
our independent accountants that accompanies our audited financial statements
states that as a result of WWAP's limited revenues and retained deficit raise
substantial doubt about the Company's ability to continue as a going coFncern.
We intend to sell shares of WWAP's common stock immediately following the
completion of the distribution, through our equity line of credit agreement with
Cornell Capital Partners, L.P. ("Cornell") in order to generate capital
necessary to sustain and grow our operations. Our plan is to utilize these funds
to concentrate on marketing and sales activities and to find appropriate sales
channels that will distribute our product. In 2005, we plan to hire 3-5
employees for our research and development department and our application work.
We also plan on initiating quality assurance activities
During the past year, research and development has focused on reducing the
time to market of each application. Significant inroads have been made and the
installation process has been shortened. Until recently, each application had to
be inputted manually. The initial part of the process is not done automatically.
However, management does believe that more investment will have to be made in
this area, particularly in market segmentation for the natural language search
engines.
In August 2004, the Company entered into a financing agreement with
Cornell. As part of this transaction, ActivePoint has issued two convertible
debentures to Cornell for USD$390,000 and USD$75,000 respectively (the
"Debentures"). Cornell is obligated to issue an additional $425,000 to WWAP
within five (5) days of the filing of this registration statement.
The Debentures for the aggregate of USD$500,000 are convertible into
shares of Common Stock any time after the Company is publicly traded at a price
equal to either (1) an amount equal to one hundred twenty
26
percent (120%) of the opening bid price of the Common Stock on the first day of
trading (the Fixed Price) or (b) an amount equal to eighty percent (80%) of the
lowest daily Volume Weighted Average Price (as reported by Bloomberg)("VWAP") of
the Common Stock for the five (5) trading days immediately preceding the
Conversion Date, Redemption Date or the Conversion Redemption Date, at the
Investor's option. This convertible debenture has a term of two years, and bears
interest at a rate of 5% per year with all accrued interest due at the
expiration of the term. At our option these debentures may be paid in cash or
redeemed at a redemption price that shall be set at 120% of the face value of
the convertible plus accrued interest. (See Certain Relationships and Related
Transactions.
The Debenture for USD$390,000 is convertible into shares of Common Stock
any time after the Company's Common Stock is publicly traded at a price equal to
one hundred percent (100%) of the lowest VWAP of the Common Stock for the five
days immediately preceding the Conversion Date. This Debenture has a term of two
years, and bears interest at a rate of 5% per year with all accrued interest due
at the expiration of the Debenture term. At our option this debenture may be
redeemed as follows: We have the right to redeem this Convertible Debenture at
100% of face value within one week of the first trading day at a price equal to
the lowest VWAP of the first five trading days. The Company shall have the right
to redeem all or part of the convertible debenture in cash at 100% of the face
value until the 90th day after the first day of trading. After the 90th day
after the first day of trading the Company shall have the right to redeem the
Convertible with (30) thirty business days advance notice, any or
all-outstanding Convertible remaining in its sole discretion. The redemption
price shall be 120% of the face amount redeemed plus accrued interest. (See
Certain Relationships and Related Transactions)
In August 2004, WWAP also entered into an Equity Line of Credit Agreement
with Cornell. Under this agreement, WWAP may issue and sell to Cornell Common
Stock for a total purchase price of up to US$10.0 million for a twenty-four (24)
month period after an effective registration of the shares. WWAP will be able to
commence drawing down on the Equity Line of Credit when the sale of the Common
Stock is registered with the Securities and Exchange Commission and the
authorization for quotation on the National Association of Securities Dealers
Over the Counter Bulletin Board. (See Certain Relationships and Related
Transactions). The funds received from the transactions with Cornell will be
used for general working capital and improve the software and increase market
awareness of the TA4U software.
On August 26, 2004, WWAP entered into a Placement Agent Agreement with
Newbridge Securities Corporation ("Newbridge"). Newbridge shall act as the
exclusive placement agent with respect to the securities issued pursuant to the
Standby Equity Distribution Agreement. As compensation for its services as
placement agent, the Company will pay Newbridge a few of Ten Thousand Dollars
($10,000), payable by the issuance of shares of WWAP's Common Stock based on the
market price of WWAP's Common Stock after the commencement of trading. Newbridge
shall be entitled to "piggy-back" registration rights, which shall be triggered
upon the registration of any shares issued to Cornell.
Other than the financing agreements with Cornell, the Company has no other
significant sources of working capital or cash commitments, However, no
assurance can be given that WWAP will raise sufficient funds from the Cornell
financing arrangements or that WWAP will ever produce sufficient revenues to
sustain its operations, or that a market will develop for its common stock for
which most of WWAP's financing is dependent on.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 4, 2004, pursuant to the terms of an exchange agreement,
approximately 94% of the stockholders of ActivePoint exchanged their shares of
stock of Activepoint for a proportionate amount of shares of WWAP common stock.
As a result, Activepoint is an approximately 94% subsidiary of WWAP.
Furthermore, pursuant to the exchange agreement, WWAP also agreed to assume
certain loans made by principal shareholders of Activepoint to Activepoint.
On August 26, 2004, WWAP entered into a Standby Equity Distribution
Agreement with Cornell. Under this agreement, WWAP may issue and sell to Cornell
Capital Partners Common Stock for a total purchase price of up to $10.0 million.
The purchase price for the shares will be equal to 97% of the market price,
which is defined as the lowest closing bid price of the Common Stock during the
five trading days following the notice date. A cash fee equal to four percent
(4%) of the cash proceeds of the draw down is also payable at the time of
funding. To date, WWAP has not drawn down on the Standby Equity Distribution
Agreement. Other than the Standby Equity Distribution Agreement, no other
financing agreement is currently available to WWAP.
On August 26, 2004, WWAP entered into a Securities Purchase Agreement with
Cornell. Under this agreement, Cornell may purchase from WWAP up to $500,000 of
secured convertible debentures. The Debentures are convertible into shares of
Common Stock and Cornell has been given registration rights with respect to the
shares issuable upon conversion of the Debentures. Cornell has purchased $75,000
worth of Debentures, and is obligated to purchase the remaining $425,000 within
five (5) days of the filing of this registration statement. The Debentures are
due (2) years from the date of issuance and accrue interest at a rate of 5% per
annum. Cornell is entitled, at its option, to convert, and sell on the same day,
at any time and from time to time subject to certain restrictions, until payment
in full of the Debentures, all or any part of the principal amount of the
Debenture, plus accrued interest, into shares of WWAP's Common Stock.
On August 26, 2004, and pursuant to the financing agreements with Cornell,
WWAP entered into the Business Development Agreements with Mobilepro and
Lighthouse. Mobilepro and Lighthouse are obligated to provide certain business
consulting services, including, but not limited to assisting WWAP with
identifying
27
customers, product development and overall services designed to improve the
business of WWAP. As consideration for the services provided by these
agreements, WWAP issued Mobilepro 1,436,103 shares of WWAP of which 1,174,993
shares are being distributed pursuant to this Registration Statement and 522,219
shares were issued to Lighthouse. WWAP intends to register the shares issued to
Lighthouse at the same time it registers the shares to be issued to Cornell.
