As Filed with the Securities and Exchange Commission on April 3, 2002
Registration Statement No. 333-84572
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT of 1933
PEOPLESWAY.COM,INC.
(Exact Name of Registrant in its Charter)
Nevada 87-0374559
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2969 Interstate Street
Charlotte, North Carolina 28208
(704) 393-7591
(Address and telephone number of principal
executive offices and principal place of business)
Peoplesway.com, Inc.
2969 Interstate Street
Charlotte, North Carolina 28208
(704) 393-7591
(Name, address and telephone number of agent for service)
Copies to: Stanley F. Freedman, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 Seventeenth Street, Suite 2700 South
Denver, Colorado 80202-5427
(303) 893-2300
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462 under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a)of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to be Amount to be Price Per Offering Registration
Registered Registered Share(1) Price Fee
- ------------------------------------------------------------------------------
Common Stock, 2,000,000 $.20 $400,000 $36.79 *
$.001 par value
Total $36.79
==============================================================================
* Fee paid with original filing.
(1) Estimated solely for the purpose of computing the amount of registration
fee based on the average of the closing bid and ask prices of our Common
Stock on the OTC Bulletin Board on March 4, 2002 which was $0.20 per
share.
PROSPECTUS SUBJECT TO COMPLETION DATED APRIL 3, 2002
- ----------------------------------------------------------------------------
The information in this prospectus is not complete and may be changed. The
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PEOPLESWAY.COM, INC.
2,000,000 Shares of Common Stock
Peoplesway.com, Inc. ("Peoplesway," "we," "us" or "our") is offering for
sale up to 2,000,000 shares of our $.001 par value common stock ("Common
Stock") at an offering price of $.20 per share (the "Shares"). The offering
will commence on the date of this prospectus and will continue until all
Shares are sold. There is no minimum offering amount. We intend to offer the
shares to the public through our officers and directors who will not be paid
any commissions. We will pay participating brokers a commission of up to the
maximum allowable rate.
Our Common Stock is quoted on the OTC Bulletin Board under the symbol
"PLWY." On February 22, 2002, the reported closing price for our Common Stock
on the OTC Bulletin Board was $.20.
____________________________
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss of your investment. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is April __, 2002.
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports and other
information with the Securities and Exchange Commission. Such reports and
other information filed by us can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Requests for copies should be
directed to the Commission's Public Reference Section, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information on the public reference rooms. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically.
We have filed with the Commission a Registration Statement on Form SB-2
of which this Prospectus constitutes a part, under the Securities Act of 1933,
as amended. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in
accordance with the rules of the Commission. For further information
pertaining to us, reference is made to the Registration Statement. Statements
contained in this Prospectus or any document incorporated herein by reference
concerning the provisions of documents are necessarily summaries of such
documents, and each such statement is qualified in its entirety by reference
to the copy of the applicable document filed with the Commission. Copies of
the Registration Statement are on file at the offices of the Commission, and
may be inspected without charge at the offices of the Commission, the
addresses of which are set forth above, and copies may be obtained from the
Commission at prescribed rates. The Registration Statement has been filed
electronically through the Commission's Electronic Data Gathering, Analysis
and Retrieval System and may be obtained through the Commission's Web site
(http://www.sec.gov).
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TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY .............................................. 1
RISK FACTORS .................................................... 2
USE OF PROCEEDS ................................................. 8
DETERMINATION OF OFFERING PRICE ................................. 8
BUSINESS OF PEOPLESWAY.COM, INC. ................................ 8
MANAGEMENT'S DISCUSSION AND ANALYSIS............................. 12
MANAGEMENT....................................................... 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................................... 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .................. 21
MARKET FOR OUR COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.. 21
PLAN OF DISTRIBUTION ............................................ 22
EXPERTS ......................................................... 23
LEGAL MATTERS ................................................... 24
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF
OFFICERS AND DIRECTORS ......................................... 24
-ii-
PROSPECTUS SUMMARY
The following is a summary of the pertinent information regarding this
offering. This summary is qualified in its entirety by the more detailed
information and financial statements and related notes incorporated by
reference in this Prospectus. The Prospectus should be read in its entirety,
as this summary does not contain all the facts necessary to make an investment
decision.
