U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
UBRANDIT.COM
(Exact name of registrant as specified in its charter)
Nevada 88-0381646
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12626 High Bluff Drive, Suite 200, San Diego, CA 92130
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (858) 350-9566
Securities registered or to be registered pursuant to Section 12(b) of the Act
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered:
------------------- --------------------
common shares None
$.001 Par Value
TABLE OF CONTENTS
ITEM 1: DESCRIPTION OF BUSINESS...............................................6
ITEM 2. FINANCIAL INFORMATION................................................19
ITEM 3. DESCRIPTION OF PROPERTY..............................................24
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......25
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.....................................26
ITEM 6. EXECUTIVE COMPENSATION...............................................29
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................30
ITEM 8. LEGAL PROCEEDINGS....................................................30
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS..........................................30
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES..............................31
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED..............32
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................34
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA..........................34
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL
DISCLOSURE...........................................................34
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS....................................35
CERTAIN DEFINITIONS
The following are definitions of terms commonly used in the Internet industry
and in this document.
Archive
A collection of files stored on a computer network - often
retrievable by FTP (File Transfer Protocol).
Authentication
A security measure for checking a network user's identity.
Backbone
The Internet's high speed data highways that serve as major
access points to which other networks connect.
Bandwidth
The amount of data you can send through a network connection.
Bandwidth is usually measured in bits-per-second (bps).
Branding
"Private Labeling" or "branding" means that when Ubrandit.com
creates content for a client's Web site (such as content from
its e-commerce or financial destination sites), the content
will contain the client company's name, logo, and navigation
buttons, and will include very minimal information about
Ubrandit.com or its affiliates.
Browser
Another name for a client program that allows users to access
documents on the WWW (World Wide Web). Browsers can be both
text-based or graphic.
Client
A remote computer connected to a host or server computer. Also
refers to the software that makes this connection possible.
Cyberspace
A term coined by author William Gibson in his novel
"Neuromancer." Cyberspace is currently used to refer to the
digital world constructed by computer networks, in particular
the Internet.
Domain Name
The address that identifies an Internet site. Domain Names
consist of at least two parts. The part on the left is the
name of the company, institution, or other organization. The
part on the right identifies the highest subdomain. This can
be a country, such as ca for Canada, fr for France, or the
type of organization: com for commercial; edu for educational,
etc. The IP address is translated into the domain name by the
DNS.
DNS
Domain Name System -- A database system that translates an IP
address into a domain name. For example, a numeric address
like 205.206.106.50 is converted into wwli.com.
Download
To transfer files from one computer to another. The most
common way of doing this on the Internet is by FTP (File
Transfer Protocol).
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e-commerce
A term used to describe the ability of users to research,
compare, and buy products and services directly from companies
and individuals who have sites on the World Wide Web.
e-mail (electronic mail)
A way of sending messages on computers attached to local or
global networks.
Electronic Mall
A virtual shopping mall where you can browse and buy products
and services online.
Electronic Storefront
A virtual space in an electronic mall. This consists of space
on a server (usually at a Web site) where HTML documents are
stored.
Encryption
A way of making data unreadable to everyone except the
receiver. An increasingly common way of sending credit card
numbers over the Internet when conducting commercial
transactions.
Firewall
The computer file system of a site's inner network that is
protected against unauthorized access by Internet users.
FTP
(File Transfer Protocol) -- A way of moving files across
networks. With FTP you can login to another Internet site and
download or send files. Some sites have public file archives
that you can access by using FTP with the account name
"anonymous" and your e-mail address as password.
This type of access is called anonymous FTP.
Gateway
A computer system for exchanging information across
incompatible networks that use different protocols. For
example, many commercial services have e-mail gateways for
sending messages to Internet addresses.
Hit
In the context of the WWW (World Wide Web), it refers to the
act of accessing an HTML (hypertext markup language) document
on a Server.
Home Page
The first page on a Web site that acts as the starting point
for navigation.
Host
A computer that acts as a server.
Hyperlink
These are links in HTML documents that you can click on to go
to other Web resources.
Hypermedia
The multimedia links on the Web that lead to sound, graphics,
video, or text resources.
Information Packet
A bundle of data sent over a network. The protocol used
determines the size and makeup of the packet.
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Internet
A global collection of computer networks that exchange
information by the TCP/IP (Transmission Control
Protocol/Internet Protocol) suite of networking protocols.
Internet Account
An account with an ISP that allows you to access the Internet.
IP Address
The Internet Protocol address - the numeric address that is
translated into a domain name by the DNS (Domain Name System).
ISDN
Integrated Services Digital Network -- Digital
telecommunications lines with two channels that can yield a
combined capacity of 128 kbps.
ISP (Internet Service Provider)
A company that provides various kinds of Internet accounts to
organizations and individuals.
Load
On the WWW (World Wide Web), HTML (Hypertext Markup Language)
documents and graphics are loaded into the browser whenever a
URL (Universal Resource Locator) or is accessed.
Mailing-List
A discussion forum where participants subscribe to a list and
receive messages via e-mail.
Modem
A device for translating the digital data of computers into
analog signals. Two or more computers connected together over
phone lines are therefore able to exchange files and generally
communicate with each other.
Navigate
To move around on the WWW (World Wide Web) by following
hypertext paths from document to document on different
computers.
Netizen
A citizen of the Internet.
Newsfeed
ISPs get their newsgroups from different newsfeeds, or news
sources, by transferring them over the Internet or other
networks.
Newsgroup
A discussion forum on the Internet similar to that found on
local BBS's (bulletin board system). There are currently
around 15,000 different groups covering a wide range of
topics.
Newsreader
Application software for reading and posting articles to
newsgroups.
Online
When a user is connected to a network, they are described as
being online.
Page View or Unique Visitors
A term used to describe the number of times that a page is
actually viewed as opposed to hits wherein a page may have
many hits depending on the structure and design of the page.
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Password
A secret combination of letters and other symbols needed to
login to a computer system.
Platform
The type of computer or operating system on which a software
application runs. For example, some common platforms are PC,
Macintosh, Unix, and NeXT.
POP (Point of Presence)
The nearest connection point at which a user may connect to a
remote site - usually that of the ISP (Internet Service
Provider) or telephone company. This is relevant when ordering
a dedicated line since you have to pay for mileage.
Post
Subscribers to newsgroups and mailing lists take part in
discussions by sending or posting their articles or comments
online.
Postmaster
An alias on a mail server for administering routing of e-mail.
Preference Setting
A set of parameters on software tools, especially WWW (World
Wide Web) browsers, that allows a signature file to e-mail or
newsgroup messages, change the color and appearance of text,
etc.
Protocol
A specification that describes how computers will talk to each
other on a network.
Real-Time Chat
This is one use of the Internet that allows live conversation
between online users by typing on a computer terminal. The
most common tools are Talk and IRC (International Relay Chat).
Script
In the context of the WWW, a (gateway) script is a program
that runs on a Web server and processes requests based on
input from the browser.
Search Engine
Programs on the Internet that allow users to search through
massive databases of information.
Server
A host computer on a network that answers requests for
information from it. The term server is also used to refer to
the software that makes the process of serving information
possible.
Signature File
A file automatically attached to outgoing e-mail messages and
postings to newsgroups.
SMTP
Simple Mail Transfer Protocol - standard protocol on the
Internet for delivering e-mail.
Stickiness
Stickiness (retention) is one of the most important trends on
today's Internet. The concept is to find ways of keeping Web
users glued to a particular Web site. The key to stickiness or
retention is providing users with an abundance of useful
content that they are able to find virtually all their needs
onsite or in other words - one stop shopping.
4
Surf
To search for information in the cyberspace reality of the WWW
(World Wide Web) by navigating in a nonlinear way.
TCP/IP
The Transmission Control Protocol (TCP) and the Internet
Protocol (IP) are protocols that let different types of
computers communicate with each other. The Internet is based
on this suite of protocols.
URL
Universal Resource Locator -- An address you use to tell your
browser where to find a resource. For example, the URL for the
World Wide Language Institute is http://wwli.com.
Username
The name assigned to users of a computer network. By
convention, default usernames usually consist of a person's
initial(s) plus their family name. For example, if your name
is Ricardo Garcia, your username would be rgarcia. Typing your
username on the computer screen is part of the login procedure
and identifies you to the computer system.
Viewer
Most browsers use helper applications, sometimes called
"viewers," to display full-size graphics and play sound and
video clips. These are separate applications that the browser
initiates after it has downloaded the image or clip.
Virtual
An adjective that refers to objects, activities, etc., that
exist or are carried on in cyberspace. For example, on the WWW
(World Wide Web) you can find virtual or electronic malls and
storefronts.
Webmaster
The person responsible for administering a Web site.
WWW or Web
World Wide Web -- A hypermedia-based system for accessing
Internet sites by clicking on hyperlinks.
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ITEM 1: DESCRIPTION OF BUSINESS
Forward-Looking Statements
This Registration Statement contains certain forward-looking statements
that involve risks and uncertainties. Our company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of a variety of factors that may or may not be within our control,
including the risks set forth in "Risk Factors" and elsewhere in this
Registration Statement.
Overview
Ubrandit.com, a Nevada corporation (together with its subsidiary, the
"Company" or "Ubrandit"), is a development-stage enterprise engaged in the
development of specialty Web sites and other online related services and
products. Our primary focus is the "branding" (private labeling) of our
destination financial and e-commerce sites on the World Wide Web to the existing
Web sites of companies desiring to drive traffic and encourage repeat visitors
to their respective sites. "Private labeling" or "branding" means that when the
Company creates content for a client's Web site, the content (or Web pages) will
contain the client company's name, logo, and navigation buttons, and will not
include information about Ubrandit.com. We believe that branded content provides
more credibility to a client's Web site than a linked component, which directs
all of the credit to the company that created the content. We will initially
focus on providing brandable turnkey systems for two of the fastest growing
segments of the World Wide Web, financial information and e-commerce.
The Company offers online financial information and related services
through its recently acquired wholly-owned subsidiary, Global Investors Guide,
Inc., a California corporation ("Global Investors Guide"). Global Investors
Guide is an early stage start-up company, which provides financial information
services via a World Wide Web site located at www.stockstudy.com. Stockstudy.com
is a comprehensive financial site that provides Web users with an extensive
array of valuable features, including: stock quotes, personal portfolio
management, mutual fund data, news releases, and exclusive editorial content. In
addition to the financial services provided by Stockstudy.com, the Company has
also launched two additional financial sites since its acquisition of Global
Investors Guide, Irpackages.com at the Internet address www.irpackage.com and
Newsletterz.com located at www.newsletterz.com. The IRpackages.com site features
a fully automated investor relations package request system developed by the
Company whereby users of the Web site can request investor relations packages
from over 5,200 public companies. Newsletterz.com is a financial
newsletter-marketing program that promotes a growing number of financial
publications from various investment categories. The Company is in the process
of launching its initial e-commerce site, JungleJeff.com, located at
www.junglejeff.com, which will offer books, music CDS, videos, and movie DVDs to
online purchasers.
The Company was incorporated on December 19, 1997, in the State of
Nevada under the name of Mount Merlot Estates, Inc. In January 1999, the Company
changed its name to Virtual Brand, Inc. In February 1999, the Company changes
its name a second time to Ubrandit.com. The Company has sold equity shares to
raise capital, recruit and organize management, and to commence corporate
strategic planning and development. Other than the combined operations of Global
Investors Guide, the Company has not conducted any significant operations as of
the date of this Registration Statement. The Company's principal corporate
offices are located at 12626 High Bluff Drive, Suite 200, San Diego, CA 92130 .
Its telephone number is (858) 350-9566.
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Risk Factors
Our business is subject to a variety of risks and uncertainties. These
include but are not limited to, the risks and uncertainties identified below.
Additional risks and uncertainties that are presently not known to us or that we
deem immaterial may also impair our business operations or financial condition.
Our company is subject to risks inherent in any new business venture.
As discussed elsewhere in this Registration Statement, we are not fully
operational and we have not as of yet introduced our branding services.
Therefore, we are unable to provide any assurance or guarantee that the
marketplace will accept our branding services and related online products, or
that we will be able to sell such services and products at a profit.
Our company has a limited operating history and we have not yet
launchedour branding services and fully commenced operations.
Other than revenues generated through our combined operations of Global
Investors Guide, we have not as of yet generated any significant revenues from
operations and we are unable to provide any assurance or guarantee that we will
be able to generate any substantial revenues in the future. Since its inception
in December 1997, our company's principal business activities have been limited
to organizational matters, research and development activities, the acquisition
and creation of Web site content and the introduction of its e-commerce sites.
Our company therefore has no significant operating history on which to evaluate
its future prospects and ability to implement its business plan and objectives.
We expect our operating losses to continue in the near future as our
development, marketing and sales activities, and operations continue. We are
uncertain as to when, or if, our company will ever become profitable.
Our capital is limited and we may need additional capital to implement
our business plan and continue operations.
Our company has limited operating capital and limited access to credit
facilities. We expect that additional funds will be necessary for our company to
implement its business plan, as described in this Registration Statement. Our
company's continued operations therefore will depend upon its ability to raise
additional funds through bank borrowings or equity or debt financing. There is
no assurance that the Company will be able to obtain additional funding when
needed, or that such funding, if available, can be obtained on terms acceptable
to the Company. If the Company cannot obtain needed funds, it may be forced to
curtail or cease its activities.
Our company's success still depends on its ability to attract and
retain qualified technical and management personnel.
At present, our company employs eleven full-time personnel plus various
consultants in management, sales, programming, legal, and editorial
responsibilities. Our company's success will depend, in part, upon its ability
to attract and retain qualified employees, technical consultants and management
personnel. We are unable to provide any assurance or guarantee that we will be
able to attract, integrate or retain sufficiently qualified personnel. Our
inability to retain additional qualified personnel in the future could harm our
business.
We face a number of risks associated with obtaining Year 2000
compliance.