PURSUANT TO THE EXCHANGE AGREEMENT, WWAP ASSUMED THE OBLIGATIONS OF ACTIVEPOINT
UNDER CERTAIN LOANS MADE TO ACTIVEPOINT BY ITS PRINCIPAL STOCKHOLDERS. THE
AGGREGATE PRINCIPAL AMOUNT OF THESE LOANS IS $255,000.
Certain stockholders of WWAP are parties to a Stockholders' Agreement with
WWAP. This agreement imposes certain restrictions on the stockholders, including
restrictions on transferability. Pursuant to the Stockholders' Agreement,
TopSchutter Holdings B.V. and/or Harry Farnesby, provided that each owns at
least 5% of the outstanding Common Stock of WWAP on a fully-diluted basis, shall
have the right to designate a member to the board of directors of WWAP.
SHARES ELIGIBLE FOR FUTURE SALE
All of the shares issued in the Distribution will be freely tradable
without restriction or further registration under the Securities Act by persons
other than our "affiliates."
The remaining shares of Common Stock outstanding held by WWAP shareholders
will be "restricted securities" within the meaning of Rule 144 under the
Securities Act and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, including the
exemptions contained in Rule 144. In general, under Rule 144 a person (or
persons whose shares are aggregated), including any person who may be deemed our
affiliate, is entitled to sell within any three-month period a number of
restricted securities that does not exceed the greater of 1% of the then
outstanding shares of common stock and the average weekly trading volume in the
over-the-counter market during the four calendar weeks preceding each such sale,
provided that at least one year has elapsed since such shares were acquired from
us or any affiliate of ours and certain manner of sale, notice requirements and
requirements as to availability of current public information about us are
satisfied. Any person who is deemed to be our affiliate must comply with the
provisions of Rule 144 (other than the one year holding period requirement) in
order to sell shares of common stock which are not restricted securities (such
as shares acquired by affiliates either in the offering or through purchases in
the open market following the offering). In addition, under Rule 144(k) a person
who is not our affiliate and who has not been our affiliate at any time during
the 90 days preceding any sale is entitled to sell such shares without regard to
the foregoing limitations, provided that at least two years have elapsed since
the shares were acquired from us or any affiliate of ours.
Following the completion of this offering, WWAP intends to file one or
more registration statements relating to the shares of Common Stock that are
will be issued in connection with the financing transactions with Cornell and
additional shares of Common Stock held by current shareholders, the amount of
which is not known at this time. We also may file one or more registration
statements on Form S-8 under the Securities Act to register common stock issued
or reserved for issuance under the 2004 Long Term Equity Compensation Plan. Any
such Form S-8 registration statement will automatically become effective upon
filing. Accordingly, shares registered under such registration statement will be
available for sale in the open market, unless such shares are subject to vesting
restrictions with us or the lock-up restrictions described above. We expect that
the Registration Statement on Form S-8 will cover 2,000,000 shares and options.
No prediction can be made as to the effect, if any, future sales of
shares, or the availability of shares for future sales, will have on the market
price of our common stock prevailing from time to time. The sale of substantial
amounts of our common stock in the public market, or the perception that such
sales could occur, could harm the prevailing market price of our common stock.
EXPERTS
The financial statements appearing in this Prospectus and Registration
Statement have been audited by Reuveni Hartuv, Tepper & Co., an independent
registered public accounting firm, to the extent and for the periods indicated
in their report appearing elsewhere herein, which report expresses an
unqualified opinion and includes an explanatory paragraph relating to the WWAP's
ability to continue as a going concern and are included in reliance upon such
report and upon the authority of such Firms as experts in accounting and
auditing.
LEGAL MATTERS
McLaughlin & Stern, LLP, 260 Madison Avenue, New York, NY 100016, counsel
to WWAP, Inc., has rendered an opinion that the common stock of WWAP to be
distributed to the stockholders of Mobilepro is legally issued, fully paid and
nonassessable under Delaware law.
28
WHERE YOU CAN FIND MORE INFORMATION
WWAP has filed with the Securities and Exchange Commission the
Registration Statement under the Exchange Act, with respect to the WWAP Common
Stock. This document does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made. Statements made in this document as to the contents of
any contract, agreement or other document referred to herein are not necessarily
complete. The Registration Statement and the exhibits thereto filed by WWAP with
the Commission may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such information can be obtained by mail from the Public Reference
Branch of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a website
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's website is http://www.sec.gov. WWAP is required to comply
with the reporting requirements of the Exchange Act and to file with the
Commission reports, proxy statements and other information as required by the
Exchange Act. Additionally, WWAP is required to provide annual reports
containing audited financial statements to its stockholders in connection with
its annual meetings of stockholders. These reports, proxy statements and other
information will be available to be inspected and copied at the public reference
facilities of the Commission or obtained by mail or over the Internet from the
Commission, as described above.
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INDEX TO CONSOLIDTAED FINANCAL STATEMENTS
WWAP, INC.
CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2004: PAGE
Consolidated Balance Sheets (Unaudited) as of September 30,
2004 and 2003. F-2
Consolidated Statements of Operations (Unaudited) for the nine
months ended September 30, 2004 and 2003. F-3
Statement of Shareholders Equity (deficit) for the year ended
December 31, 2003 and 2002, and for the period ended
September 30, 2004 (Unaudited). F-4
Consolidated Statements of Cash Flows (Unaudited) for the nine
months ended September 30, 2004 and 2003. F-5
Notes to the Consolidated Financial Statements (Unaudited). F6-F8
1 CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-9
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of December 31, 2003 and 2002. F-10
Consolidated Statements of Operations for the year ended December 31,
2003 and 2002 and for the period from December 8, 1997 (inception)
to December 31, 2003. F-11
Statement of Shareholders' Equity (deficit) for year ended
December 31, 2003 and 2002. F-12
Consolidated Statements of Cash Flows for the year ended December 31,
2003 and 2002 and for the period from December 8, 1997 (inception)
to December 31, 2003. F-13
Notes to the Consolidated Financial Statements F14-F20
F-1
WWAP, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS (IN DOLLARS)
SEPTEMBER 30,
-------------
2 0 0 4 2 0 0 3
------- -------
UNAUDITED UNAUDITED
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 875 $ 74,731
Restricted cash 5,342 --
Other current assets 17,207 2,472
----------- -----------
Total current assets 23,424 77,203
----------- -----------
EQUIPMENT
Cost 31,775 31,775
Less - accumulated depreciation (26,777) (24,043)
----------- -----------
Equipment, net 4,998 7,732
----------- -----------
$ 28,422 $ 84,935
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term bank debt $ 1,358 $ --
Trade accounts payable 783 34,714
Other current liabilities 176,691 25,699
----------- -----------
Total current liabilities 178,832 60,413
----------- -----------
LONG-TERM LIABILITIES
Subordinated long-term loan from shareholders 276,400 276,400
Liability for severance pay, net 22,921 19,116
----------- -----------
Total long-term liabilities 299,321 295,516
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' (DEFICIT) EQUITY
Preferred shares, $0.01 par value;
10,000,000 shares authorized;
2,337,500 issued and outstanding 23,375 23,375
Ordinary shares, $0.01 par value;
100,000,000 shares authorized;
277,647 issued and outstanding 2,776 2,776
Additional paid-in capital 1,495,812 1,202,835
Deficit accumulated during the development stage (1,971,694) (1,499,980)
----------- -----------
Total shareholders' equity (deficit) (449,731) (270,994)
----------- -----------
$ 28,422 $ 84,935
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
F-2
WWAP INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
2 0 0 3 2 0 0 4
------- -------
UNAUDITED UNAUDITED
Income: $ 22,873 $ --
Operating costs and expenses:
Research and Development expenses 134,236 135,067
Marketing expenses, Net 149,947 25,661
General and Administrative expenses 68,000 171,820
------------ ------------
Total expenses 352,153 332,548
Loss before financing expenses, net 329,310 332,548
Financing expenses, Net 2,243 1,144
------------ ------------
Loss before taxation 331,553 333,692
Taxation -- --
------------ ------------
Net loss $ 331,553 $ 333,692
============ ============
Basic loss per share: $ (0.01) $ (0.01)
============ ============
Weighted average number of shares
outstanding 23,652,647 23,652,647
============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
F-3
WWAP INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
DEFICIT
NUMBER OF SHARES ACCUMULATED
SERIES A ADDITIONAL DURING THE
ORDINARY PREFERRED SHARE PAID-IN DEVELOPMENT
SHARES SHARES CAPITAL CAPITAL STAGE TOTAL
----------- ----------- ----------- ----------- ----------- -----------
Shares issuance form December 8,
1997 ended December 31, 2001 277,647 2,337,500 $ 26,151 $ 801,175 $ -- $ 827,326
Net loss for the period form
December 8, 1997 ended December
31, 2001 -- -- (872,838) (872,838)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 2001 277,647 2,337,500 26,151 801,175 (872,838) (45,512)
Shares issuance in 2002 -- 131,660 -- 131,660
Net loss for the year -- -- (295,589) (295,589)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 2002 277,647 2,337,500 26,151 932,845 (1,168,427) (209,441)
Shares issuance in 2003 -- 320,000 -- 320,000
Net loss for the year -- -- (469,575) (469,575)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 2003 277,647 2,337,500 26,151 1,252,835 (1,638,002) (359,016)
Shares issuance in 2004 -- 242,977 -- 242,977
Net loss for the period -- -- (333,692) (333,692)
----------- ----------- ----------- ----------- ----------- -----------
Balance - September 30, 2004 277,647 2,337,500 $ 26,151 $ 1,495,812 $(1,971,694) $ (449,731)
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements
F-4
WWAP INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
2 0 0 3 2 0 0 4
------- -------
UNAUDITED UNAUDITED
CASH FLOWS - OPERATING ACTIVITIES
Net loss for the period $(331,553) $(333,692)
Adjustments to reconcile net loss to net
cash used in operating activities:
Items not involving cash flows:
Depreciation 3,260 1,858
Increase (decrease) in liability for severance
pay, net 14,647 4,176
Changes in operating assets and liabilities:
Decrease (Increase) in other current assets 3,114 (13,874)
Increase (decrease) in trade accounts payable 31,570 (59)
Increase (decrease) in other current liabilities (9,424) 75,741
--------- ---------
Net cash used in operating activities (288,386) (265,850)
CASH FLOWS - INVESTING ACTIVITIES
Purchase of equipment -- --
--------- ---------
Net cash used in investing activities -- --
--------- ---------
CASH FLOWS - FINANCING ACTIVITIES
Increase in Restricted cash -- (5,342)
Increase in short-term bank debt, net -- 1,358
Proceeds from issuance of long-term debt -- --
Issuance of shares, net 270,000 242,977
--------- ---------
Net cash provided by financing activities 270,000 238,993
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (18,386) (26,857)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 93,117 27,732
--------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 74,731 $ 875
========= =========
The accompanying notes are an integral part of the
consolidated financial statements.
F-5
NOTE 1 - DESCRIPTION OF BUSINESS AND GENERAL
A. DESCRIPTION OF BUSINESS
(1) On July 22, 2004, WWAP Inc. ("the Company") a Delaware corporation
acquired 94.6% of the issued and outstanding common stock of
ActivePoint Ltd. in exchange for 2,615,147 common shares of WWAP
Inc. At the time of the 2004 acquisition, WWAP Inc had no
significant assets or operation.
ActivePoint Ltd is accounted for as the acquiring party and the
surviving accounting entity because the former stockholders of
ActivePoint Ltd received an amount of voting shares which
constitutes an effective controlling interest in the combined
corporation. The shares issued by WWAP Inc pursuant to the 2004
acquisition have been accounted for as if those shares had been
issued upon the organization of ActivePoint Ltd. The outstanding
capital stock of WWAP Inc immediately prior to the 2004 acquisition
has been accounted for as shares issued by ActivePoint Ltd. to
effect the reverse acquisition.
Because ActivePoint Ltd. is the accounting survivor, the financial
statements presented for all periods are those of ActivePoint Ltd.
All inter -company accounts and transactions are eliminated on
consolidation. All financial statements are in the currency of the
United States Dollar.
The outstanding common stock of 2,615,147 common shares at the time
of the 2003 acquisition was held principally by officers of the
combined corporation.
(2) The financial statements have prepared on a going concern basis,
which contemplates the realization of assets and the liquidation of
liabilities in the ordinary course of business. As shown in the
accompanying financial Statements. The company has a working capital
deficit of $70,727 and a stockholders' deficit of $359,016 at
December 31, 2003. And has funded operations since inception through
equity and debt financing. As a result substantial doubt exists
about the company's ability to continue to fund future operations
using its existing resources.
(3) The Company is engaged in research and development, marketing and
selling of software that enables network sales.
(4) The Company established a subsidiary, ActivePoint Ltd. ("the
Subsidiary") to provide the Company with services relating to the
Company's product. The minority interest (5.4%) was not reflected in
the accounts since the subsidiary had a shareholders' deficit and
the minority had no guarantee for the shareholders' deficit.
B. RISK FACTORS
The Company has a limited operating history and faces a number of
risks, including uncertainties regarding demand and market
acceptance of the Company's products, dependence on a single product
line, the effects of technological change, competition and the
development of new products. Additionally, other risk factors exist
such as the ability to manage growth, loss of key personnel and the
effect of planned expansion of operations on the future results of
the Company.
The Company has funded operating losses and negative cash flows
since inception through the issuance of equity and debt financing.
The Company anticipates that it will continue to incur significant
operating costs and losses in connection with the development of its
product and with increased marketing efforts. In addition, the
Company has limited revenues from its operations and is therefore
dependent on outside financing and on the continuing support of its
investors.
F-6
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the annual financial
statements of the Company as of December 31, 2003, are applied
consistently in these financial statements.
NOTE 3: - UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include
all 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 nine months ended
September 30, 2004 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2004.