The Company
- -----------
Peoplesway.com, Inc., a Nevada corporation ("we," "our," or
"Peoplesway"), is an electronic commerce and Internet services company that
maintains an Internet destination called "Peoplesway," located at
www.peoplesway.com. The Peoplesway Web site offers goods and services for
sale, including: cosmetics and beauty products, health supplements, specialty
items, and flowers, which can be obtained directly through the Web site, or by
calling our customer service team members. Payment comes directly to
Peoplesway from customers through a secure Internet server that accepts credit
card transactions. We then forward these orders to our vendors, who then will
drop ship products to customers as orders are received through our Peoplesway
Web sites.
The Offering
- ------------
Securities Offered: 2,000,000 shares of our $.001 par value Common Stock.
Offering Price: $.20
Common Stock to be 15,419,969 shares
Outstanding after
Offering
Dividend Policy We do not anticipate paying dividends on our common
stock in the foreseeable future.
Use of Proceeds We intend to use the proceeds from this Offering for
product research and development, to restructure debt
and to fund working capital.
Risk Factors This offering involves a high degree of risk, elements
of which include:
- We Have a Limited Operating History
- We Have Incurred Substantial Losses and May Never
Achieve Profitability
- We Need Additional Working Capital
- Certain Economic Conditions May Affect Our Operations
- Our Future Operations Will Depend on the Efforts
of our Management Team and Our Business
Will Suffer if We Lose the Services of Any
Key Employees
Page 1
- We Have Agreements with a Related Party
Which May Create Conflicts of Interest that
Could Hurt Our Business
- We Rely Upon the Accurate and Proper Utilization of
Our Information System and a Significant Failure of
Such System May Affect Our Operations
- We Face Intense Competition Which Could Adversely
Affect Our Financial Performance
- Our Operations May be Affected by Any Backlog in
Delivery From Our Vendors
- Our Business is Subject to the Rapid Changes
Experienced by the Technological Industry
- Resales of Outstanding Restricted Shares Could Hurt
the Market Price of Our Stock
- We do not Expect to Pay Dividends
- The Market for Our Shares is Very Limited and May not
be Maintained
- The Market for Our Common Stock is Adversely
Affected by the "Penny Stock" Rules
- NASD Sales Practice Requirements Adversely Affect
the Market for Our Common Stock
Offering Period There is no minimum offering amount. We plan to
continue the offering until all 2,000,000 shares are
sold.
Plan of Distribution We plan to offer these securities through our officers
and directors to whom no commission will be paid. We
may pay participating brokers a commission of up to
the maximum allowable rate. See, "Plan of
Distribution."
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information in this Prospectus, the following:
The securities being offered hereby are speculative in nature and involve
a high degree of risk. Following is a summary discussion of the risk factors
applicable to an investment in the securities. Prospective investors should
thoroughly consider all of the risk factors discussed below and should
understand that there is substantial risk they will lose all or part of their
investment. No person should consider investing who cannot afford to lose his
entire investment or who is in any way dependent upon the funds that he is
investing.
1. We have a limited operating history.
We have had limited operations since our inception in 1980, and since
becoming Peoplesway in September 1999. We have accumulated $332,873 in losses
for our first nineteen months of operations as Peoplesway (September 1, 1999
through March 31, 2001), none of our operations have proven successful, and
there is no assurance that we can profitably market our present products and
services.
Page 2
2. We have incurred substantial losses.
We had limited net revenues of $789,625 and substantial losses ($166,360)
for the year ended March 31, 2001.
The net loss shown for the period ended March 31, 2001 reflects certain
expenses, which were borne by RMC Group, Inc., which shares office space with
us. All expenses paid by DRM and/or any of its subsidiaries are being booked
by us as an expense and an inter-company payable is established with DRM
and/or the appropriate subsidiary.
3. We need additional working capital.
We have limited capital. Our primary revenues are derived from the sale
of a limited number of goods and services online to limited markets, and these
sales are presently dependent upon the services provided by our alliance with
DRM and a small number of employees. If this alliance ends, it is likely that
we cannot continue as a going concern. We have limited capital to increase
our sales force or to expand operations; accordingly, without additional
capital, growth will be limited.
4. Certain economic considerations may affect our operations.
Any substantial downturn in economic conditions could significantly
depress discretionary consumer spending and have a material adverse effect on
our business operations. At any given time, because of the search and
comparison-shopping capabilities using the Internet, it is possible to locate
items similar to those sold by us at competitive or lower prices. Inflation
may also affect the future availability of favorable terms or financing rates
for us or our customers, and deflation may also affect revenues derived from
these operations.