Computer systems, software packages and microprocessor dependent
equipment may cease to function or generate erroneous data when the Year 2000
arrives. To correctly identify the Year 2000, a four-digit code field will be
required to be what is commonly termed "Year 2000 compliant." Our business may
suffer if the systems we depend on to conduct day-to-day operations are not Year
2000 compliant. The potential areas of exposure include electronic data exchange
systems operated by third parties with which we may transact business and
computers, software, telephone systems and other equipment that we may use
internally.
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Our systems may fail or experience a slow down.
Our facilities will house a variety of hardware and software computer
systems. Our operations depend on our ability to protect these systems against
damage from fire, earthquakes, power loss, telecommunications failures,
break-ins and similar events. Additionally, computer viruses, electronic
break-ins or other similar disruptive problems could harm our operations. A
disaster or malfunction that disables our facility could cause an interruption
in the production and distribution of our products and services, or limit the
quantity or timeliness of updates to our productions. Our insurance policies may
not adequately compensate us for any losses that may occur due to any failures
or interruptions in our systems. We do not presently have a formal disaster
recovery plan.
The market for online services is intensely competitive.
E-commerce and the market for online services are intensely competitive
industries. The Company will compete against established companies with
significantly greater financial, marketing, personnel, and other resources than
the Company. Such competition could have a material adverse effect on the
Company's profitability.
The market for our company's securities is limited and may not provide
adequate liquidity.
The Company's Common Stock is currently traded on the OTC Electronic
Bulletin Board. We are unable to provide any assurance or guarantee that the OTC
Bulletin Board will provide adequate liquidity or that a trading market will be
sustained. Holders of our company's stock may be unable to sell shares purchased
should they desire to do so. Furthermore, it is unlikely that a lending
institution will accept our company's securities as pledged collateral.
"Penny stock" regulations may impose certain restrictions on
marketability of securities.
The SEC has adopted regulations which generally define "penny stock" to
be an equity security that has a market price of less than $5.00 per share. The
Company's Common Stock may be subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's prior written consent to the
transaction. Additionally, for any transaction, other than exempt transactions,
involving a penny stock, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the SEC relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's Common Stock and
may affect the ability to sell the Company's Common Stock in the secondary
market.
Our market and business technology is rapidly changing.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our Web sites and Internet
storefronts. Internet e-commerce and other Internet-based industries are
currently characterized by rapid technological change, changes in customer
requirements and preferences, frequent new product and service introductions
embodying new technologies, and the emergence of new industry standards and
practices that could render our existing Web sites, Internet storefronts and
enabling technologies obsolete. If we are unable, for technical, legal,
financial or other reasons, to adapt quickly to changing market conditions and
customer requirements, our business, financial condition and results of
operations would be materially adversely affected.
8
Security breached and credit card fraud could harm our business.
A significant barrier to online commerce and communications is the
secure transmission of confidential information over public networks. We rely on
licensed third party encryption and authentication technology to provide the
security and authentication necessary to effect secure transmission of
confidential information, such as customer credit card numbers. Advances in
computer capabilities, new discoveries in the field of cryptolography, or other
events or developments may result in a compromise or breach of the algorithms we
use to protect our customers, transaction data or our software vendors and
products. Someone who is able to circumvent our security measures could
misappropriate proprietary information to cause interruptions in our operations.
We may be required to expend significant capital and other resources to protect
against such security breaches or alleviate problems caused by such breaches.
Such expenditures could have a material adverse effect on our business, results
of operations and financial condition.
Because we store and transmit proprietary information, a breach of our
security could damage our reputation and expose us to potential liability from
litigation and reimbursement of losses. We are unable to provide any assurance
that our security measures will prevent a future security breach or that, should
a security breach occur, it will not have a material adverse effect on our
business, results of operations and financial condition. In addition, we may
incur losses, as have other retailers who accept credit card payments without
obtaining a signature, from orders placed using fraudulent or stolen credit card
information, despite obtaining approvals from financial institutions. Under
current commercial banking and credit card practices, we are liable for
fraudulent credit card transactions. We are unable to provide any assurance that
our security measures will always be successful and, as a result, could suffer
from significant losses in the future which could have a material adverse effect
on our business, results of operations and financial condition.
Our operations significantly depend upon maintenance and continued
improvement of the Internet's infrastructure.
The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic. Our
success will depend upon the development and maintenance of the Internet's
infrastructure to cope with this increased traffic. This will require a reliable
network backbone with the necessary speed, bandwidth, data capacity and
security. Improvement of the Internet's infrastructure will also require the
timely development of complementary products, such as high-speed modems, to
provide reliable Internet access and services.
The Internet has experienced a variety of outages and other delays as a
result of damage to portions of its infrastructure and could face similar
outages and delays in the future. Outages and delays are likely to affect the
level of Internet usage, the level of traffic on our Web site and the number of
purchases on our Web site. In addition, the Internet could lose its viability as
a mode of commerce due to delays in the development or adoption of new standards
to handle increased levels of activity or due to increased government
regulation. The adoption of new standards or government regulation may also
require us to incur substantial compliance costs.
We may be exposed to liability for content retrieved from our Web
sites.
Our exposure to liability from providing content on the Internet is
currently uncertain. Due to third party use of information and content
downloaded from our Web sites, we may be subject to claims for defamation,
negligence, copyright, trademark or patent infringement or other theories based
on the nature and content of online materials. Our exposure to any related
liability, particularly for claims not covered by insurance, or in excess of any
insurance coverage, could have a material adverse effect on our business,
financial condition and results of operations. Liability or alleged liability
could further harm our business by diverting the attention and resources of our
management and by damaging our reputation in our industry and with our
customers.
9
Our industry may be subject to increased government regulation.
As commerce conducted on the Internet and online services continue to
evolve, federal, state or foreign agencies may adopt regulations or impose new
taxes intended to cover our business operations. These agencies may seek to
regulate areas including user privacy, pricing, content and consumer protection
standards for our products and services. Compliance with additional regulation
could hinder our growth or prove to be prohibitively expensive. It is also
possible that the introduction of additional regulations could expose companies
involved in Internet commerce, or the provision of content over the Internet, to
significant liability. If enacted, these government regulations could materially
adversely affect the viability of the Internet commerce and online services,
generally, as well as our business, financial condition and results of
operations.
Acquisition of Global Investors Guide
On March 11, 1999, the Company entered into an Agreement and Plan of
Reorganization for the Acquisition of All the Outstanding Shares of Common Stock
of Global Investors Guide. Said shares were purchased from the shareholders of
Global Investors Guide in exchange for 1,826,000 shares of the Company's common
stock. Global Investors Guide became a wholly owned subsidiary of the Company.
The transaction was treated as a reverse acquisition and accordingly the
Company's audited financial statements reflect the combined operations. Global
Investors Guide is a progressive Internet company that provides financial
information services via a Web site located at www.stockstudy.com. Headquartered
in Del Mar, California, Global Investors Guide employed eight full-time
personnel plus various consultants in management, sales, programming, legal, and
editorial responsibilities at the time of acquisition. The Web site
stockstudy.com provides online investors with targeted content, including, but
not limited to: stock quotes, personal portfolio management, charting, mutual
fund data, news releases, public company Web site listings, an automated
investor relations package request system, and financial editorial content. At
the time of acquisition, Global Investors Guide, in conjunction with major
industry partners was developing a comprehensive online e-commerce destination
site designed to directly compete for present market share. This site has since
developed into junglejeff.com, the Company's book, music, video, e-commerce site
discussed in detail below. Prior to its acquisition by the Company, Global
Investors Guide was developing a "branding" technology for future release with
the sales of its private-labeled sites to follow after completion and adequate
testing. This branding technology has become one of the principal technologies
of the Company as set forth below. The Company hired all the key employees of
Global Investors Guide and has continued the development of the branding and
private labeling technology. Global Investors Guide is the first significant
acquisition of Company .
Business Strategy
The Company's business strategy is to build a Company that offers
brandable Web modules to other Web sites. The Company is focused on creating
value for its stockholders through revenues created by advertising, sales, and
sponsorship payments on its soon to be brandable destination financial and
e-commerce sites on the World Wide Web. The Company expects that companies with
existing Web sites desiring to drive traffic and encourage repeat visitors to
their respective sites will brand the Ubrandit.com's destination sites thereby
increasing Ubrandit.com's e- commerce sales, the value of its advertising space,
and sponsorship revenue. The key components of the Company's business strategy
include the following:
(1) To develop destination Web sites in the areas of finance
(stock quotes, company and financial information and reports)
and entertainment (books, videos, and music ).
(2) Upgrade its existing financial sites Stockstudy.com,
newsletterz.com and Irpackages.com to brandable sites and
increase and improve the content on these sites.
(3) Complete development and beta testing of its e-commerce site,
Junglejeff.com, make the site brandable, and continue to
increase and perfect the content of the site once the site is
in operation.
(4) Market its brandable sites and the advertising space and
sponsorships available on its main sites and branded sites.
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(5) Continue developing and increasing the customers utilizing the
Company's custom Web site design and programming
The Company's principal business objective is to provide "private
labeled" and "branded" financial and e- commerce Web-based systems to the
Internet. "Private Labeling" or "branding" means that when the Company creates
content for a client's Web site, the content (or Web pages) will contain the
client company's name, logo, and navigation buttons, and will include very
minimal information about Ubrandit.com. or its affiliates. The goal of one of
the Company's branded sites is to have it appear to be part of the client's Web
site and to have the Web user believe that he or she has not left the clients
site when accessing the content available on the private labeled site. The
Company believes that the content provided by branded sites will provide Web
users with significant incentives to visit and remain at the client's Web site
enabling the client to have an increased Web presence. Branded content is
different than content assessable by "linking". Usually linking occurs when a
Web user accesses a link and is sent to a different and distinct site where the
company that created the content is located. After visiting the different site
the Web user has little incentive to return to the originating site where the
link was found when desiring to access that specific content again.
Through the development of completely brandable systems for financial
information and e-commerce, the Company believes that it has found a niche
within the Internet industry that has yet to have been fully exploited. To date
the Company knows of no Internet company has positioned itself as the leader in
this niche area. The Company believes that there will be significant demand for
branded systems.
The Company's current focus is on providing branded turnkey systems for
two significant segments of the World Wide Web, financial information and
e-commerce. Through technology developed by Global Investors Guide and through
the development of and purchase of other Web content, it is the Company's plan
to develop valuable "sticky" technology (content and systems which hold traffic
at Web sites) that will enable the generation of income through commission-based
programs and advertisement.
Plan of Operation
The Company has financed its research and development activities
through the sale of equity securities to its stockholders in private
transactions. As of March 31, 1999, the Company had approximately $941,566 in
cash, together with approximately $990,000 in remaining proceeds received in
April from a recent private sale of its securities, to conduct operations. At
the current expense rate, the Company anticipates that such funds will be
sufficient to continue operations until the end of the third quarter of the next
fiscal year. Thereafter, the Company will be dependent upon the receipt of
additional capital to sustain operations. Without additional capital, there is
substantial uncertainty about the ability of the Company to achieve its business
plan.
The Company intends to commence providing branding services to approved
clients by August 1999, and to continue its research and development efforts to
the extent permitted by available financing
The Company's principal focus over the remainder of this fiscal year
and for the first six months of fiscal 2000 will be to complete the development
of its branding technology. The Company uses outside programmers and computer
technicians as well as Company employees in its research and development
efforts. The Company also plans, as part of its development efforts, to increase
the amount of content and the quality of the content on all of its sites. This
will involve extensive programming to increase the ease of use of the Web sites
and the overall presentation of the sites so that users of the site will find a
hassle free, friendly and exciting environment. The Company believes that such
improvements will increase Web traffic and the length of time that users are on
its affiliated sites thereby, which will increase the potential for higher
advertising revenues. The Company expects to increase the number of programmers
employed to four over the next year and to continue its outsourcing of
programmers. It is expected that two more outsourcing firms will be added to the
Company's research and development outsourcing program over the next year. The
Company plans to control costs by extensively utilizing outsourcing in the
future. It is possible that the Company may encounter opportunities to acquire
strategic Internet related entities and/or content providers for the purpose of
consolidation or expansion of its current operations. Any such acquisition would
be outside the scope of our management's currently anticipated workload. The
Company may be required to raise additional capital and recruit additional
qualified management personnel to lead and supervise these efforts. In the event
11
that the Company decides to make an acquisition, these operational and other
issues will be addressed as part of the acquisition evaluation.
The Company also plans to increase the "stickiness" of its sites by the
acquisition of more and improved content to the existing sites. With regards to
the e-commerce site, Junglejeff.com, this would mean the acquisition of more
products to sell. At present the Company is researching the development of sub
sites for computer products and auction based e-commerce. The Company plans also
to enter into other strategic alliances with product providers such as those
providing the book, music , and video products to offer a larger number and
greater variety of products. The Company expects to increase the information
available on its financial sites and significantly increase the database of
public companies available on irpackages.com. The Company intends to allocate
additional capital to recruit and train additional qualified personnel to
implement this expansion strategy. The Company plans to continue to increase the
quality of the quotes, portfolio management, charting, and company information
available on the site stockstudy.com. This will be done through additional
programming and development of the site and by the purchase of additional data
feeds from data providers. The Company also plans to increase the attractiveness
of newsletterz.com by increasing both the number and variety of news letters
available on the site. The Company has allocated additional personnel to market
the service to the newsletter community.
Through the first six (6) months of the next fiscal year, the Company
plans to purchase approximately $200,000 in computer equipment which will
include servers, hubs, routers, Internet connectivity lines, and work stations.
The Company expects that this equipment will be capable of servicing the
projected number of users on the Company's e-commerce sites and content sites
over this period. The Company's computer systems are scalable and if the number
of Internet users accessing the sites exceed expectations more funds will be
allocated to the purchase of additional servers and connectivity lines. The
Company expects that the present office space that it is leasing will be
adequate to accommodate the growth of the Company through the end of the next
fiscal year. The Company uses off-site server providers in secure server
locations to house most of its Internet server computers and expects to continue
this practice in the foreseeable future.