NOTE 4: - SIGNIFICANT EVENTS DURING THE REPORTED PERIOD
(1) On August 26, 2004, WWAP entered into a Standby Equity
Distribution Agreement with Cornell Capital Partners, LP
("Cornell").
Under this agreement, WWAP may issue and sell to Cornell
Capital Partners Common Stock for a total purchase price of up
to $10.0 million. Subject to certain conditions, WWAP will be
entitled to commence drawing down on the Equity Line of Credit
when the sale of the Common Stock under the Equity Line of
Credit is registered with the Securities and Exchange
Commission and for two years thereafter. The purchase price
for the shares will be equal to 97% of the market price, which
is defined as the lowest closing bid price of the Common Stock
during the five trading days following the notice date. A cash
fee equal to four percent (4%) of the cash proceeds of the
draw down is also payable at the time of funding. To date,
WWAP has not drawn down on the Standby Equity Distribution
Agreement. Other than the Standby Equity Distribution
Agreement, no other financing agreement is currently available
to WWAP.
(2) On August 26, 2004, WWAP entered into a Securities Purchase
Agreement with Cornell. Under this agreement, Cornell may
purchase from WWAP up to $500,000 of secured convertible
debentures (the "Debentures"). The Debentures are convertible
into shares of Common Stock pursuant to the terms of the
Debenture and Cornell has been given registration rights with
respect to the shares issuable upon conversion of the
Debentures. As of the date hereof, Cornell has purchased
$75,000 worth of Debentures, and is obligated to purchase the
remaining $425,000 within five (5) days of the filing of this
registration statement.
(3) On August 26, 2004, and pursuant to the financing agreements
with Cornell, WWAP entered into Business Development
Agreements with Mobilepro and Lighthouse Advisors, Inc.
("Lighthouse"). Pursuant to the agreements, Mobilepro and
Lighthouse are obligated to provide certain business
consulting services, including, but not limited to assisting
WWAP with identifying customers, product development and
overall services designed to improve the business of WWAP. As
consideration for the services provided by these agreements,
WWAP issued Mobilepro 1,436,103 shares of WWAP of which
1,174,994 shares are being distributed pursuant to a proposed
registration statement and 522,219 shares were issued to
Lighthouse. WWAP intends to register the shares issued to
Lighthouse at the same time it registers the shares to be
issued to Cornell.
(4) ActivePoint Ltd. is currently involved in litigation with Onn
Tavor, ActivePoint's former chief executive officer. In March
2004, Mr. Tavor filed a lawsuit in the Regional Labor Court of
Tel-Aviv against ActivePoint for damages in the amount of
approximately U.S. $225,000 alleging that ActivePoint owed him
unpaid salary, severance pay and social benefits. Mr. Tavor
was granted a temporary attachment over ActivePoint's bank
accounts, real property and software programs, but not over
funds owed to ActivePoint by its customers. In June 2004,
ActivePoint filed a counter-claim against Mr. Tavor alleging
negligence which resulted in a loss of approximately U.S.
$900,000.00. Legal opinion received by the company indicates
that the maximum exposure of the company to this claim is an
amount of $77,000. Which has been reflected as a liability in
the consolidated balance sheet. On November 1, 2004, Onn Tavor
applied to court for an order of liquidation against the
subsidiary company - Activepoint Ltd. Legal opinion taken by
the company indicates that there is no basis for this action.
F-7
NOTE 5: - SUBSEQUENT EVENTS
(1) On November 2, 2004 the board of directors of the Corporation
had resolved that, the Corporation is authorized to issue to
Moshe Offer 500,000 shares of common stock of the Corporation.
In addition, in 2005, he shall receive an annual compensation
of $ 125,000 and a bonus of up to $ 115,000 based upon the
performance criterions to be determined by the Board of
Directors.
In term of resolution of the directors dated November 16,
2004, the following performance criterions were decided upon,
In order for the above bonus to come into effect:
(1) Success in achieving and equity line of at least $
500,000 for the company, or
(2) The sale of the company or part thereof for a minimum of
$ 5 million.
Whichever shall occur first.
(2) On October 20, 2004, and pursuant to the financing
transactions, WWAP has issued two (2) Debentures to Cornell in
the principal amounts of $75,000 and $390,000 respectively.
Within five (5) days of the filing of the registration
statement Cornell is obligated to fund WWAP an additional
$425,000 and WWAP will issue a third Debenture. The Debentures
are due (2) years from the date of issuance and accrue
interest at a rate of 5% per annum. Cornell is entitled, at
its option, to convert, and sell on the same day, at any time
and from time to time subject to certain restrictions, until
payment in full of the Debentures, all or any part of the
principal amount of the Debenture, plus accrued interest, into
shares of WWAP's Common Stock. The shares of Common Stock
issuable upon conversion of the Debentures are entitled to
registration rights.
(3) On October 15, 2004 the Corporation resolved an Employment
agreement. The plan provides for the granting of non-qualified
stock options, incentive stock options (within the meaning of
Section 422 of the Code), stock appreciation rights ("SARs"),
restricted stock and restricted stock unit awards, performance
shares and other cash or share-based awards. The maximum
number of shares of common stock that may be issued in
connection with awards under the plan is 2,000,000. In the
event of any merger, reorganization, recapitalization, stock
split, stock dividend, or other change in corporate structure
that affects our common stock, an adjustment may be made to
the (a) maximum number of shares available for grants under
the plan and/or kind of shares that may be delivered under the
plan, (b) the individual award limits under the plan and (c)
number, kind and/or price of shares subject to outstanding
awards granted under the plan, by the board of directors of
WWAP, to prevent dilution or enlargement of rights. Shares of
stock covered by an award under the plan that is cancelled,
expired, forfeited or settled in cash will again be available
for issuance in connection with future grants of awards under
the plan. As of the date of this prospectus, no awards have
been made under the plan.
F-8
Report of Independent Registered Public Accounting Firm
To the of shareholders of
WWAP INC.
We have audited the accompanying consolidated balance sheets of WWAP Inc. (a
development stage company) ("the Company") and its subsidiary as of December 31,
2003 and 2002 and the related consolidated statements of operations,
shareholders' equity and cash flows for the year ended December 31, 2003, and
2002. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States of America). 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 the Company's 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company and its subsidiary as of December 31, 2003 and 2002 and the consolidated
results of its operations and cash flows for the year ended December 31, 2003,
and 2002, In conformity with accounting principles generally accepted in the
United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As described in note 1A(2), at
December 31, 2003 the company has produced a limited amount of revenue since
inception and had a retained deficit of US$ 1,638,002. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Reuveni, Hartuv, Tepper & Co.
Reuveni, Hartuv, Tepper & Co.