5. We rely heavily on our existing management.
Our operations are primarily dependent upon the experience and expertise
of Donald R. "Pete" Monroe, Chairman; Matthew M. Monroe, President; and,
Eugene M. Johnston, CEO and Secretary/Treasurer. The loss of any of our
management may have a material adverse effect on our present and contemplated
business operations. Our success is also dependent upon our ability to
attract and retain qualified management, and administrative and sales
personnel to support our anticipated future growth, of which there can be no
assurance. We do not carry key man insurance upon the lives of any of our
directors or executive officers.
6. Our operations rely on our existing alliance with DRM.
Our operations are primarily dependent upon the existence of our alliance
with DRM and its subsidiaries, and the contracts that exist between DRM and
vendors. Formal written agreements have been established with DRM and its
subsidiaries such that all goods and services, which DRM or its subsidiaries
offer for sale, are listed on, and for sale through, our Web site. However,
the loss of this alliance or a downturn in the business of DRM would have a
material adverse effect on our present and contemplated business operations.
Page 3
7. We have yet to pay dividends.
We have not paid and do not expect to pay any cash dividends with respect
to our Common Stock in the foreseeable future. We presently have limited
revenues and capital. Without substantial increases in revenues and capital,
it would be impossible to pay cash dividends.
8. There is currently a limited market for our Common Stock.
There is currently a limited trading market for our shares of Common
Stock, and there can be no assurance that a more substantial market will ever
develop or be maintained. Any market price for shares of our Common Stock is
likely to be very volatile, and numerous factors beyond our control may have a
significant adverse effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume fluctuations
which have affected the market price of many small capital companies and which
have often been unrelated to the operating performance of these companies.
These broad market fluctuations, as well as general economic and political
conditions, may also adversely affect the market price of our Common Stock.
Further, there is no correlation between the present limited market price of
our Common Stock and our revenues, book value, assets or other established
criteria of value. The present limited quotations of our Common Stock should
not be considered indicative of the actual value of Peoplesway or our Common
Stock.
9. Certain of our Shares are eligible for future sales and may affect the
price of our Common Stock.
Sales of unrestricted securities may also have an adverse effect on any
market that may develop in our Common Stock. Of the 13,419,969 outstanding
shares of our Common Stock, 889,171 are free trading meaning that they can
presently be sold. In addition, of the 13,419,969 shares, 12,500,000 were
issued on October 18, 1999, and under Rule 144 of the Securities Act of 1933,
if certain conditions are satisfied, a limited number of these shares, up to
1% of the total issued and outstanding shares of the Company, could be sold
during any three month period. Once these shares enter the market, their sale
may have a depressive effect on the market price of our stock.
10. Certain conflicts of interest exist between us and our management.
Our directors and officers are directors, executive officers, controlling
stockholders and/or partners of DRM and its related subsidiaries. Thus, there
exist potential conflicts of interest including, among other things, time,
effort and corporate opportunity, for these individuals involved in
participation with other potential business opportunities.
11. There are risks associated with the execution of our growth strategy.
A principal component of our growth strategy is to partner with
additional merchants and service providers that will allow their goods and
services to be sold through member Web sites, and to attract additional
customers. Our ability to execute our growth strategy depends on a number of
factors including, (i) our ability to acquire these goods and services and
related opportunities on economically feasible terms; (ii) our ability to
obtain the capital necessary to finance the expansion and to pay any necessary
sales, marketing and operational expenditures; and (iii) our ability to manage
potentially rapidly growing operations effectively and in a manner which will
Page 4
result in significant customer satisfaction. There can be no assurance that
we will be successful in any of these respects.
12. We rely on Internet and information systems.
We rely upon the accuracy and proper utilization of our Internet and
information system to provide timely distribution services, manage our sales
and track our customers' purchase and sale information. To manage our growth,
we are continually evaluating the adequacy of our existing systems and
procedures and continue to update and integrate critical functions. We
anticipate that we will regularly need to make capital expenditures to upgrade
and modify our Internet and information systems, including software and
hardware, as we grow and the needs of our business change. There can be no
assurance that we will anticipate all of the demands which our expanding
operations will place on our information system. The occurrence of a
significant system failure or our failure to expand or successfully implement
its systems could have a material adverse effect on our operations and
financial results.