The Company expects to hire four additional programmers and computer
technicians during the remainder of this year and the first half of the next
fiscal year and expects to extensively employ outside computer consultants on a
project by project basis. The Company will be hiring approximately twelve people
to work in a newly formed marketing department. This new department will market
the services and products of the Company including: selling advertising on the
Company's sites and associates sites, marketing the associates program to the
Companies and institutions that have Web sites that could benefit from a branded
e-commerce or financial site, and selling custom programming to Web Sites. The
Company also expects to hire an additional ten technicians to support the
operations of the e-commerce site, and an additional five persons for general
administrative purposes.
Principal Markets
The Company initially will focus on two principal markets on the World
Wide Web: the market for financial services and information (stock quotes,
personal portfolio management, charting, mutual fund data, news releases,
automated investor relations package request system, and financial editorial
content) and the market for entertainment products and services (books, videos,
and music ).
The Company expects to generate the majority of its revenue through 1)
revenues derived from the sale of products via e-commerce (through the Company's
main sites and through the Company's client (associate branded sites)), 2) the
sale of advertisement space (on main sites and on client sites), 3) Fees Charged
for custom Web site design and programming, and 4) Fees charged for graphic
customization of the branded content on individual associate sites.
Marketing
The Company plans to implement an aggressive marketing campaign over
the next 12 months. The Company expect to finance the bulk of its marketing
expenses through the future sale of its equity securities. The Company has
allocated approximately $200,000 to finance the cost of marketing its
destination Web sites and related products over the next six months. Additional
12
funds will be required to implement the Company's marketing strategy. The
Company has determined that the most effective way to market its products will
be through multiple media advertising campaigns, including Web-based
advertisements, targeted mailings, and print and radio advertisements. The
Company will also benefit as its client base grows since the Company plans to
control the advertising space on its branded sites. The Company expects
advertising exposure to increase as the Company develops more branded sites.
The potential customers of the Company are significant since many Web
sites are constantly searching for new "sticky" content to differentiate
themselves from their competition and to encourage repeat visits by their users.
The Company believes that its products will appeal to virtually every type of
Web site that provides content and will represent very significant savings to
these sites over the development of similar sticky solutions by their own
programmers.
Initial Marketing Prospects
The Company has targeted several different types of Internet sites for
its initial marketing effort over the next 12 months. The Company believes that
these sites would significantly benefit from branding its sticky financial
information and e-commerce systems and therefore be most receptive to its
marketing efforts. The Company plans to hire twelve additional sales and service
personnel to service these new accounts. As of this time the Company has not
completed its branding technology nor has it entered into any branding
agreements with Web Site owners.
Portal Sites (an example of some very large portal sites are Excite,
Yahoo!, and Netscape's Netcenter) are continuously adding and searching for new
sticky content to help ensure that they are able to keep users glued onsite. The
Company believes that its brandable products could significantly assist portals
that want to add powerful sticky content without providing links to the
competition. Though some very large sites may already have agreements with
sticky content providers, the Company will market to other portals which are as
yet unaffiliated with financial information or e-commerce systems or sites that
wish to upgrade their present systems to the sophistication of a branded system.
The Company believes that many financial sites will be able to benefit
from the Company's products. For example, many financial information sites
provide services such as stock quotes and personal portfolio management, but
lose users to other sites when it comes to other important features such as
financial editorial content and e- commerce capabilities. The Company could also
market to such sites its newsletterz.com and irpackages.com sites.
The Company expects to fulfill these needs when its branding technology is
competed.
Many radio station Web sites currently do not offer their users an
online music CD store. The Company believes that this is a market with
significant potential for exposure to the Company's branded e-commerce stores
and the sale of music products. The Company expects that its future radio
station partners will be able to customize their stores in order to appeal to
the music preferences of the station's listeners. For its marketing effort over
the next twelve months the Company has compiled a data base of radio and
television stations, daily weekly newspapers, and magazines and plans to promote
its products to these companies as soon as the Company's e-commerce site is
available for branding. The Company expects to generate low or no cost
advertising from radio stations that sign up for its branded sites; stations
stand to benefit when their listeners visit their Web sites. The Company plans
to give its partners the opportunity to earn commissions from sales of music CDS
and other merchandise that listeners purchase from the radio station's branded
store.
The Company will also be marketing its sticky e-commerce and financial
sites to Community Sites. Community Sites (some examples of some very large
community sites are Geocities and the Mining Company) create "fraternities" of
users by providing Community-building features such as personal Web pages,
networking opportunities, and free e-mail services. A typical Community Site
organizes its site's features in ways that entice users into visiting various
areas of the site on a regular basis. When successful, the site's users become
accustomed to frequenting the site for specific information and interaction with
users of similar interests. The Company's products cover topics with such
wide-range appeal (from the financial markets to entertainment products) that
the Company believes that its branded sites will represent significant
additional assets to Community Sites.
The Company believes that one of the key benefits of its e-commerce
site is that it will be highly customizable to the partner when all of the
technology is completed. The Company believes this will be appealing to a wide
selection of sites such as sports, travel, automotive and health related sites
13
where the site could tailor its branded e- commerce store to increase the time a
user spends on his site and the users repeat visits. For example a partner sport
related site could select and showcase specific sports books, videos, and DVDs
relating to its site.
Sticky Technology
The Company believes that "stickiness" is one of the most important
trends on today's Internet. As the word would imply, stickiness means finding
ways of keeping Web users glued to a particular Web site.
While a Web user may utilize a Web site for a specific purpose, such as
the purchasing of computer hardware, the moment the need arises for something
else, such as a stock quote or book purchase, the user is off to another site if
the current site does not provide the desired content. The key to stickiness is
providing users with so much useful content that they are able to find virtually
everything they need onsite.
The Company has taken that model one step further by developing
integrated systems that when completed will provide the client company's Web
site with an array of important content that will be branded with the client
company's name, logo, and color scheme - not those of Ubrandit.com.
Prior to acquisition and now as part of the Company, Global Investors
Guide, has been developing a diverse suite of sophisticated Web sites with the
purpose of "branding" the sites to clients as sticky solutions. Three major
sites are completed www.stockstudy.com , www.irpackage.com, and
www.newsletterz.com. The Company has launched its fourth site,
www.junglejeff.com and is presently beta testing the site. The Company's
destination Web sites have been designed to reflect the latest in sticky
technologies. The Company expects to release its proprietary branding technology
in the third calendar quarter of 1999 and begin branding its sites to clients
shortly thereafter.
Branding Technology
The Company uses the terms "branding" and "private labeling"
interchangeably. The goal of the Company's proprietary branding technology, is
to provide private labeled content to client sites whereby the content will
appear to belong exclusively to the client company. This will be achieved by
incorporating the client company's name, logo, Web-color scheme, and navigation
into the content. The Company's destination Web sites have been designed to be
"transparent" in the way client sites access the branded content. The branding
content is designed so that the user will not notice the change in content
provider when they leave the client's site and enter the Company's branded
content. This is unlike the traditional "affiliate" model or "linking"
arrangement where the user is typically transferred directly to the main site of
the company that created the content. The Company believes that the lack of
transparency in the traditional affiliate model and linking arrangement is a
major shortcoming. In many cases the user will eventually just bypass the
affiliate site in favor of going directly to the content provider. The Company's
systems have been designed so that the user will not be aware of the Company's
destination sites, JungleJeff.com, StockStudy.com, Irpackages.com, or
newsletterz.com. This is key in that then users will not be tempted to bypass
the clients site and also it will enable the Company to run a variety of
e-mail-based promotions designed to drive traffic back to our clients' sites.
The Company expects to begin branding its destination sites to approved clients
by August 1999.
The Company's Brandable Sticky Solutions
Stockstudy.com
Located on the Internet at www.stockstudy.com, stockstudy.com is a
comprehensive financial site that provides Web users with an extensive array of
sticky features including: stock quotes, personal portfolio management, mutual
fund data, news releases, and exclusive editorial content. The Company plans to
add several new features to the site over the remainder of 1999 including adding
data feeds that provide additional news sources and editorial comment.
Upon completion of its branding technology the Company expects to be
able to brand stockstudy.com to Web sites that either do not have a finance
center or wish to upgrade their finance center - a customer base that includes a
significant portion of Web sites on the Internet. There are thousands of sites
14
that currently "link" to other sites for finance content. The Company believes
that a significant number of these sites would take advantage of a cost
effective and sophisticated private labeled finance center if it was made
available to them. It is the goal of the Company's private labeled finance
center to appear as part of the client's Web site - not as a link to another
company's financial content. With enhanced content the Web user will have more
of an incentive to visit and remain at a client's site.
Newsletterz.com
Located on the Internet at www.newsletterz.com, Newsletterz.com is a
unique financial newsletter-marketing program that promotes a growing number of
publications from various investment categories. Investors can sample dozens of
respected financial publications and read daily market commentary from the
editors.
When the Company's branding technology is complete, Newsletterz.com
will provide clients with an opportunity to earn revenue from the sale of trial
subscriptions. Users of the site will be able to purchase long-term and trial
subscriptions directly from the site. The Company plans to generate revenues
from the sale of trial subscriptions by a client's site shared with the client.
It is expected that newsletterz.com will be available as a stand-alone brandable
product and also as an integrated part of stockstudy.com.
IR Packages.com
IR packages.com is located on the Internet at www.irpackages.com. The
"IR" in IR Packages.com stands for "Investor Relations." Investor relations
packages are a resource that many investors require when evaluating the
investment merits of a company. A typical IR package includes the company's
corporate profile, recent press releases, recent public filings, and other
pertinent company information.
The Company has developed a fully automated IR package request system.
Users simply utilize the site's search engine to find the company they are
interested in receiving an IR package from, and click "send." The system
automatically sends an e-mail to the IR department of the selected company with
the user's contact information and request. The IR department of the specific
company then makes a determination on the disposition of the request. IR
packages.com already has included in its data base more than 5,200 publicly
traded companies and is on pace to add a significant number of additional
companies by the end of the third calendar quarter of 1999.
IR Packages.com is an integrated part of the Company's stockstudy.com
and it is expected that the site will also be available as a separate brandable
product.
JungleJeff.com
Launched on June 8,1999 and currently in beta testing, JungleJeff.com
is a large e-commerce site that currently features music, videos, and DVDs. The
site is located on the Web at www.junglejeff.com. The site's book store will
soon be completed and it is expected that other product lines will be added over
time. Once branding technology is complete, the Company will be able to private
label JungleJeff.com to Web sites that either do not have an entertainment
presence or wish to upgrade their entertainment presence, a customer base that
potentially encompasses a significant portion of Web sites on the Internet. As
is the case with finance centers, there are thousands of Web sites that
currently link to other sites for their entertainment presence via associates
programs (associate sites earn commissions through the generation of sales). The
Company believes that a significant number of these sites would take advantage
of a cost effective and sophisticated private labeled entertainment e-commerce
site if it was made available to them. The Company plans through JungleJeff.com
to offer client companies an affiliate revenue sharing program. It is
anticipated that an affiliate site, when the technology is complete, will be
able to customize their store to highlight certain categories and items,
according to their respective needs.
The products that are sold through Junglejeff.com, similar to other
e-commerce sites, are purchased from large music and book distributors and
resold to buyers purchasing on the Web. Currently the Company has a contract
with a major industry distributor to provide its music, book, and video products
through a drop shipment program. Pursuant to the program products purchased on a
retail Web site are drop shipped to the customer on an as available basis. No
specific inventory has been designated as belonging to the Company and the
Company only purchases the inventory as it fulfills orders. The Company has also
15
contracted with major industry data providers to provide the book, music, and
video data base feeds. These data feeds that appear on the Company's destination
sites (and the Company's branded sites when the technology is completed), allow
purchasers to view video, book, or music jackets and pricing, biographic
synopsis, and other information about the products that are being sold. Since
the Company will rely exclusively on the drop shipment program run by its
distributors, the Company will not keep an inventory of its products. Since the
Company will not keep its own inventory, products will only be available to the
Web purchaser if they are currently in stock or as they become available to the
Company's distributors. The Company's system updates distributor's inventory on
a weekly basis. Products are purchased exclusively by credit card and the
Company processes said credit card purchases through CyberCash, Inc. of Reston,
Virginia, a provider of secure electronic payment solutions. The Company insures
secure Internet transactions by the use of VeriSign, of Mountain View,
California, a provider of Public Key Infrastructure (PKI) and digital credit
solutions used by Web sites to conduct communications and transactions over the
Internet. Products are purchased from distributors on an as available basis. If
the product is not available within 15 days then the purchaser will be notified
by e-mail and have the opportunity to cancel the order. The Company has a return
policy that a customer may return any unused item for a full refund provided
that the customer returns it to the Company in its original condition within 15
days following receipt of order. Shipping costs are only refunded if the return
in due to an error on the part of the Company.
Revenue Sources
The Company has in previous years generated revenue from list rentals,
sponsorship advertising, and design of Web sites. The Company anticipates these
sources will not to be as significant in the future due to the in Company's
change in planning. As stated previously in this section the main focus of the
Company is on new areas of revenue generation, specifically, e-commerce, selling
Web site advertising, and graphic customization. Though not a primary focus, the
Company will also continue its Web site development and to seek sponsorship
advertising.
E-commerce
The Company recently launched a beta version of its site on June 8,
1999. No significant revenues have been earned by the site and there are no
material backorders. The Company expects to earn revenues on items (books, music
CDS, Videos, DVDs, etc.) sold via its e-commerce site JungleJeff.com. The
Company plans to earn revenues on items sold through partnered versions of the
site upon the completion of the Company's branding technology. The Company
anticipates offering discounts on items sold through JungleJeff.com and through
branded versions of the site. The Company plans to pay a commission to partners
on sales generated by their branded sites.