Certified Public Accountants
Tel Aviv, Israel November 16, 2004
F-9
WWAP INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(U.S DOLLARS)
DECEMBER 31,
------------
NOTE 2 0 0 3 2 0 0 2
---- ----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 27,732 $ 93,117
Other current assets 3 3,333 5,586
----------- -----------
Total current assets 31,065 98,703
EQUIPMENT 4
Cost 31,775 31,775
Less - accumulated depreciation (24,919) (20,783)
----------- -----------
Equipment, net 6,856 10,992
----------- -----------
$ 37,921 $ 109,695
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 842 $ 3,144
Other current liabilities 5 100,950 35,123
----------- -----------
Total current liabilities 101,792 38,267
LONG-TERM LIABILITIES
Subordinated long-term loan from shareholders 6 276,400 276,400
Liability for severance pay, net 7 18,745 4,469
----------- -----------
Total long term liabilities 295,145 280,869
COMMITMENTS AND CONTINGENT LIABILITIES 8
SHAREHOLDERS' EQUITY (DEFICIT) 9
Preferred shares, $0.01 par value; 10,000,000 shares
authorized; 2,337,500 issued and outstanding 23,375 23,375
Ordinary shares, $0.01 par value; 100,000,000 shares
authorized; 277,647 issued and outstanding 2,776 2,776
Additional paid-in capital 1,252,835 932,835
Deficit accumulated during the development stage (1,638,002) (1,168,427)
----------- -----------
Total shareholders' equity (deficit) (359,016) (209,441)
----------- -----------
$ 37,921 $ 109,695
=========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
F-10
WWAP INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S DOLLARS)
CUMULATIVE FROM
DECEMBER 8, 1997
YEAR ENDED (INCEPTION) TO
DECEMBER 31, DECEMBER 31,
------------ ------------
NOTE 2 0 0 3 2 0 0 2 2 0 0 3
---- ------- ------- -------
Income: $ 31,590 $ 22,874 $ 119,154
Operating costs and expenses:
Research and Development expenses 10 168,714 140,070 $ 855,357
Marketing expenses, Net 11 151,386 6,419 248,407
General and Administrative expenses 12 178,918 168,418 644,551
------------ ------------ ------------
Total expenses 499,018 314,907 1,748,315
Loss before financing expenses, net 467,428 292,033 1,629,161
Financing expenses, Net 2,147 3,556 8,841
------------ ------------ ------------
Loss before income taxation 469,575 295,589 1,638,002
Taxation 13 -- -- --
------------ ------------ ------------
Net loss $ 469,575 $ 295,589 $ 1,638,002
============ ============ ============
Basic loss per share: $ (0.02) $ (0.01) $ (0.07)
============ ============ ============
Weighted average number of
shares outstanding 14 23,652,647 23,652,647 23,652,647
============ ============ ============
The accompanying notes are an integral part of the
consolidated financial statements.
F-11
WWAP INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(U.S DOLLARS)
NUMBER OF SHARES DEFICIT
---------------- ACCUMULATED
SERIES A ADDITIONAL DURING THE
ORDINARY PREFERRED SHARE PAID-IN DEVELOPMENT
SHARES SHARES CAPITAL CAPITAL STAGE TOTAL
----------- ----------- ----------- ----------- ----------- -----------
Shares issuance form
December 8, 1997
ended December 31, 2001 277,647 2,337,500 $ 26,151 $ 801,175 $ -- $ 827,326
Net loss for the period form
December 8, 1997 ended
December 31, 2001 -- -- (872,838) (872,838)
----------- ----------- ----------- ----------- ----------- -----------
1.1 Balance - December 31, 2001 277,647 2,337,500 26,151 801,175 (872,838) (45,512)
Shares issuance in 2002 -- 131,660 -- 131,660
Net loss for the year -- -- (295,589) (295,589)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 2002 277,647 2,337,500 26,151 932,835 (1,168,427) (209,441)
Shares issuance in 2003 -- 320,000 -- 320,000
Net loss for the year -- -- (469,575) (469,575)
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 2003 277,647 2,337,500 $ 26,151 $ 1,252,835 $(1,638,002) $ (359,016)
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
F-12
WWAP INC. AND SUBSIDIARY.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S DOLLARS)
CUMULATIVE FROM
DECEMBER 8, 1997
YEAR ENDED (INCEPTION) TO
DECEMBER 31, DECEMBER 31,
------------ ------------
2 0 0 3 2 0 0 2 2 0 0 3
------- ------- -------
CASH FLOWS - OPERATING ACTIVITIES
Net loss for the period $ (469,575) $ (295,589) $(1,638,002)
Adjustments to reconcile net loss to net cash used
in operating activities:
Items not involving cash flows:
Depreciation and amortization 4,136 7,914 24,919
Increase (decrease) in liability for severance
pay, net 14,276 5,257 18,745
Changes in operating assets and liabilities:
Decrease (Increase) in other current assets 2,253 (253) (3,333)
Increase (decrease) in trade accounts payable (2,302) (15,535) 842
Increase in other current liabilities 65,827 896 100,950
----------- ----------- -----------
Net cash used in operating activities (385,385) (297,310) (1,495,879)
----------- ----------- -----------
CASH FLOWS - INVESTING ACTIVITIES
Purchase of equipment -- (2,671) (31,775)
----------- ----------- -----------
Net cash used in investing activities -- (2,671) (31,775)
----------- ----------- -----------
CASH FLOWS - FINANCING ACTIVITIES
Proceeds from issuance of long-term debt -- 253,900 276,400
Issuance of shares, net 320,000 131,660 1,278,986
----------- ----------- -----------
Net cash provided by financing activities 320,000 385,560 1,555,386
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (65,385) 85,579 27,732
CASH AND CASH EQUIVALENTS -BEGINNING OF PERIOD 93,117 7,538 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 27,732 $ 93,117 $ 27,732
=========== =========== ===========
The accompanying notes are an integral part of the
consolidated financial statements.
F-13
NOTE 1 - DESCRIPTION OF BUSINESS AND GENERAL
A. DESCRIPTION OF BUSINESS
(1) On July 22, 2004, WWAP Inc. ("the Company") a Delaware corporation
acquired 94.6% of the issued and outstanding common stock of
ActivePoint Ltd. in exchange for 2,615,147 common shares of WWAP
Inc. At the time of the 2004 acquisition, WWAP Inc had no
significant assets or operation.
ActivePoint Ltd is accounted for as the acquiring party and the
surviving accounting entity because the former stockholders of
ActivePoint Ltd received an amount of voting shares which
constitutes an effective controlling interest in the combined
corporation. The shares issued by WWAP Inc pursuant to the 2004
acquisition have been accounted for as if those shares had been
issued upon the organization of ActivePoint Ltd. The outstanding
capital stock of WWAP Inc immediately prior to the 2004 acquisition
has been accounted for as shares issued by ActivePoint Ltd. to
effect the reverse acquisition.
Because ActivePoint Ltd. is the accounting survivor, the financial
statements presented for all periods are those of ActivePoint Ltd.
All inter -company accounts and transactions are eliminated on
consolidation. All financial statements are in the currency of the
United States Dollar.
The outstanding common stock of 2,615,147 common shares at the time
of the 2003 acquisition was held principally by officers of the
combined corporation.