The Company's other source of revenue generation from e-commerce is
through the sale of financial newsletter trial subscriptions from StockStudy.com
and Newsletterz.com. To date no significant revenues have been earned.
(Newsletterz.com is an integrated part of StockStudy.com and is expected to also
be available to partners as a separate brandable product upon completion of the
Company's branding technology). The Company plans to pay its partner sites a
commission on all trial subscription revenue generated by their branded sites.
Advertising
To date the Company has not earned any significant revenue from
advertising. Currently the layouts of the Company's branded and destination
sites allow for one large banner ad and up to two smaller banner ads per page.
The Company plans to follow the generally accepted guidelines for advertising
fees on the World Wide Web. Ad fees are generally calculated through a
combination of the following two criteria: 1) The number of page views received
(each time a banner ad has the opportunity of being seen by a user counts as one
page view); 2) The popularity of the host site (and the popularity of specific
pages of the host site). Typically, Web sites charge advertisers by CPM (cost
per thousand) page views. The Company plans to follow this general model.
The Company plans to charge fees that are commensurate with these
criteria. As mentioned above, the Company currently plans on controlling the
advertising space on its destination and branded sites. Therefor the value of
the Company's advertising space should increase as the size of the Company's
partner base grows.
16
Graphic Customization
The Company plans to charge a fee to partners who wish to customize and
have their official corporate logo integrated into their branded Web-content.
Depending on the level of customization required, the Company plans to charge a
fee accordingly. Though no assurances can be given, management believes that the
amount of revenue from this area could be significant if a large percentage of
partners opt for graphic customization.
Web Site Development
In addition to providing private labeled Web-content to partner sites,
the Company plans to continue and expand its custom Web site design and
programming for clients who wish to upgrade their existing Web presence.
The Company is not dependent on any large customer but conversely is
dependent upon various individual Web sites deciding to have the Company's
branded content appear on their respective Web sites. The Company believes that
the e-commerce and financial sites are suited for large corporate Web sites or
small individual sites. Since the Web sites will be able to customize the
branded content with regards to the color, logo, and highlighted content, the
branded content should be readily able to integrate into the look and feel of a
specific site whether it be a large car company or a small independent service
provider. It is in the Company's best interest to make their sites readily
brandable so that there is maximum exposure to the products sold by its
e-commerce sites and the advertisement space available on its e-commerce and
financial sites. The Company expects that its e-commerce business will be
seasonal in the same respect that any retail business is seasonal, with greater
sales expected in the holiday seasons.
Proprietary Technology and Research and Development
The Company does not have any patents on any of its Internet processes.
The Company does have various technologies that it has developed which are
proprietary. The Company expects that upon delivery of said proprietary
processes and technology to the market place that competitors will attempt and
possibly may successfully replicate certain advantageous processes developed by
the Company's that are part of its branding technology. The Company has applied
for Trademark protection with regards to its name and logo. The current business
strategy of the Company focusing on the development and branding of its
destination Web sites has resulted in the Company expending significant amounts
of its resources on research and development. The Company estimates that during
the past two years the that it has spent approximately $312,000 on Company
sponsored research and development. The dollar amount spent on research
activities sponsored by customers is not a material amount.
Competition
The Internet market is extremely competitive, new, and dynamic. The
Company will be competing with companies that have far greater resources than
that of the Company. The Company, a startup company, will be competing against
Company's with far greater experience and better funding. Though the competition
is formidable management believes that because of the dynamics and huge breadth
of Web e-commerce that there are certain areas of e-commerce where the Company
can compete effectively. Through the development of private labeled systems for
financial information and e-commerce, the Company believes that it has found a
niche within the Internet industry that has yet to be fully exploited. To date,
the Company believes that no Internet company has positioned itself as the
leader in this niche area.
It is management's opinion that when the Company's branding technology
is completed its value as a content provider to the Web sites of its partners
will stem from several distinct areas, including: the appeal of brandable
content, the turnkey nature of its content, the Company's planned no-cost (or
nominal fee charged for graphic customization) to participate model, the ability
for a partner to customize their e-commerce store to reflect the unique nature
of their business, and the expected breadth of the Company's products.
It is management's opinion that content providers represent the major
competition to the Company as they are vying for similar relationships with
third-party Internet marketers. The Company's major competitors generally fall
into the following two categories (1) e-commerce sites, such as Amazon.com and
BarnesandNoble.com, provide third-party sites with affiliate programs similar to
the partnering programs the Company will be offering when its branding
technology is complete. Larger sites may also keep an inventory of certain books
and music and thus may be able to deliver products that are not available to the
Company through its distributors. Also some of the larger sites may be able to
deliver certain products out of inventory on a more timely basis then the
Company. (2) Financial Information Providers, such as CBS Marketwatch and PC
Quote, Inc. provide third-party sites with comprehensive financial information
(stock quotes, market news, etc.) much like stockstudy.com. Many of the larger
sites have the advantages of "tie ins" with radio, print, and television media
that give them significantly greater exposure then that available to the Company
primarily dependent upon exposure through the Web.
17
The Company believes that its branding program has certain advantages
not offered by the "affiliate programs" offered by other e-commerce providers.
Generally affiliate programs work similar to the following. Destination Web
sites will advertise a number of books, CDS, or videos from one of the large
e-commerce sites offering the products, such as books that pertain to the
destination Web site's business. When a visitor to the site takes an interest in
a book (by "clicking" a link or picture of the book's jacket cover), the user is
instantly transferred to the e-commerce Web site.
That model has been generally very successful for these e-commerce Web
sites. The e-commerce site generates additional traffic and sells more
merchandise, users enjoy the shopping and browsing experience that the
e-commerce content provides, and the affiliate site hopefully generates more
repeat users and gets a commission on certain sales the e-commerce site makes
from its users.
The Company's program will be different providing partners with a
series of Web sites, any of which can be customized and "private labeled" to the
partner's existing site. By incorporating the partner company's logo and color
scheme, the Company will be able to add sophisticated sticky content with the
general "touch and feel" of the client's own Web site. Customers who click on
the Company's branded content will technically be transported to the Company's
servers; however, the change should be transparent to the customer. The
transition should be such that the Web site visitor would be unaware that he has
left the partner's site. The Company believes that the lack of transparency in
the traditional affiliate model is a major shortcoming because in many cases the
user may eventually just bypass the affiliate site in favor of going directly to
the content provider. Also once the user becomes a customer of the content
provider many times the content provider markets directly to the user bypassing
the affiliate site that directed the business. It is the present intention of
the Company to redirect traffic back to the Company's branded sites with certain
marketing campaigns which the Company believes will increase the "sticky" nature
of the branded sites.
Governmental Regulation
The Company will be subject to regulation by state, federal, local
authorities, with regards to content, copyright and Federal Trade Commission
regulations. No assurance can be given that unforeseen regulations will not be
adopted by the governmental authorities prohibiting the Company from conducting
business as planned or once in business limiting the success of said business
operations through the expense of complying with new regulations.
Employees
The Company currently has 11 full-time personnel plus various
consultants in management, sales, Internet and technology computer application,
programming, legal, and editorial responsibilities. The Company relies
significantly on outsourcing of its computer programming and other consulting
needs and plans to control costs by extensively utilizing outsourcing in the
future. Management of the Company expects to hire additional employees as
needed.
Further reference is made to the Company's Consolidated Financial
Statements, and the notes included therein and to the subsection "Management
Discussion and Analysis" included in Item 3 with regards to the Company'
business and planning.
18
ITEM 2. FINANCIAL INFORMATION
Summary of Certain Information
Capitalization
The following table sets forth the capitalization of Ubrandit.com and
subsidiary at March 31, 1999. This table should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Information Statement.
March 31,
1999
--------------
Short Term Debt.........................................$ 150,000
Long Term Debt.......................................... --0--
Shareholders' equity:
Common Stock, $0.001 par value,
25,000,000 shares authorized;
8,756,000 shares issued and
outstanding.................................... 8,756
Additional paid-in capital......................... 974,270
Retained earnings (deficit)........................ (282,139)
Total shareholders' equity .................... 700,887
Total capitalization...................... 850,887
==============
19
SUMMARY OF HISTORICAL FINANCIAL DATA
The following table, which sets forth certain historical combined
financial data for the Ubrandit.com and subsidiary for the period December 3,
1996 to September 30, 1997, the year ended September 30, 1998, and the six
months ended March 31, 1999, has been derived from the audited consolidated
Ubrandit.com and subsidiary financial statements. The selected historical data
as of and for the six months ended March 31, 1998, is unaudited and was derived
from the accounting records of Ubrandit.com. In the opinion of management, the
historical consolidated financial statements of Ubrandit.com and subsidiary as
of September 30, 1997 and 1998, and for the period December 3, 1996 to September
30, 1997, and the year ended September 30, 1998, and as of March 31, 1998
(unaudited) and 1999, and for the six months then ended, included all adjusting
entries (consisting only of normal recurring adjustments) necessary to present
fairly the information set forth therein. Historical financial data may not be
indicative of the Company's future performance. This information should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Historical Combined Financial Statements and
notes thereto included elsewhere herein. Historical earnings per share and
dividend data have not been presented, as the Company was not a publicly-held
company during the periods presented below.
(In Thousands)
For the Six months
period Year ended Ended Six months
December 3, September March 31, Ended
1996 30, 1998 March 31,
To September 1998 (Unaudited) 1999
30,
1997
---------- ---------- ---------- ----------
INCOME STATEMENT DATA
Revenue $86.4 $341.9 $274.7 $51.0
Operating expenses 78.0 443.4 239.0 224.1
Operating income (loss) 8.4 (101.6) 35.7 (173.0)
Other (expense) net 0 (13.0) (5.9) (1.2)
Income (loss) before income taxes 8.4 (114.7) 29.8 (174.2)
Income taxes 1.6 0 0 0
Net income (loss) $6.8 $(114.7) $29.8 $(174.2)
20
MANAGEMENT DISCUSSION AND ANALYSIS
General
Since its inception, the main activity of the Company, an early stage
startup Company, has been organizational. The Company has sold equity shares to
raise capital, recruited and organized management, has commenced corporate
strategic planning, and has engaged in the limited development of destination
Web sites and the branding and private labeling of systems for the Company. The
Company has conducted no significant operations to date. Though no assurance can
be given, management expects the Company to launch its brandable book, music,
video store and its brandable financial and other related financial sites in the
final quarter of the current fiscal year ending September 30, 1999. Even though
the Company expects to generate revenues from advertising, e-commerce sales, and
custom programming during the next fiscal year, management expects that, the
Company will continue to operate at a loss for the foreseeable future. On March
11, 1999, the Company purchased all of the common shares of Global Investors
Guide and Global Investors Guide became a wholly owned subsidiary of the
Company. Global Investors Guide is an Internet development Company with a
limited operating history. As of March 31, 1999, the Company owns approximately
$93,886 in tangible property, less depreciation of approximately $15,061.
Recent Events
The Company's most recent audited financial statements are as of March
31, 1999. In March of this year the Company negotiated a conversion of debt to
shares of Common stock with two creditors of the Company converting $264,251 in
debt to 500,000 shares of Common Stock. The negotiations and conversion
agreements were reached in March and are mentioned in Note 13 "Subsequent
Events" of the audited financial statements, but the shares were not issued
until April of 1999 and thus the debt conversion and the additional issuance of
shares is not reflected in the financial statements by either a reduction of
liabilities or an increase in the shares outstanding. Also, subsequent to March
31, 1999, 1,000,000 shares of Common Stock were purchased for $1.00 per share in
April of this year by accredited persons investing in a private offering of the
Company's Common Shares pursuant to Regulation D, Rule 506, promulgated under
the Securities Act of 1933, as amended. The offering and sale of these
additional shares is not reflected in the audited financial statements or the
notes to the financial statements.
Results of Operation
Six month period ended March 31, 1999, compared to the six month period
ended March 31, 1998
Consolidated revenues for the six months ended March 31, 1999, were
$51,060, as compared to revenues of $274,676 for the period ending March 31,
1998, representing a cumulative decrease of approximately 81%. The decrease in
revenues was principally due to the change in the Company's business focus.
During the six month period ended March 31, 1998, the Company generated revenues
from the sale of sponsorships and advertising space on its comprehensive
financial Web site and the sale of its financial newsletter subscriptions.
Previously, the Company's business model contemplated the development and
maintenance of a comprehensive financial Web site, the selling of sponsorships
on the site, and the marketing and selling of its Web site's financial
newsletter. The Company subsequently changed its business focus to the
development of its branding technology and "brandable destination Web sites."
Operating expenses consist of direct operating expenses, sales, general
and administrative expenses, and other operating expenses. Operating expenses
were $224,141 during the period ended March 31, 1999, in comparison to $238,976
for the period ended March 31, 1998. However, operating expenses as a percentage
of revenues increased approximately 352% to approximately 439% for the period
ended March 31, 1998, as compared to 87% for the period ended March 31, 1997.
The increase was primarily due to the decline in revenues and an increase in
research and development expenses relating to the Company's change in business
strategy.
Net losses from operations for the six months ended March 31, 1999,
were $173,081 as compared to net operating income of $35,700 for the six month
period ended March 31, 1998. The net losses during the period ended March 31,
1999, were due to the decline in revenue and increase in research and
development costs relating to the Company's implementation of its new business
plan.
Fiscal year ended September 30, 1998, compared to the period from
December 3, 1996, to September 30, 1997
Consolidated revenues for the fiscal year ended September 30, 1998,
were $341,887, as compared to revenues of $86,390 for the period ending
September 30, 1997, representing a cumulative increase of approximately 296%.
21
The increase in revenues was principally due to the additional revenues that the
Company was able to generate from its expanded sale of sponsorships and
advertising, custom programming and design, and subscriptions.
Operating expenses consist of direct operating expenses, sales, general
and administrative expenses, and other operating expenses. Operating expenses
were $443,481 during the fiscal year ended September 30, 1998, in comparison to
$78,027 for the period ended September 30, 1997, representing an increase of
approximately 468% over the preceding fiscal year. The increase was primarily
due to the increased research, development, and marketing costs associated with
the Company's change in business focus during the latter part of the fiscal year
ended September 30, 1998.
Net losses from operations for the fiscal year ended September 30,
1998, were $101,594 as compared to net operating income of $8,363 for the fiscal
year ended September 30, 1997. The increase in net losses during the fiscal year
ended September 30, 1998, was due to the decline in revenue and increase in
research, development and marketing costs relating to the Company's
implementation of its new business plan.
Certain Balance Sheet Items
In comparing the Balance sheet as of March 31, 1998 to September 30,
1998, current assets increased from $65 thousand to $954 thousand. The increase
was principally due to cash received from a private equity financing pursuant to
Regulation D, Rule 504, promulgated under the Securities Act of 1933. Total
assets increased from $100 thousand to $1.024 million on the March 31, 1998
balance sheet compared to the balance sheet on September 30, 1998. The increase
was due to the increase in cash as noted above and an increase in property and
equipment (primarily computer hardware and software), net of accumulated
depreciation. Current liabilities increased from $200 thousand to $323 thousand
on the March 31, 1998 balance sheet compared to the balance sheet on September
30, 1998. This increase was due to increases in accrued expenses and amounts due
to a related party.
Liquidity and Capital Resources.
At present, the Company is not producing revenues and only limited
revenues are being produced by its wholly owned subsidiary Global Investors
Guide. The Company's main source of funds has been the sale of the Company's
equity securities. The Company has issued 7,930,000 shares of its Common Stock
for approximately $1,975,000, including the most recent offering and after
deduction of estimated offering expenses, has exchanged 1,826,000 shares of its
Common Stock for all the outstanding shares of Global Investors Guide and has
converted 264,251 in debt to 500,000 shares issued to two creditors of the
Company. The Company had $941,566 in cash as of the date of its latest audit as
set forth in Exhibit "B" Financial Statements. Since March 31st 1999 the Company
has raised approximately $1,000,000 in cash, less offering expenses estimated
under $10,000, by the sale of Common Stock in a recent offering, as referenced
above. This cash is at present being used mainly to develop and market the
Company's destination Web sites and its co-branding and private label technology
and to fund certain ongoing general and administrative expenses plus consulting
expense with the total of such expenses estimated by Management to be in excess
of $90,000 per month. The Company will need to raise additional capital either
by the sale of it's securities or by alternative funding methods, to meet its
current development and marketing plans. Such funding may be obtained through
the sale of additional shares, warrants or convertible debentures, which will
dilute the ownership interests of present shareholders. The Company is seeking
to raise additional funds through the private placements of shares of its common
stock. During 1999 equity market financing has been increasingly available to
Internet startup ventures. Due to the volatility of the new issue market and the
stock market in general said equity financing could become scarce or
unattainable at any time. If the Company is unable to obtain sufficient funds to
develop and market its Internet strategies then Ubrandit.com may seek to find
development partners or industry partners to assist in the development of its
business plan. The capital resources of the Company are limited. At present the
Company is not producing any significant revenues and is not expected to produce
revenues until the 3rd calendar quarter of 1999. These revenues, if realized,
22
are projected to be insufficient to fund the aggressive ongoing development and
marketing of the Company's Internet branding and e-commerce strategy and
additional funds will be required as discussed above in this section. Further,
if revenue from branding, advertising, sponsorship fees, and custom programming
is realized said revenues will be subject to all of the risks set forth in the
section entitled "RISKS FACTORS" and no profits may be realized from said
revenue. The main source of funds at the present is the sale of the Company's
equity securities. Other possible sources of funding includes loans by financial
institutions with the Company's computer equipment as collateral. However, the
collateral value of Company's tangible property is limited. The Company has no
material contractual commitments for capital expenditure at present.
Year 2000 Compliance; Year 2000 Readiness Disclosure
To the fullest extent permitted by law, the following discussion is a
"Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information
and Readiness Disclosure Act 105 P.L. 271.
Background
Many of the world's computer systems and programs currently record
years in a two-digit format. Such computer systems or programs that have
date-sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000, and therefore, may be unable to recognize,
interpret or use dates in and beyond the year 1999 correctly. Because the
activities of many businesses are affected by dates or are date-related, the
inability of these systems or programs to use such date information correctly
could result in system failures or disruptions and lead to disruptions of
business operations in the United States and internationally (the "Year 2000
Problem"). In the case of the Company, such disruptions may include, among other
things, an inability to process transactions, send invoices, or engage in
similar routine business activities.
Issues relating to the Year 2000 Problem arise in a number of different
contexts in which the Company and its operating subsidiary use or access
computer programming. In its operations, the Company uses both third-party and
internally developed software programs and relies on customary
telecommunications services, as well as building and property logistical
services, including, without limitation, embedded computer-controlled systems.
The Company generally will also rely heavily upon suppliers, as well as data
processing, transmission and other services provided by third-party service
providers, including, without limitation, Internet access, online content,
product distribution and delivery, and information services.
The Company and its operating subsidiary will rely upon independent
internal local access network (LAN) computer systems. In addition, the Company
and its subsidiaries lease their office space from third parties and may conduct
business through multiple locations in major cities. Although the operating
subsidiary will, for the most part, conduct business independently, it will
substantially use similar third-party software and have common relationships and
dependencies with third party service providers.
Assessing the Impact of the Year 2000 Problem on the Company's
Operations
The Company has reviewed its computer systems and programs, including
information technology ("IT") and non-IT systems, and has determined that they
are in compliance with the requirements of the Year 2000. The Year 2000 problem,
however, is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year to 00. Failure of any
of the Company's third-party service providers to adequately address this issue
could result in a substantial interruption of the Company's normal plan of
operation and business affairs, and could result in significant losses from
operations. To the extent that the Company relies upon non-U.S. third-party
service providers who may be less capable or prepared than their U.S.
counterparts to address and resolve the Year 2000 problem, the Company's
operations may be subject to a greater level of risk with respect to Year 2000
compliance. Although the Company could incur substantial costs in connection
with the failure of third-party computing systems and software, such costs are
not sufficiently certain to estimate at this time.
23
Contingency Planning
The Company has not developed any plan to address contingencies arising
from the inability of third-party service providers to become Year 2000
compliant in a timely manner. Consequently, no assurance can be given that the
potential failure of third-party systems will not increase the Company's
operating costs or create uncertainties that may have an adverse effect on the
Company's operating results or financial condition.
ITEM 3. DESCRIPTION OF PROPERTY
The Company subleases approximately 5,000 square feet of general use
office space in San Diego California as its primary corporate office. The term
of the sublease is until June 30, 2000. These offices are sufficient for the
Company to conduct its current operations. On site the Company has a secure
facility for housing one of the Company's eight high capacity Internet servers.
The other seven servers are housed at a secure location operated by CONNECTNET,
a local Internet service provider located in San Diego. The Company believes
that its current configuration of server computers and purchased bandwidth are
capable of handling the expected high volume Internet traffic during peak user
hours. In addition the Company's systems have been designed to be scalable to
meet growth beyond the expected use of the system.
24
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Common Stock as of June 30, 1999 for (i) each current director
who owns shares, (ii) each executive officer of the Company who owns shares,
(iii) all persons known by the Company to beneficially own more than 5% of the
outstanding shares of the Common Stock, and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated in the footnotes
below, the address of each stockholder is 12626 High Bluff Dr., San Diego, CA
92130.
Names of Number of Shares Percent of Shares
Beneficial Owners(1) Beneficially Owned Beneficially Owned
- -------------------- ------------------ ------------------
Jeff Phillips 2,006,880(3) 18.8%
Gregory V. Gibson 125,000(4) 1.2%
Roger C. Royce 75,000 *
Steven K. Radowicz 25,000(5) *
Michael Fagan 54,780 *
Mark Cullivan 54,780 *
J. Eric Arteburn 54,780 *
William Childers 54,780 *
All officers & Directors
as a group (nine persons)(9) 2,461,000 22.7%
- ------------------------
* Less than 1%
(1) Unless otherwise noted, the Company believes that all shares are
beneficially owned and that all persons named in the table have sole
voting and investment power with respect to all shares owned by them.
(2) Beneficial ownership is determined in accordance with the applicable
rules under the Exchange Act. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person
that are currently exercisable, or become exercisable within 60 days
from the date hereof, are deemed outstanding. However, such shares are
not deemed outstanding for purposes of computing the percentage
ownership of any other person. Percentage ownership is based on
10,256,000 shares of Common Stock outstanding as of June 30, 1999.
(3) Includes 400,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $.50 per
share.
(4) Includes 125,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $.50 per
share.
(5) Includes 25,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $1.50 per
share. Mr. Radowicz's address is Apquip Company, #8 Harris Court Unit
C1, Monterey, California 93940 .
25
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The names, ages and positions of the Company's Directors and executive
officers as of June 30, 1999 are listed below:
Name Age Position
- ---- --- --------
Jeff Phillips 31 President, Chief Executive Officer,
Chairman of the Board
Roger C. Royce 59 Chief Operating Officer, Director
Gregory V. Gibson 49 Vice President, Legal, Director
Steven K. Radowicz 31 Director
Michael Fagan 32 Vice President Corporate Development
Mark Cullivan 31 Vice President Operations
J. Eric Arterburn 28 Vice President Design Development
William Childers 28 Vice President MIS
JEFFERY PHILLIPS,
PRESIDENT, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Phillips was appointed as the Company's President, Chief Executive
Officer and Chairman of the Board in January 1999. From 1997 to the present, Mr.
Phillips also has been the President of Global Investors Guide of San Diego, CA.
Global Investors Guide maintains a financial research site and performs contract
programming for companies in the financial and e-commerce markets. As president,
Mr. Phillips has been in charge of budgeting, project planning and management,
and development of specialty tools as per the clients' needs. He was also
responsible for exploring and implementing the newest technology into Global
Investors Guide's Web sites pertaining to the financial Internet market. During
the past five years, Mr. Phillips has also been a marketing consultant to public
relations firms and the owner of LPC Communications, an Advertising Agency and
Market Publishing, Inc. a fulfillment and order processing company. Prior to Mr.
Phillips joining Global Investors Guide he was President of Arboc Marketing, an
independent marketing company located in Santa Barbara, CA. As president, Mr.
Phillips was responsible for designing and implementing marketing programs for
over one hundred small and medium sized businesses. Business types included
health organizations, banks, retail outlets, and manufacturing enterprises. The
company also handled political campaigns in the state of California in the
capacity of campaign management, marketing, and public relations. Mr. Phillips
received his Bachelor of Arts in Economics from the University of California,
Santa Barbara.
26
ROGER C. ROYCE,
DIRECTOR AND CHIEF OPERATING OFFICER.
Mr. Royce joined the Company in March of 1999 as its Chief Operating
Officer and as a member of the Board of Directors. Mr. Royce brings over 30
years of corporate experience in managing rapid growth enterprises in
conglomerate environments both in the private and public sector. Prior to his
association with the Company, Mr. Royce was Chairman and CEO of Fortune
Financial Systems, Inc., a diversified national education and training company.
Before joining Fortune Financial, he was President and CEO of Academic
Excellence Institute, Inc., an accelerated learning and distribution company,
and now serves as CEO of Westban Financial, Inc., a financial and management
consulting company. His other experience includes: President and CEO of Motel 6,
Inc., a 400 property lodging chain with revenues of $275 million and assets in
excess of $900 million employing over 7,000 employees; President of Fotomat
Labs, Inc. and Corporate Sr. Vice President and Managing Operations Director for
Fotomat Corporation, a national conglomerate holding company with a retail chain
of 3,850 photographic processing/camera stores generating sales in excess of
$265 million and 12 nationwide processing plant and manufacturing facilities
having wholesale billing of $120 million and employing over 13,000 employees;
and President of Woodfin Suites Hotels, Inc., a national hotel management and
franchise company which was the founding franchisee for the Marriott Residence
Inns chain. During his business career he has also been a consultant for
companies involved in Internet delivery systems. Mr. Royce holds a BA and MBA
from California Western University and has completed additional postgraduate
studies at UCLA and Harvard.
GREGORY V. GIBSON,
VICE PRESIDENT LEGAL, DIRECTOR
Mr. Gibson has been an officer and director of the Company since
January of this year. Mr. Gibson has been an attorney specializing in securities
and securities broker dealerships for over 15 years. Presently Mr. Gibson is a
member of the law firm Gibson, Haglund and Paulsen and Vice President Legal for
Pennaco Energy, Inc. a Denver based public Oil and Gas Company. Prior to his
present affiliations Mr. Gibson was corporate counsel for three years to Global
Resource Investment Limited, a southern California based broker dealer
specializing in resource and foreign publicly traded securities. Prior to
working at Global Mr. Gibson was practicing securities and international law
with the law firms of Gibson and Haglund and Gibson, Ogden and Johnson. Mr.
Gibson attended Claremont Men's College and Brigham Young University for
undergraduate studies and received his juris doctorate degree from Pepperdine
University School of Law.
STEVEN K. RADOWICZ,
DIRECTOR
Mr. Radowicz has been a director of the Company since March 1999. Mr.
Radowicz, an independent director of the Company, is the managing partner and
owner of Apquip Company LLC. Located in Monterey, California, Apquip is a
Company that manufactures equipment for the wood products industry and services
a worldwide clientele. Mr. Radowicz has held numerous positions with the Company
over the past nine years and has served as the Chief Executive Officer for the
past two years. Apquip has distribution and sales throughout five continents
with many of the largest wood producing companies in the industry. While at
Apquip, Mr. Radowicz has been responsible for much of the growth of the company
setting up a network of dealers and representation for the company worldwide.