(2) The financial statements have prepared on a going concern basis,
which contemplates the realization of assets and the liquidation of
liabilities in the ordinary course of business. As shown in the
accompanying Financial Statements. The company has a working capital
deficit of $70,727 and a stockholders' deficit of $359,016 at
December 31, 2003. And has funded operations since inception through
equity and debt financing. As a result substantial doubt exists
about the company's ability to continue to fund future operations
using its existing resources.
(3) The Company is engaged in research and development, marketing and
selling of software that enables network sales.
(4) The Company established a subsidiary, ActivePoint Ltd. ("the
Subsidiary") to provide the Company with services relating to the
Company's product. The minority interest (5.4%) was not reflected in
the accounts since the subsidiary had a shareholders' deficit and
the minority had no guarantee for the shareholders' deficit.
B. RISK FACTORS
The Company has a limited operating history and faces a number of
risks, including uncertainties regarding demand and market
acceptance of the Company's products, dependence on a single product
line, the effects of technological change, competition and the
development of new products. Additionally, other risk factors exist
such as the ability to manage growth, loss of key personnel and the
effect of planned expansion of operations on the future results of
the Company.
The Company has funded operating losses and negative cash flows
since inception through the issuance of equity and debt financing.
The Company anticipates that it will continue to incur significant
operating costs and losses in connection with the development of its
product and with increased marketing efforts. In addition, the
Company has limited revenues from its operations and is therefore
dependent on outside financing and on the continuing support of its
investors.
F-14
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed in the preparation of the
financial statements, are as follows:
A. USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
Accounting Principles Generally Accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date
of the financial statements, and the reported amount of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
B. DEVELOPMENT-STAGE COMPANY
Since its inception, the Company's efforts have been devoted to
research and development. The financial statements are therefore
presented in accordance with the principles of Statement of
Financial Accounting Standards ("SFAS") No. 7 - "Accounting and
Reporting by Development-Stage Enterprises."
The company income in the year ended December 31, 2003 and 2002, are
form paid Beta sites, witch are actually a system test for a limited
period of time by potential customers.
C. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the financial
statements of the Company and its majority owed Subsidiary.
Inter-company transactions and balances between the company and its
Subsidiary have been eliminated in the consolidated financial
statements.
D. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and demand deposits in
banks, and other short-term, highly liquid investments with original
maturities of less than three months.
E. EQUIPMENT
Equipment is presented at cost, less accumulated depreciation.
Depreciation are calculated based on the straight-line method over
the estimated useful lives of the assets, as follows:
Computers and software 3 Years
Furniture and office equipment 14 Years
F. RESEARCH AND DEVELOPMENT COSTS
Research and Development costs are charged to operations as
incurred.
G. FAIR VALUE OF FINANCIAL INSTRUMENTS
The financial instruments of the Company consist mainly of cash and
cash equivalents, other current assets, trade accounts payable and
other current liabilities. In view of their nature, the fair value
of the financial instruments included in working capital of the
Company is usually identical or substantially similar to their
carrying amounts.
H. CONCENTRATIONS OF CREDIT RISK
As of December 31, 2003 and 2002 the Company had cash and cash
equivalents totaling $27,732 and $93,117, respectively, most of
which are deposited in a major Israeli financial institution.
Management believes that the financial institutions holding the
Company's cash and cash equivalents are financially sound.
F-15
I. INCOME TAXES
The Company accounts for income taxes under the provisions of SFAS
No. 109, "Accounting for Income Taxes". SFAS No. 109 requires an
asset and liability approach for financial reporting for income
taxes. Valuation allowances are established when necessary, to
reduce deferred tax assets, if it is more likely than not that all,
or a portion of it will not be realized.
NOTE 3 - OTHER CURRENT ASSETS
December 31,
------------
2 0 0 3 2 0 0 2
------- -------
Government of Israel
(VAT refundable and other) $ 3,333 $ 5,586
-------- --------
$ 3,333 $ 5,586
======== ========
NOTE 4 - EQUIPMENT
December 31,
------------
2 0 0 3 2 0 0 2
------- -------
Cost:
Computers and software $ 22,232 $ 22,232
Furniture and office equipment 9,543 9,543
-------- --------
$ 31,775 $ 31,775
-------- --------
Accumulated depreciation:
Computers and software $ 20,446 $ 17,505
Furniture and office equipment 4,473 3,278
-------- --------
24,919 20,783
-------- --------
$ 6,856 $ 10,992
======== ========
NOTE 5 - OTHER CURRENT LIABILITIES
December 31,
------------
2 0 0 3 2 0 0 2
------- --------
Employees and related institutions $ 17,304 $ 20,720
Accrual for vacation 5,047 12,045
Accrued expenses 78,599 2,358
-------- --------
$100,950 $ 35,123
======== ========
F-16
NOTE 6 - SUBORDINATEED LONG-TERM LOAN FROM SHAREHOLDERS
The Company signed loan agreements with its shareholders, as a
result of which as of December 31, 2003, $276,400 were received by
the Company. The loans will serve to finance the Company's activity.
The loan is denominated in dollars and is non-interest bearing, 25%
of the Company's income after a cash surplus of $100,000 in the
Company's account from sales, will be used to repay the loans. As of
December 9, 2004 the Company has not started repaying the loans
NOTE 7 - LIABILITY FOR SEVERANCE PAY, NET
The Company's liability for severance pay is calculated in
accordance with Israeli law based on the most recent salary paid to
employees and the length of employment in the Company. Part of the
liability is funded through individual insurance policies purchased
from outside insurance companies, which are not under the Company's
control. The balance presented as a liability for severance pay,
net, represents the un-funded portion.
Severance pay expenses for the year ended December 31, 2003 and 2002
were $ 21,365 and $ 9,349, respectively.
NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES
A. ROYALTY-BEARING GRANTS:
The Company partially finances its research and development
expenditures under a program sponsored by the Office of the Chief
Scientist ("OCS") of Israel for the support of research and
development activities conducted in Israel.
In exchange for participation in the program by the OCS, the Company
agreed to pay 3%-5% of total net sales of software developed within
the framework of these programs. The royalties will be paid up to a
maximum amount equivalent to 100% of the grants provided by the OCS,
linked to the dollar. Repayment of such grants is not required in
the event that there are no sales of products developed within the
framework of such funded program. During 2003, total royalties
accrued amounted to $785.
As of December 31, 2003, the Company had a contingent liability to
pay royalties of approximately $ 258,000.
B. ActivePoint Ltd. is currently involved in litigation with Onn Tavor,
ActivePoint's former chief executive officer. In March 2004, Mr.
Tavor filed a lawsuit in the Regional Labor Court of Tel-Aviv
against ActivePoint for damages in the amount of approximately U.S.
$225,000 alleging that ActivePoint owed him unpaid salary, severance
pay and social benefits. Mr. Tavor was granted a temporary
attachment over ActivePoint's bank accounts, real property and
software programs, but not over funds owed to ActivePoint by its
customers. In June 2004, ActivePoint filed a counter-claim against
Mr. Tavor alleging negligence which resulted in a loss of
approximately U.S. $900,000.00. Legal opinion received by the
company indicates that the maximum exposure of the company to this
claim is an amount of $77,000, which has been reflected as a
liability in the consolidated balance sheet. On November 1, 2004,
Onn Tavor applied to court for an order of liquidation against the
subsidiary company - ActivePoint Ltd. Legal opinion taken by the
company indicates that there is no basis for this action.