Mr. Radowicz graduated from the University of California at Santa Barbara with a
B. A. degree in business economics in 1990.
27
MICHAEL FAGAN,
VICE PRESIDENT CORPORATE DEVELOPMENT
Mr. Fagan has been the Company's Vice President of Corporate
Development since March 1999. Michael Fagan, from July 1997 until assuming his
present position as VP Corporate Development with the Company, served as Vice
President of Global Investors Guide of San Diego, California. In that position,
Mr. Fagan created and implemented the company's marketing strategy and was
responsible for all Web-content-related matters. Also serving as Editor for
Global Investors Guide Financial Digest, he wrote market commentary and
interviewed financial analysts. Prior to his association with Global Investors,
from 1996 to 1997, Mr. Fagan held the position of Senior Research Analyst for
the London Taylor Group, a Southern California-based financial service provider.
From 1994 through 1996 Mr. Fagan was sales and marketing representative with The
Sporting Club at Aventine a California- based health/fitness corporation where
his responsibilities included the development and implementation of marketing
programs and the training of personnel for the company's sales force. Mr. Fagan
received his Bachelor of Science in Business Management from San Diego State
University, California, in 1992.
MARK CULLIVAN,
VICE PRESIDENT OPERATIONS, CONTROLLER
Mr. Cullivan joined the Company in March 1999. His responsibilities
include management of the Company's e-commerce sites and all in-house financial
reporting. From December 1996 to February 1999, Mr. Cullivan as President of
Market Publishing Corporation of San Diego, CA he was in charge of all the
operations of a fulfillment and order processing company. Prior to Market
Publishing, Mr. Cullivan was the Senior Sales and Marketing Analyst for the
Rembrandt Consumer Division of Den-Mat Corporation from 1993-1996. At Den-Mat,
he was responsible for the design and implementation of the corporate sales
programs utilized by the company's regional vice presidents of sales and
national network of product brokers. In addition to his corporate positions, Mr.
Cullivan has been an instructor of economics for several California colleges
from 1992 to present. He received his Bachelor of Arts and Master of Arts
degrees in Business Economics from the University of California, Santa Barbara.
J. ERIC ARTERBURN,
VICE PRESIDENT DESIGN DEVELOPMENT
Mr. Arterburn joined the Company in March of 1999 and since May of 1998
has been the Art Director of the Company's subsidiary Global Investors Guide.
Prior to working at Global Investors Guide Mr. Arterburn was the Art Director
for Internetwork Media from 1994 until 1998. Internetwork Media, a Southern
California design firm, specializes in multimedia cd-rom as well as traditional
media. At Internetwork Media, he worked on numerous projects for the Unites
States Geological Survey (USGS), the National Ocean and Atmospheric Association
(NOAA), as well as projects for Times Mirror and New Millennia. His pursuant to
his responsibilities as Art Director at Global Investors Guide and now as the
Company's Art Director he has designed and directed the content of various
projects including StockStudy.com, Newsletterz.com, IR Packages.com,
JungleJeff.com. Mr. Arterburn graduated from San Diego State University with a
Bachelor of Arts degree with a focus in Graphic Design.
WILLIAM CHILDERS,
VICE PRESIDENT MIS
Mr. Childers was appointed as the Company's Vice President of MIS in
March 1999. Mr. Childers, prior to his association with the Company, was MIS
director for Global Investors Guide from January of 1997 to March of 1999. He
brings to Ubrandit.com 15 years of computer experience in administration,
security, planning, design, and implementation of LAN/WAN networks. His
responsibilities at Global Investors Guide included systems and software
administration and maintenance, planning and execution of the internal network
and Internet Web server farm, installation and maintenance of interoffice links,
WAN connections and leased lines, e-mail system, FTP and Web site
implementation, file and Web server maintenance, network security and anti-virus
protection, backup solutions, and disaster-preparedness planning. Prior to his
involvement with the Company and Global Investors Guide, Mr. Childers was
systems administrator and a consultant regarding Novell NetWare and Windows NT
LAN/WAN networks with small and medium sized companies. From 1994 to 1996 Mr.
Childers was a sales and Technical Consultant for Networks Plus Technology
Group, a Corporate Value added Reseller specializing in high-end applications
and equipment. Mr. Childers studied Computer Science at Colorado State
University, Fort Collins.
28
Employment Agreements
The Company anticipates entering into employment agreements with its
officers in the near future, the terms of which are undecided at the present
time. The Company has not as of yet entered into any employment agreement with
its officers or other employees.
Committees of the Board
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate legal principles, it is not involved in
day-to-day operating details. Members of the Board are kept informed of the
Company's business through discussions with the Chairman and other officers, by
reviewing analyses and reports sent to them, and by participating in Board and
committee meetings.
The Board has not established any committees at this time.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual compensation of the Company's Chief Executive Officer and each of the
Company's three other most highly compensated executive officers for services
rendered to Ubrandit.com during the Company's only two completed fiscal years
ended September 30, 1998 and 1997.
Compensation
-----------------------------
Name Annual Other Restricted Securities LTIP All
And Principal Year Salary($) Bonus Annual Stock Underlying Pay- Other
Position (1) ($) Compen- Award(s) Option/ outs Compen-
sation ($) SARS(#) ($) sation
($) ($)
Jeff Phillips, 98 18,000 -0- -0- -0- -0- -0- -0-
CEO(2) 97 1,826 -0- -0- -0- -0- -0- -0-
Patricia Wiate(3) 98 -0- -0- -0- -0- -0- -0- -0-
97 -0- -0- -0- -0- -0- -0- -0-
- ----------------
(1) All other compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such
perquisites and other personal benefits constituted the lesser of
$50,000 or 10% of the total annual salary and bonus of the named
executive for such year.
(2) Mr. Phillips was the President and CEO of Global Investors Guide as of
the end of the last completed fiscal year ended September 30, 1998.
(3) Ms. Wiate was the President and CEO of the Company prior to the
acquisition of Global Investors Guide. Ms. Wiate resigned in February
3, 1999, and is no longer employed by the Company.
The Company has no retirement, pension, profit sharing or medical
reimbursement plans exclusively covering its officers and directors, and does
not contemplate implementing any such plans at this time.
29
Directors of the Company who are also employees do not receive cash
compensation for their services as directors or members of committees of the
Board of Directors, but are reimbursed for their reasonable expenses in
connection with attending meetings of the Board of Directors or management
committees. Non-employee directors are expected to be paid a fee per Board
meeting attended, and reimbursement for expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of Global Investors Guide in March
1998, all of the shares of Global Investors Guide were purchased from officers
and a director of that company in exchange for restricted shares of the
Company's $.001 par value Common Stock (the "exchange shares") on a pro rata
basis. Specifically Mr. Phillips, President and director of the Company received
1,606,880 exchange shares and Messrs. Fagan, Cullivan, Childers, and Arterburn,
all executive officers of the Company, received 54,780 shares each for an
aggregate of 1,826,000 exchange shares. The Company received computer equipment,
services and cash in exchange for a $100,000 amount due to a company 100% owned
by Mr. Phillips an executive officer and director of Ubrandit.com. The aggregate
$100,000 amount due resulted from $50,000 advanced to the Company, office space
provided the Company at $1,000 a month for 12 months, receptionist, secretarial,
and clerical support services provided to the Company at $2,000 per month for 12
months, and the sale of following office equipment: copier, postage machine,
shredder, address labeler, computer printer, two fax machines, and three
computers. Said office equipment was sold to the Company for $14,000. Said
equipment was purchased by Mr. Phillip's company within the last eighteen months
for approximately $23,000. The amount due was converted to 200,000 shares of
Ubrandit.com $.001 Common Stock that were issued to said company. Mr. Phillips
has sold all his interest in said company, which is now owned by an unrelated
party. Mr. Gibson an executive officer and director, provides legal services to
the Company through his law firm Gibson, Haglund and Johnson. As of March 31,
1999, said law firm had received $18,000 for legal services rendered.
ITEM 8. LEGAL PROCEEDINGS
No material legal proceedings to which the Company is a party are
pending nor are any known to be contemplated and the Company knows of no legal
proceedings pending or threatened, or judgments entered against any Director or
Officer of the Company in his capacity as such.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock, par value $.001 (the "Common Stock") trades
over the counter and is quoted on the OTC Bulletin Board System. The following
table sets forth the high and low closing prices for the Common Stock as
reported on the OTC Bulletin Board system for the quarters traded in Fiscal
1999.
Low High
---------- ----------
Year Ended September 30, 1999
Second Quarter $ .375 $ 3.625
Third Quarter 3.625 11.125
The Company has not paid any cash dividends on its Common Stock since
its incorporation and anticipates that, for the foreseeable future, earnings, if
any, will continue to be retained for use in its business. As of June 30, 1999
the Company had approximately 4,700 shareholders of its Common Stock.
30
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is certain information concerning all sales of
securities by the Company during the past three years that were not registered
under the Securities Act:
(a) The Company, at the time operating under the named Mount Merlot
Estates, Inc., issued 40,000 shares in December of 1997 for the purchase price
of $.01 per share in reliance on the exemption from registration available under
Section 4(2) of the Securities Act. At that time, the Company had a business
plan to enter into the viticulture business and no assets. The offeree was
apprised of both the Company's start-up nature and its business plan. There was
one offeree in this offering, who made the only purchase pursuant to the terms
of an investment letter. In the investment letter the purchaser acknowledged
that (i) that he was purchasing for his own account, for investment, and not
with a view towards distribution (ii) that he solicited the offer and sale of
the securities and the offer and sale were not accompanied by any publication or
advertisement and (iii) the he understands that the shares purchased may only be
sold or otherwise transferred if they are registered under the Securities Act of
1933 or unless an exemption from such registration is available. No underwriters
were used in connection with this offering.
(b) The Company, at the time name Mount Merlot Estates, in February of
1998, offered 5,000,000 shares for a purchase price of $.01 per share in
reliance on the exemption from registration available under Rule 504 of
Regulation D promulgated under the Securities Act. Offerees were provided with a
private placement memorandum containing detailed information about the Company
and its plan to engage in the development of a Merlot viticulture operation in
Santa Ynez Valley County, California and that the securities had not been
registered under the Securities Act and may have not been registered or
qualified under applicable state securities laws. The Company required each
prospective investor to represent in writing that (i) they had adequate means of
providing for their current needs and personal contingencies and had no need to
sell the securities in the foreseeable future and (ii) they, either alone or
with their duly designated purchaser representative, had such knowledge and
experience in business and financial matters that they were capable of
evaluating the risks and merits of an investment in the securities. No
underwriters were used in connection with this offering.
(c) The Company, at the time named Virtual Brand, Inc. to reflect the
Company's change in business plan to that of developing or acquiring an Internet
service company, in February of 1999, offered 1,890,000 shares for a purchase
price of $.50 per share in reliance on the exemption from registration available
under Rule 504 of Regulation D promulgated under the Securities Act. All
1,890,000 shares were issued by the Company in February of 1998. There were six
Offerees, which were also the only purchasers of the offering. The Company
required each prospective investor to represent in writing (i)that the investor
was a sophisticated investor with sufficient knowledge and experience to be
capable of evaluating the merit and risks of the offering (ii) that all
documents they deemed material in making an investment decision were provided by
the Company and that the investor had been afforded the opportunity to make
inquires and receive answers from management, (iii) that the investor had
substantial means of providing for his current needs and contingencies and was
capable of understanding and bearing the economic risk of the investment. (iii)
they understood that the securities had not been registered under the Securities
Act and may have not been registered or qualified under applicable state
securities laws. No underwriters were used in connection with this offering.
(d) Pursuant to an Agreement and Plan of Reorganization for the
Acquisition of All the Outstanding Shares of Common Stock of Global Investors
Guide, the Company issued 1,826,000 pro rata to all the shareholders of Global
Investment Guide to purchase all of the shares of Common Stock of the Company.
The offering of the shares was made to five accredited investors only, in
reliance on the exemption from registration available under Rule 506 of
Regulation D promulgated under the Securities Act. Said investors received 1,826
shares of the Company's Common Stock for each share of Global Investors Guide
that they owned. Each investor represented in an investment letter that (i) he
acquired said common stock for my own account for investment and not with a view
towards any distribution thereof (ii) that he understood that the shares may not
be sold or otherwise transferred unless they are subsequently registered under
the Act or unless an exemption from such registration is available. (iii)that he
understood that the investment was highly speculative with very substantial
risks and could result in a complete loss of my investment (iv) that he had such
knowledge and experience with the Company, Internet businesses, and general
business matters that he was capable of fully evaluating the merits and risks of
this investment; (v) that he was fully aware that the Company is a startup
company with very limited resources in an extremely competitive industry; and
(vi) that the Company had afforded him the opportunity to ask and had answered
all questions. All investors understood that the securities would bear a
restrictive legend prohibiting transfers except in compliance with the
provisions of the Act. No underwriters were used in connection with this
offering.
31
(e) In March and April of 1999, the Company negotiated and reached a
debt conversion to common stock agreement with two of the large creditors of its
wholly owned subsidiary Global Investment Guide. Pursuant to said agreements
Bloomington Corporate Services was issued 300,000 shares of the Company's Common
Stock for forgiveness of $164,251.43 in debt and Market Publishing, Inc. was
issued 200,000 shares of Common Stock for forgiveness of $100,000 in debt. Both
issuances of shares were to sophisticated companies pursuant to a private
placement exempt from the registration requirements of the Securities Act in
reliance on the exemption from registration available under Section 4(2) of the
Securities Act. The Company fully apprised the said sophisticated companies of
the Company's start-up nature and gave them full details regarding the Company's
business plan. There was no general solicitation or advertising used in
connection with the offer to sell or sale of these securities. Said companies
were advised that the securities, once purchased, could not be resold or
otherwise transferred without subsequent registration under the Securities Act
and that they would carry a legend stating said restrictions to transfer.
No underwriters were used in connection with this offering.
(f) The Company issued 1,000,000 shares in April 1999, for a purchase
price of $1.00 per share in reliance on the exemption from registration
available under Rule 506 of Regulation D promulgated under the Securities Act.
The Company accepted subscriptions only from accredited investors. The Company
changed its name to Ubrandit.com at the time of purchase of Global Investors
Guide to better reflect its adoption and continuation of the business plan of
Global Investors Guide, the Company's current business plan, which is the
branding and private labeling of Internet sites. Offerees were provided with a
private placement memorandum containing detailed information about the Company
and its current plan. The Company required each prospective investor to
represent in writing that (i) they had received and reviewed the private
placement memorandum and understood the risks of an investment in the Company;
(ii) they had the experience and knowledge with respect to similar investments
which enabled them to evaluate the merits and risks of such investment, or they
had obtained and relied upon an experienced independent adviser with respect to
such evaluation; (iii) they had adequate means to bear the economic risk of such
investment, including the loss of the entire investment; (iv) they had adequate
means to provide for their current needs and possible personal contingencies;
(v) they had no need for liquidity of their investment in the Company; (vi) they
understood that the securities had not been registered under the Securities Act
and may have not been registered or qualified under applicable state securities
laws and, therefore, that they could not sell or transfer the securities unless
the securities were subsequently registered or an exemption therefrom was
available to them; (vii) they were acquiring the securities for investment
solely for their own account and without any intention of reselling or
distributing them; and (viii) they understood that the securities would bear a
restrictive legend prohibiting transfers except in compliance with the
provisions of the securities, the subscription agreement executed by the
purchaser and the applicable federal and state securities laws. No underwriters
were used in connection with this offering.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
General
The authorized Common Stock of the Company consists of 25,000,000
shares of $0.001 par value common stock. The following summary of the terms and
provisions of the Company's capital stock does not purport to be complete and is
qualified in its entirety by reference to the Company's Articles of
Incorporation and By-laws, which have been filed as exhibits to the Company's
registration statement, of which this prospectus is a part, and applicable law.
Common Stock
The holders of Common Stock are entitled to one vote for each share on
all matters voted upon by stockholders, including the election of directors.
Such holders are not entitled to vote cumulatively for the election of
directors. Holders of a majority of the shares of Common Stock entitled to vote
in any election of directors may elect all of directors standing for election.
Holders of Common Stock are entitled to participate pro rata in such
dividends as may be declared in the discretion of the Board of Directors out of
funds legally available therefor. Holders of Common Stock are entitled to share
ratably in the net assets of the Company upon liquidation after payment or
provision for all liabilities. Holders of Common Stock have no preemptive rights
to purchase shares of stock of the Company. Shares of Common Stock are not
subject to any redemption provisions and are not convertible into any other
securities of the Company. All outstanding shares of Common Stock are fully paid
and non-assessable.
32
The Common Stock is quoted on the OTC Bulletin Board system under the
symbol "UBRT."
As of June 30, 1999, 10,256,000 shares are issued and outstanding.
Transfer Agent
The Company's transfer agent is: Pacific Stock Transfer Company, 3690
South Eastern, Las Vegas, Nevada 89109.
1999 Stock Option and Incentive Plan
As of March 31, 1999, 1,485,000 shares have been granted to employees
and directors for exercise prices ranging from $0.50 to $3.35 per shares
pursuant to the vesting schedules of the respective agreements. No options were
granted during the last completed fiscal year ended September 30, 1998. The
following table details the shares granted to executive officers and directors:
Name Principal Position Number of shares granted
Jeff Phillips President, CEO 400,000
Roger C. Royce (1) COO 425,000
Gregory V. Gibson VP legal 125,000
Steven K. Radowicz Director 25,000
Michael Fagan VP Corporate Development 60,000
Mark Cullivan VP Operations 50,000
J. Eric Arterburn VP Design Development 50,000
William Childers VP MIS 50,000
Total: 1,185,000
- ------------------
(1) 387,500 of the options granted Mr. Royce, have been continently granted
pursuant to terms of his employment. Additionally 50,000 options to
purchase shares have been granted to current non-executive employees of
the Company and Jeffrey L. Taylor, a former director, was granted
options to purchase 250,000 shares.
On January 22, 1999, the Board of Directors adopted the 1999 Stock
Option and Incentive Plan (the "Plan") which was subsequently approved by the
stockholders of the Company. The Plan is intended to provide incentive to key
employees and directors of, and key consultants, vendors, customers, and others
expected to provide significant services to, the Company, to encourage
proprietary interest in the Company, to encourage such key employees to remain
in the employ of the Company and its Subsidiaries, to attract new employees with
outstanding qualifications, and to afford additional incentive to consultants,
vendors, customers, and others to increase their efforts in providing
significant services to the Company. The Plan is administered by the Board of
Directors or can be administered by a Committee appointed by the Board of
Directors, which Committee shall be constituted to permit the Plan to comply
with Rule 16b-3 of the Act, and which shall consist of not less than two
members. The Board of Directors, or the Committee if there be one, at its
discretion, can select the eligible employees and consultants to be granted
awards, determine the number of shares to be applicable to such award, and
designate any Options as Incentive Stock Options or Nonstatutory Stock Options
(except that no Incentive Stock Option may be granted to a non-employee director
or a non-employee consultant). The stock subject to awards granted under the
Plan are shares of the Company's authorized but unissued or reacquired Common
Stock. The aggregate number of shares which may be issued as awards or upon
exercise of awards under the Plan is 2,500,000 shares. The shares that may
presently be issued pursuant to the exercise of an option awarded by the Plan
have not been registered under the Securities Act of 1933 (the "Securities Act")
nor any state securities authority and will be subject to the limitations of
Rule 144.
33
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Revised Statutes and certain provisions of the Company's
Bylaws under certain circumstances provide for indemnification of the Company's
Officers, Directors and controlling persons against liabilities that they may
incur in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this description is
qualified in its entirety by reference to the Company's Bylaws and to the
statutory provisions.
In general, any Officer, Director, employee or agent may be indemnified
against expenses, fines, settlements or judgments arising in connection with a
legal proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by independent
decision of the Board of Directors, by legal counsel, or by a vote of the
stockholders, that the applicable standard of conduct was met by the person to
be indemnified.
The circumstances under which indemnification is granted in connection
with an action brought on behalf of the Company is generally the same as those
set forth above; however, with respect to such actions, indemnification is
granted only with respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed to have been
in the Company's best interest, and must not have been adjudged liable for
negligence or misconduct.
Indemnification may also be granted pursuant to the terms of agreements
that may be entered in the future or pursuant to a vote of stockholders or
Directors. The statutory provision cited above also grants the power to the
Company to purchase and maintain insurance which protects its Officers and
Directors against any liabilities incurred in connection with their service in
such a position, and such a policy may be obtained by the Company.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information required by this item is contained in Item 2. Financial
Information and Item 15. Financial Statement and Exhibits.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE.
None
34
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
List of Financial Statements
Report of Independent Public Accountant
Consolidated Balance Sheet September 30, 1997, 1998 and March 31, 1999
Consolidated Statements of Operations and Statements of Cash Flows for December
3, 1996 to September 30, 1997, year ended 1998, six months ended March 31, 1998
(unaudited), Six months ended March 31, 1999
Consolidated Statement of Shareholders' Equity for the period December 3, 1996 -
March 31, 1999
Notes to Consolidated Financial Statements
Ubrandit.com and subsidiary
As of September 30, 1997, September 30, 1998
and March 31, 1999, and
for the period December 3, 1996 to
September 30, 1997,
the year ended September 30, 1998 and
the six months ended March 31, 1999
Ubrandit.com and subsidiary
Table of Contents
Page
----
Report of Independent Auditors F-1
Consolidated Balance Sheet F-2
Consolidated Statement of Operations F-3
Consolidated Statement of Changes in Stockholders' Equity F-4
Consolidated Statement of Cash Flows F-5
Notes to Consolidated Financial Statements F-6-12
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Ubrandit.com and subsidiary
Del Mar, California
We have audited the accompanying consolidated balance sheets of Ubrandit.com and
subsidiary as of September 30, 1997, September 30, 1998 and March 31, 1999, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the periods December 3, 1996 to September 30, 1997; the year
ended September 30, 1998 and the six months ended March 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ubrandit.com and subsidiary as
of September 30, 1997, September 30, 1998 and March 31, 1999, and the results of
its operations, and its cash flows for the period December 3, 1996 to September
30, 1997; the year ended September 30, 1998 and the six months ended March 31,
1999, in conformity with generally accepted accounting principles.
Stark Tinter & Associates, LLC
Englewood, Colorado
June 7, 1999
F-1
Ubrandit.com and subsidiary
Consolidated Balance Sheets
September 30, March 31,
1997 1998 1999
------------------ ------------------ ---------------------
ASSETS
Current assets
Cash $ 10,439 $ 45,604 $ 941,566
Accounts receivable 18,820 10,097
Employee advances 150
Prepaid expenses 1,025 1,662
Deposits 237
------------------ ------------------ ---------------------
Total current assets 10,439 65,449 953,712
Other assets:
Property and equipment - net of
accumulated depreciation 2,888 31,260 63,847
Organizational costs - net of accumulated
amortization 380 1,250
Deferred Offering costs 3,000 5,000
------------------ ------------------ ---------------------
$ 13,327 $ 100,089 $1,023,809
================== ================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses $ 4,714 $ 8,681 $ 42,192
Due to related party 28,589 100,000
Due to stockholder 4,990
Payroll taxes payable 11,489
Convertible debt 150,000 150,000
Accrued interest 13,063 14,251
------------------ ------------------ ---------------------
Total current liabilities 4,714 200,333 322,922
Stockholders' equity (deficiency)
Common stock, $0.001 par value,
25,000,000 shares authorized; 1,000,
901,000; and 8,756,000 shares issued
and outstanding in 1997, 1998 and 1999,
respectively 1,826 2,726 8,756
Additional paid in capital 4,900 974,270
Retained earnings (deficit) 6,787 (107,870) (282,139)
------------------ ------------------ ---------------------
Total stockholders' equity (deficiency) 8,613 (100,244) 700,887
------------------ ------------------ ---------------------
$ 13,327 $ 100,089 $1,023,809
================== ================== =====================
See accompanying notes to consolidated financial statements.
F-2
Ubrandit.com and subsidiary
Consolidated Statements of Operations
Six months
For the period ended Six months
December 3, 1996 Year ended March 31, ended
to September 30, September 30, 1998 March 31,
1997 1998 (Unaudited) 1999
---------------------- ---------------------- --------------------- ---------------------
Revenue $ 86,390 $ 341,887 $ 274,676 $ 51,060
---------------------- ---------------------- --------------------- ---------------------
Expenses:
Direct operating 54,176 154,310 57,270 137,166
Sales, general and administrative 23,456 278,611 176,276 78,345
Depreciation and amortization 395 10,560 5,430 8,630
---------------------- ---------------------- --------------------- ---------------------
Total operating expenses 78,027 443,481 238,976 224,141
---------------------- ---------------------- --------------------- ---------------------
Operating income (loss) 8,363 (101,594) 35,700 (173,081)
Other (expense):
Interest - (13,063) (5,938) (1,188)
---------------------- ---------------------- --------------------- ---------------------
Income (loss) before income taxes 8,363 (114,657) 29,762 (174,269)
Income taxes 1,576 - - -
---------------------- ---------------------- --------------------- ---------------------
Net income (loss) $ 6,787 $ (114,657) $ 29,762 $ (174,269)
====================== ====================== ===================== =====================
Per share information:
Weighted average shares outstanding 1,000 535,247 167,484 3,870,967
====================== ====================== ===================== =====================
Net income per common share - basic $ 6.79 $ (0.21) $ 0.18 $ (0.05)
====================== ====================== ===================== =====================
See accompanying notes to consolidated financial statements.
F-3
Ubrandit.com and subsidiary
Consolidated Statements of Stockholders'
Equity For the period December 3, 1996 to March 31, 1999
Common Stock Additional
------------------------------ Paid in Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance at December 3, 1996 $ -- $ -- $ -- $ -- $ --
Issuance of stock at $0.01 per share
in consideration for services
rendered 1,000 1,826 1,826
Net income for the period 6,787 6,787
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1997 1,000 1,826 -- 6,787 8,613
Issuance of stock for cash
at $0.01 per share net
of issuance cost 900,000 900 4,900 5,800
Net loss for the year (114,657) (114,657)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1998 901,000 2,726 4,900 (107,870) (100,244)
Issuance of stock for cash
at $0.01 per share net
of issuance cost 4,140,000 4,140 34,260 -- 38,400
Issuance of stock for cash
at $0.50 per share net
of issuance costs 1,890,000 1,890 935,110 -- 937,000
Stock acquired by parent in
a business combination (1,000) (1,826) -- (1,826)
Issuance of stock in a
business combination 1,826,000 1,826 1,826
Net loss for the period (174,269) (174,269)
----------- ----------- ----------- ----------- -----------
Balance at March 31, 1999 8,756,000 $ 8,756 $ 974,270 $ (282,139) $ 700,887
=========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
F-4
Ubrandit.com and subsidiary
Consolidated Statements of Cash Flows
Six months
For the period ended Six months
December 3, 1996 Year ended March 31, ended
to September 30, September 30, 1998 March 31,
1997 1998 (Unaudited) 1999
--------- --------- --------- ---------
Cash flows from operating activities:
Net income (loss) $ 6,787 $(114,657) $ 29,762 $(174,269)
--------- --------- --------- ---------
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 395 10,560 5,430 8,630
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (18,820) 8,723
(Increase) in employee advances (150)
(Increase) in prepaid expenses (1,025) (637)
(Increase) in deferred offering costs (3,000) (2,000)
(Increase) in deposits (237)
(Increase) in organizational costs (400) (400) (1,000)
Increase (decrease) in accrued expenses 4,714 3,967 (3,158) 33,511
Increase in due to stockholder 4,990
Increase in payroll taxes payable 11,489
Increase in accrued interest 13,063 5,938 1,188
--------- --------- --------- ---------
Total adjustments 5,109 4,345 7,810 64,507
--------- --------- --------- ---------
Net cash provided by (used in) operating
activities 11,896 (110,312) 37,572 (109,762)
--------- --------- --------- ---------
Cash flows from investing activities:
Purchase of fixed assets (3,283) (38,912) (36,220) (41,087)
Proceeds from related party advances 28,589 9,000 71,411
--------- --------- --------- ---------
Net cash (used in) provided by investing
activities (3,283) (10,323) (27,220) 30,324
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from convertible debt 150,000 150,000
Net proceeds from issuance of common
stock, net of issuance costs 1,826 5,800 5,800 975,400
--------- --------- --------- ---------
Net cash provided by financing activities 1,826 155,800 155,800 975,400
--------- --------- --------- ---------
Net increase in cash 10,439 35,165 166,152 895,962
Cash, beginning -- 10,439 10,439 45,604
--------- --------- --------- ---------
Cash, ending $ 10,439 $ 45,604 $ 176,591 $ 941,566
========= ========= ========= =========
F-5
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on December 19, 1997 in the State of
Nevada under the name of Mount Merlot Estates, Inc. On January 14, 1999
the Company's name was changed to Virtual Brand, Inc. and amended
articles of Incorporation were filed. The name was again changed to
Ubrandit.com on February 18, 1999 and a second set of amended articles
of Incorporation was filed with the State of Nevada. The Company's
primary concentrations are in providing of "branded" financial and
e-commerce Web-based systems to the Internet in order to earn both
advertising and sponsorship revenue. The Company also derives revenue
from custom programming and website design.