C. For further commitments and contingent liabilities which have arisen
after the date of the balance sheet - refer Note 14 (Subsequent
Events).
F-17
NOTE 9 - SHAREHOLDERS' EQUITY
A. GENERAL
Ordinary shares confer to holders the right to receive notice to
participate and vote at general meetings of the Company and the
right to receive dividends, if declared. Ordinary shares and
preferred shares are identical in all respects except for some
preferential rights granted to holders of preferred shares upon
liquidation. Preferred shares confer to holders the right to receive
10 Ordinary shares for 1 preferred shares.
B. ISSUANCE OF SHARE CAPITAL
In July 2004 The Company signed an agreement with its founders
according to which the Company issued such founders with 277,647
ordinary shares and 2,337,500 Preferred shares of, $0.01 par value
each, of the Company. (see note 1A1).
C. PREFERRED STOCK
The Preferred Stock has a liquidation preference over the holders of
the common stock, the amount equal to the greater of (i) the issue
price of the Preferred Stock plus accrued and unpaid interest on the
Issue Price at a rate of 3% commencing on the date of payment of the
Preferred Stock issue price or (ii) the pro-rata distribution on the
Common Stock had a holder of the Preferred Stock converted
his/her/its Preferred Stock prior to a liquidation, dissolution or
winding up of the Corporation (appropriately adjusted for any stock
split or stock combination of the Preferred Stock) for each share of
Preferred Stock then held by them and, in addition, in each case an
amount equal to all cumulated and unpaid dividends on the Preferred.
Each share of Preferred Stock is convertible into ten (10) shares of
Common Stock and the holder of each share of Preferred Stock shall
be entitled to the number of votes equal to the number of shares of
Common Stock into which such share of Preferred could be converted.
Each share of Preferred Stock shall automatically be converted into
shares of Common Stock at the then effective conversion rate upon
(i) this registration statement under the Securities Act being
declared effective by the Securities and Exchange Commission
covering the offer and sale of securities and (ii) the quotation of
the Corporation's securities on the Over-the-Counter Bulletin Board
or the listing of the Corporation's securities on a securities
exchange. Holders of Preferred Stock are entitled to protective
provisions, including the right to approve the creation of any class
of stock that ranks superior to the Preferred Stock.
NOTE 10 - RESEARCH AND DEVELOPMENT EXPENSES, NET.
Cumulative from
December 8, 1997
Year ended (inception) to
December 31, December 31,
------------ ------------
2 0 0 3 2 0 0 2 2 0 0 3
------- ------- -------
Salaries and related $167,505 $135,554 $780,227
expenses, net Other 1,209 4,516 75,130
-------- -------- --------
$168,714 $140,070 $855,357
======== ======== ========
NOTE 11 - MARKETING EXPENSES, NET.
Cumulative from
December 8, 1997
Year ended (inception) to
December 31, December 31,
------------ ------------
2 0 0 3 2 0 0 2 2 0 0 3
------- ------- -------
Consultants, Net $116,628 $ 6,419 $206,142
Travel expenses, Net 34,758 -- 42,265
-------- -------- --------
$151,386 $ 6,419 $248,407
======== ======== ========
F-18
NOTE 12 - GENERAL AND ADMINISTRATIVE EXPENSES
Cumulative from
December 8, 1997
Year ended (inception) to
December 31, December 31,
------------ ------------
2 0 0 3 2 0 0 2 2 0 0 3
------- ------- -------
Salaries and related expenses $103,664 $ 97,566 $267,996
Professional fees 22,488 21,546 100,094
Depreciation 4,136 7,914 24,919
Rent and office maintenance 49,630 41,392 251,542
-------- -------- --------
$178,918 $168,418 $644,551
======== ======== ========
NOTE 13 - INCOME TAXES
A. DEFERRED TAXES
As of December 31, 2003, the Company and its Subsidiary had a net
operating loss for tax purpose carry forward of approximately $1.4
million.
Due to the uncertainty of realizing the benefit of the Company's tax
loss carry forwards, a valuation allowance for the entire amount of
the related deferred tax asset has been recorded.
B. The Company and its Subsidiary have not received tax assessments
since their incorporation.
NOTE 14 - EARNINGS PER SHARE
Basic earnings per share are computed based on the weighted average
number of shares outstanding during each year, plus the amount of
the assumed conversion of the preferred shares into shares of common
stock.
NOTE 15 - SUBSEQUENT EVENTS
(1) On August 26, 2004, WWAP entered into a Standby Equity Distribution
Agreement with Cornell Capital Partners, LP ("Cornell").
Under this agreement, WWAP may issue and sell to Cornell Capital
Partners Common Stock for a total purchase price of up to $10.0
million. Subject to certain conditions, WWAP will be entitled to
commence drawing down on the Equity Line of Credit when the sale of
the Common Stock under the Equity Line of Credit is registered with
the Securities and Exchange Commission and for two years thereafter.
The purchase price for the shares will be equal to 97% of the market
price, which is defined as the lowest closing bid price of the
Common Stock during the five trading days following the notice date.
A cash fee equal to four percent (4%) of the cash proceeds of the
draw down is also payable at the time of funding. To date, WWAP has
not drawn down on the Standby Equity Distribution Agreement. Other
than the Standby Equity Distribution Agreement, no other financing
agreement is currently available to WWAP.
(2) On August 26, 2004, WWAP entered into a Securities Purchase
Agreement with Cornell. Under this agreement, Cornell may purchase
from WWAP up to $500,000 of secured convertible debentures (the
"Debentures"). The Debentures are convertible into shares of Common
Stock pursuant to the terms of the Debenture and Cornell has been
given registration rights with respect to the shares issuable upon
conversion of the Debentures. As of the date hereof, Cornell has
purchased $75,000 worth of Debentures, and is obligated to purchase
the remaining $425,000 within five (5) days of the filing of a
registration statement.
(3) On August 26, 2004, and pursuant to the financing agreements with
Cornell, WWAP entered into Business Development Agreements with
Mobilepro and Lighthouse Advisors, Inc. ("Lighthouse"). Pursuant to
the agreements, Mobilepro and Lighthouse are obligated to provide
certain business consulting services, including, but not limited to
assisting WWAP with identifying customers, product development and
overall services designed to improve the business of WWAP. As
consideration for the services provided by these agreements, WWAP
issued Mobilepro 1,436,103 shares of WWAP of which 1,174,994 shares
are being distributed pursuant to a proposed
F-19
registration statement and 522,219 shares were issued to Lighthouse.
WWAP intends to register the shares issued to Lighthouse at the same
time it registers the shares to be issued to Cornell.