On March 11, 1999 the Company acquired Global Investors Guide
("Global") a related Corporation in a business combination. The
combination has been accounted for as if it were a reverse acquisition,
accordingly these statements reflect the combined operations from the
beginning of the period (see Note 9). Global was incorporated in
California in 1996. The financial statements include the accounts of
the Company and its wholly owned subsidiary. All significant
inter-company accounts and transactions have been eliminated.
Net income per share
The net income per share is computed by dividing the net income for the
period by the weighted average number of common shares outstanding for
the period. For the period December 3, 1996 to September 30, 1997 and
for the six months ended March 31, 1998 there were no potential common
shares to include in a computation of diluted earnings per share. For
the year ended September 30, 1998 and the six months ended March 31,
1999 potential common shares and the computation of diluted earnings
per share are not considered as their effect would be anti-dilutive.
Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Property and Equipment
Property and equipment are being depreciated by the straight-line and
accelerated methods over lives ranging from three to five years. The
depreciation methods are designed to expense the cost of the assets
over their estimated useful lives.
F-6
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangibles
Organization costs are amortized under the straight-line method over
five years. Amortization of organization costs expensed to operations
for the year ended September 30, 1998 and the six months ended March
31, 1999 were $20 and $130, respectively.
Revenue Recognition
The Company recognizes revenue when website design is complete, terms
of advertising projects are met and when mailing lists are rented.
Comprehensive Income
There were no items of other comprehensive income in the period
December 3, 1996 to September 30, 1997; the year ended September 30,
1998, the six months ended March 31, 1998 (unaudited) and the six
months ended March 31, 1999 and, thus, net income is equal to
comprehensive income for all four periods.
Research and Development Costs
Research and development costs are charged to operations when incurred
and are included in operating expenses. The amounts charged to
operations for the period December 3, 1996 to September 30, 1997; the
year ended September 30, 1998, the six months ended March 31, 1998
(unaudited) and the six months ended March 31, 1999 were approximately
$8,000, $8,000, $4,000 and $30,894, respectively.
Note 2. CONCENTRATIONS OF CREDIT RISK
The Company's funds are deposited in a federally insured institution up
to $100,000. As of March 31, 1999 the funds under deposit exceed this
insured amount by $750,000.
For the year ended September 30, 1998 and the six months ended March
31, 1998 (unaudited) the Company derived 54% of its revenues from one
customer for sponsorship advertising on e-commerce Web-based systems to
the Internet for both periods. The Company derived ninety-nine percent
of its revenues from the rental of customer mailing lists to one
customer for the six months ended March 31, 1999. The Company
anticipates these concentrations not to be significant in the future as
revenue will be derived from other sources.
F-7
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 3. RELATED PARTY TRANSACTIONS
The Company received computer equipment, services and cash from a
company controlled by a majority stockholder of the Company. These
items were received in exchange for amounts due of $28,589 as of
September 30, 1998 and $100,000 as of March 31, 1999, respectively. The
total amount due of $100,000, as of March 31, 1999, was converted to
stock in April 1999 (see Note 13).
The Company owes $4,990 to a stockholder as a result of a stock
subscription overpayment during February 1999. This amount was refunded
to this stockholder in April 1999.
Note 4. PROPERTY AND EQUIPMENT
The following is a summary of property and equipment, at cost, less
accumulated depreciation:
September 30, March 31,
----------------- ---------
1997 1998 1999
------- ------- -------
Computer equipment $ 3,283 $42,195 $83,281
Less accumulated depreciation 395 10,935 19,434
------- ------- -------
Net property and equipment $ 2,888 $31,260 $63,847
======= ======= =======
For the period December 3, 1996 to September 30, 1997, the year ended
September 30, 1998, the six months ended March 31, 1998 (unaudited) and
the six months ended March 31, 1998, the amounts for depreciation
expense charged to operations were $395, $10,540, $5,430 and $8,480,
respectively.
Note 5. LICENSE AGREEMENTS
On February 2, 1998 the Company's subsidiary Global entered into an
Information Distribution License agreement with an unrelated company.
The Agreement grants a nonexclusive, nontransferable right and license
to distribute electronically, a stock quote data feed. Under the terms
of the three-year agreement Global paid a one-time installation fee of
$1,230 in January 1998. In addition the contract requires Global to pay
a monthly fee of $970 plus redistribution fees based on the number of
months the data feed is used. During the year ended September 30, 1998,
the six months ended March 31, 1998 (unaudited) and the six months
ended March 31, 1999 Global paid fees of $9,331, $2,200 and $970,
respectively. As of September 30, 1998 and March 31, 1999 there are
amounts due of $5,830 and $8,300, respectively.
Additionally, the Company's subsidiary Global entered into a Computer
Software License Agreement on April 21, 1998. The agreement grants
Global the right to use "NT-TASRV" operating system and provides
monthly service and support of this system. Under the terms of the
contract Global paid an initial license fee of $1,025 and pays a
monthly fee of $1,025. For the year ended September 30, 1998 and the
six months ended March 31, 1999 Global had paid $7,175 and $5,125,
respectively, in fees.
F-8
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 5. LICENSE AGREEMENTS (Continued)
In addition, the Company's subsidiary Global entered into a License
Agreement with an unrelated company on January 19, 1999. The Agreement
grants non-exclusive, non-transferable, limited right to use data feeds
for music, video, books and an encyclopedia of popular music. Under the
terms of the one-year agreement, Global will pay the greater of a
minimum monthly fee of $3,500 or a calculated fee based on a fixed
price per unit sold. For the six months ended March 31, 1999 Global has
not paid any fees and March 31, 1999 there is an amount due of $3,500.
Note 6. CONVERTIBLE DEBT
As of September 30, 1998 and March 31, 1999 the Company had an
outstanding note payable of $150,000 to an unrelated party due
November, 2000. The terms of the note require a balloon payment of
$150,000 of principle and cumulative interest accrued at 9.5%. The debt
and accrued interest were converted to stock in April 1999 (see Note
13).
Note 7. STOCKHOLDERS' EQUITY
During December 1996 the Company issued 1,000 shares of stock to an
officer of the Company in consideration for services provided to the
Company.
During February 1998, 860,000 shares of stock were issued to various
investors at $0.01 per share for cash of $8,600, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $3,200.
Additionally, the Company issued 40,000 shares of restricted stock at
$0.01 per share for cash of $400 pursuant to Rule 4-2
During December 1998, 4,140,000 shares of stock were issued to various
investors at $0.01 per share for cash of $41,400, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $3,000.
During February 1999, 1,890,000 shares of stock were issued to various
investors at $0.50 per share for cash of $945,000, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $8,000.
On March 11, 1999 1,826,000 shares of stock were issued in conjunction
with the acquisition of Global (see Note 9).
F-9
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 8. STOCK OPTION PLAN
The Company adopted an incentive stock option plan on March 11, 1999.
Under the plan, the Company may grant up to 2,500,000 in options for
the purchase of common stock. The exercise price of each option shall
not be less than eighty five percent (85%) of the fair market value of
the common stock at the date of grant. The maximum term of the options
is five years. Of the 1,135,000 options granted 785,000 are fully
vested and the remainder vest within one year from the date of grant.
Pursuant to the terms of an employment contract the Company issued
350,000 stock purchase options to an officer of the Company. Of the
350,000 options granted, one third will vest September, 1999, one third
will vest in March 2000 and the remaining one third will vest March,
2001.
The Company applies APB Opinion 25 in accounting for its stock
compensation plan. No compensation cost has been recognized for the
period ending March 31, 1999. Had the Company elected to account for
stock based compensation pursuant to SFAS No. 123 "Accounting for Stock
Based Compensation" the difference would not have been material.
Following is a summary of the status of the options during the period
ended March 31, 1999:
Incentive Stock Option Plan Others
---------------------- ----------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Shares Price Shares Price
--------- --------- --------- ---------
Outstanding at October 1, 1998 -- -- -- --
Granted 1,135,000 $ 0.81 350,000 $ 3.35
Exercise -- -- -- --
Forfeited -- -- -- --
--------- --------- --------- ---------
Outstanding at March 31, 1999 1,135,000 $ 0.81 350,000 $ 3.35
========= ========= ========= =========
Options exercisable at
March 31, 1999 785,000 $ 0.50 -- --
========= ========= ========= =========
Weighted average fair value
of options granted during
year $ 0.004
=========
F-10
Note 8. STOCK OPTION PLAN (Continued)
Following is a summary of the status of the options outstanding at
March 31, 1999:
Outstanding Options Exercisable Options
----------------------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Contractual Exercise Exercise
Price Range Number Life Price Number Price
----------- ----------- ----------- --------- ------ ---------
Incentive Stock Option Plan:
$0.50-$0.75 785,000 5 years $0.50 785,000 $0.50
$1.50-$1.50 350,000 5 years $1.50 -- --
Others:
$3.35-$3.35 350,000 5 years $3.35 -- --
Note 9. ACQUISITION
On March 11, 1999 the Company entered into an Agreement and Plan of
Exchange with a related corporation, Global Investors Guide. As of
March 11, 1999 Global became a wholly owned subsidiary of the Company.
On March 11, 1999 the Company issued shares of stock to each common
stock shareholder of Global in exchange for all of the issued and
outstanding Global stock at an exchange rate of 1,826 shares of the
Company's common stock for 1 share of Global's common stock (See Note
1).
Pursuant to this agreement the shareholders of Global received
1,826,000 Shares of the Company's common stock in exchange for its
issued and outstanding common shares.
Note 10. DEFERRED OFFERING COSTS
As of September 30, 1998 and March 31, 1999, the Company had,
respectively, $3,000 and $5,000 in professional fees, which related
directly to Rule 506 offerings in process.
Note 11. INCOME TAXES
The Company has a Federal net operating loss carryforward of
approximately $280,000, which will expire in the year 2014. The tax
benefit of this net operating loss of approximately $175,000 has been
offset by a full allowance for realization. This carryforward may be
limited upon the consummation of a business combination under Section
381 of the Internal Revenue Code.
F-11
Note 12. YEAR 2000
The Company has assessed its exposure to date sensitive computer
software programs that may not be operative subsequent to 1999 and has
implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruption of normal business
operations are encountered. However, because there is no guarantee that
all systems of outside vendors or other entities on which the Company's
operations rely will be 2000 compliant, the Company remains susceptible
to consequences of the Year 2000 issue.
Note 13. SUBSEQUENT EVENTS
In April 1999 the Company converted $150,000 of debt and accrued
interest due to an unrelated party into 300,000 shares of stock at a
value of $164,251 (see Note 3).
In April 1999 the Company converted an amount due to a related party of
$100,000 into 200,000 shares of stock.
During April 1999, 1,000,000 shares of stock were issued to various
investors at $1.00 per share for cash of $1,000,000, pursuant to a
Regulation D, Rule 506 offering. Issuance costs were $10,000.
The Company entered into an operating lease for office space in April
1999. The lease has a one year term with monthly payments of $9,540.
F-12
INDEX TO EXHIBITS
2.1 Agreement and Plan of Reorganization for the Acquisition of all of the
Outstanding Shares of Common Stock of Global Investors Guide by
Ubrandit.com *
3.1 Ubrandit.com Articles of Incorporation and amendments *
3.2 Ubrandit.com By-laws *
10.1 1999 Stock Option and Incentive Plan *
10.2 Form of Incentive Stock Option Agreement **
10.3 Form of Non-Statutory Stock Option Agreement **
10.4 Information Distribution Agreement *
10.5 Database License Agreement ***
10.6 Computer Software License Agreement *
10.7 License Agreement ***
11.1 Statement of Computation of per share earnings reference is made to the
Income Statement of the Financial Statements *
21.1 Subsidiary of Registrant Global Investment Guide, Inc. Articles of
Incorporation *
21.2 Subsidiary of Registrant Global Investment Guide, Inc. By-laws *
- ----------
* Filed herewith.
** To be filed with subsequent amendment to the Registration Statement.
*** To be filed with subsequent amendment to the Registration Statement.
Portions omitted pursuant to a confidential treatment request to be
filed separately with the Commission.
35
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Ubrandit.com
by:
Jeff Phillips,
President and Chief Executive Officer
36