(4) On October 20, 2004, and pursuant to the financing transactions,
WWAP has issued two (2) Debentures to Cornell in the principal
amounts of $75,000 and $390,000 respectively. Within five (5) days
of the filing of the registration statement Cornell is obligated to
fund WWAP an additional $425,000 and WWAP will issue a third
Debenture. The Debentures are due (2) years from the date of
issuance and accrue interest at a rate of 5% per annum. Cornell is
entitled, at its option, to convert, and sell on the same day, at
any time and from time to time subject to certain restrictions,
until payment in full of the Debentures, all or any part of the
principal amount of the Debenture, plus accrued interest, into
shares of WWAP's Common Stock. The shares of Common Stock issuable
upon conversion of the Debentures are entitled to registration
rights.
(5) On November 2, 2004 the board of directors of the Corporation had
resolved that, the Corporation is authorized to issue to Moshe Ofer
500,000 shares of common stock of the Corporation. In addition, in
2005, he shall receive an annual compensation of $ 125,000 and a
bonus of up to $ 115,000 based upon the performance criterions to be
determined by the Board of Directors. In term of resolution of the
directors dated November 16, 2004, The following performance
criterions were decided upon, In order for the above bonus to come
into effect:
a. Success in achieving and equity line of at least $ 500,000 for
the company, or b. The sale of the company or part thereof for
a minimum of $ 5 million. Whichever shall occur first.
(6) On October 15, 2004 the Corporation resolved an Employment
agreement. The plan provides for the granting of non-qualified stock
options, incentive stock options (within the meaning of Section 422
of the Code), stock appreciation rights ("SARs"), restricted stock
and restricted stock unit awards, performance shares and other cash
or share-based awards. The maximum number of shares of common stock
that may be issued in connection with awards under the plan is
2,000,000. In the event of any merger, reorganization,
recapitalization, stock split, stock dividend, or other change in
corporate structure that affects our common stock, an adjustment may
be made to the (a) maximum number of shares available for grants
under the plan and/or kind of shares that may be delivered under the
plan, (b) the individual award limits under the plan and (c) number,
kind and/or price of shares subject to outstanding awards granted
under the plan, by the board of directors of WWAP, to prevent
dilution or enlargement of rights. Shares of stock covered by an
award under the plan that is cancelled, expired, forfeited or
settled in cash will again be available for issuance in connection
with future grants of awards under the plan. As of the date of this
prospectus, no awards have been made under the plan.
(7) ActivePoint Ltd. is currently involved in litigation with Onn Tavor,
ActivePoint's former chief executive officer. In March 2004, Mr.
Tavor filed a lawsuit in the Regional Labor Court of Tel-Aviv
against ActivePoint for damages in the amount of approximately U.S.
$225,000 alleging that ActivePoint owed him unpaid salary, severance
pay and social benefits. Mr. Tavor was granted a temporary
attachment over ActivePoint's bank accounts, real property and
software programs, but not over funds owed to ActivePoint by its
customers. In June 2004, ActivePoint filed a counter-claim against
Mr. Tavor alleging negligence which resulted in a loss of
approximately U.S. $900,000.00. Legal opinion received by the
company indicates that the maximum exposure of the company to this
claim is an amount of $77,000. Which has been reflected as a
liability in the consolidated balance sheet. On November 1, 2004,
Onn Tavor applied to court for an order of liquidation against the
subsidiary company - Activepoint Ltd. Legal opinion taken by the
company indicates that there is no basis for this action.
F-20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation and by-laws include an indemnification
provision under which we have agreed to indemnify directors of WWAP to the
fullest extent possible from and against any and all claims of any type arising
from or related to future acts or omissions as a director of WWAP.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
WWAP pursuant to the foregoing, or otherwise, WWAP has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth estimated expenses expected to be incurred
in connection with the issuance and distribution of the securities being
registered. WWAP will pay all expenses in connection with this offering.
Securities and Exchange Commission Registration Fee $ 169.02
Printing and Engraving Expenses $20,000.00
Accounting Fees and Expenses $35,000.00
Legal Fees and Expenses $80,000.00
SALE OF UNREGISTERED SECURITIES
There have been no recent sales of unregistered securities except as
follows: i) 1,436,103 shares issued to Mobilepro and 522,219 shares issued to
Lighthouse pursuant to the Business Development Agreements pursuant to an
exemption from registration under Regulation D and (ii) a private placement an
aggregate of 748,314 shares of common stock of Activepoint, the subsidiary
organized under the laws of Israel, for aggregate proceeds of $500,000.00, which
shares were converted into shares of preferred stock of WWAP pursuant to the
Exchange Agreement. The proceeds of this offering will be used for general
working capital.
EXHIBITS
No. Description
- ------ ------------------------------------------------------------
3.1 Amended and Restated Certificate of Incorporation of WWAP, Inc.
3.2 Certificate of Designation of Class A Convertible Preferred Stock
3.3 By-laws of WWAP, Inc.
5.1 Opinion of McLaughlin & Stern, LLP (to be provided by amendment)
10.1 Exchange Agreement between WWAP, Inc. and Activepoint, Ltd. dated as
of October 2004
10.2 Collaboration Agreement between WWAP, Inc. and Activepoint, Ltd.
dated as of August 2004
10.3 Securities Purchase Agreement, dated August 26, 2004, between
Cornell and WWAP
10.4 Secured Convertible Debenture in the principal amount of $75,000
10.5 Security Agreement, dated August 26, 2004, between Cornell and WWAP
10.6 Pledge Agreement, dated October, 2004, between Cornell and WWAP
10.7 Standby Equity Distribution Agreement, dated August 26, 2004,
between Cornell and WWAP
10.8 Escrow Agreement, dated August 26, 2004, between WWAP, Cornell and
Butler Gonzalez LLP (Securities Purchase Agreement)
10.9 Escrow Agreement, dated August 26, 2004, between WWAP, Cornell and
Butler Gonzalez LLP (Standby Equity Distribution Agreement)
II-1
10.10 Registration Rights Agreement (SEDA), dated August 26, 2004, between
WWAP and Cornell
10.11 Investor Registration Rights Agreement, dated August 26, 2004,
between WWAP and Cornell
10.12 Business Development Agreement, dated August 26, 2004, between WWAP
and Mobilepro
10.13 Business Development Agreement, dated August 26, 2004, between WWAP
and Lighthouse Advisors, Inc.
10.14 Convertible in the principal amount of $390,0000
10.15 WWAP, Inc. 2004 Long Term Equity Incentive Plan.
21.1 Subsidiaries of WWAP
23.1 Consent of Reuveni, Hartuv, Tepper & Co.
UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Sections 10(a)(3) of the Securities
Act of 1933 (the "Act");
(ii) Reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) Include any additional or changed material information on the plan
of distribution;
(2) That, for the purpose of determining any liability under the Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer 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 Act and
will be governed by the final adjudication of such issue.
II-2
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on our behalf by the undersigned, on December 16, 2004.
WWAP, INC.
By: /s/ Moshe Ofer
-----------------------------------
Name: Moshe Ofer
Title: President, Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates stated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Stephen Dumbrell Director December 20, 2004
- -------------------------
Stephen Dumbrell
/s/ Mosher ofer Director December 20, 2004
- -------------------------
Moshe Ofer
II-3