13. Our operations depend on our maintaining our technical employees.
The success of our Internet services business depends in large part upon
our ability to attract and retain highly skilled technical employees in
competitive labor markets. There can be no assurance that we will be able to
attract and retain sufficient numbers of skilled technical employees. The
loss of existing technical personnel or difficulty in hiring or retaining
technical personnel in the future could have a material adverse effect on our
operations and financial results.
14. Any backlog in delivery of our products could cause a loss of sales.
We do not have a significant backlog of business since our vendors
normally deliver and/or install products and services purchased by our
customers within one to seven days from the date of order. Accordingly,
backlog is not material to our business or indicative of future sales. From
time to time, we may experience difficulty in obtaining products from our
major vendors as a result of general industry conditions. In addition, in the
Internet industry, one to three day delivery options are becoming commonplace.
If we are unable to deliver products to our customers within a short time
period, we may experience loss of sales.
15. We are affected by the rapid changes experienced by the technological
industry.
As with all Internet companies, our success will depend in part on our
ability to develop Internet solutions that keep pace with continuing changes
in information technology, evolving industry standards and changing client
preferences. There can be no assurance that we will be successful in
adequately addressing these developments on a timely basis or that, if these
developments are addressed, we will be successful in the marketplace. In
addition, there can be no assurance that products or technologies developed by
others will not render our services noncompetitive or obsolete. Our failure
to address these developments could have a material adverse effect on our
operating results and financial condition.
Page 5
16. We experience competition and the low barriers to entry into our
industry.
We expect competition to persist, intensify and increase in the retail
Internet industry in the future. There are thousands of individuals and
companies that sell goods and services similar to those offered by us. Almost
all of our current and potential competitors have longer operating histories,
larger installed customer bases, longer relationships with clients and
vendors, and significantly greater financial, technical, marketing and public
relation resources than Peoplesway. As a strategic response to changes in the
competitive environment, we may from time to time make certain pricing,
service technology or marketing decisions or business or technology
acquisitions that could have a material adverse effect on our business,
financial condition, results of operations and prospects, and similar actions
by competitors could materially adversely affect our present and proposed
business operations, results of operations, financial condition and prospects.
In addition, our ability to generate customers will depend to a
significant degree on the uniqueness and quality of our products and services
and our reputation among our customers and potential customers, compared with
the quality of similar services provided by, and the reputations of,
Peoplesway's competitors. To the extent that we lose customers to our
competitors because of dissatisfaction with our services, or our reputation is
adversely affected for any other reason, our business, results of operations,
financial condition and prospects could be materially adversely affected.
There are relatively low barriers to entry into our targeted business.
Anyone can attempt to purchase and sell the goods and services, which we
purchase and market. Accordingly, we are likely to face additional
competition from new entrants into the market in the future. There can be no
assurance that existing or future competitors will not develop or offer
services that provide significant performance, price, creative or other
advantages over those offered by us, which could have a material adverse
effect on our business, financial condition, results of operations and
prospects.
17. We may acquire the assets and operations of other companies which may
affect our financial condition.
We may consider acquiring the assets and operations of other companies in
order to expand our business. Integration of acquisitions may involve a
number of risks that could have a material adverse effect on our operating
results and financial condition, including: restructuring charges associated
with the acquisitions and other expenses associated with a change of control;
non-recurring acquisition costs such as accounting and legal fees; investment
banking fees; amortization of acquired intangible assets; recognition of
transaction-related obligations and various other acquisition-related costs;
diversion of management's attention; difficulties with retention, hiring and
training of key personnel; and risks of incurring unanticipated problems or
legal liabilities.
Although we would conduct due diligence, hire outside independent
financial and accounting consultants, and generally require representations,
warranties and indemnifications from the former owners of any acquisition
candidates, there can be no assurance that such owners will have accurately
Page 6
represented the financial and operating conditions of their companies. If an
acquired company's financial or operating results were misrepresented, or the
acquired company otherwise failed to perform as anticipated, the acquisition
could have a material adverse effect on our operating results and financial
condition.
18. The market for our Common Stock is adversely affected by the "Penny
Stock" rules.
Our Common Stock may be deemed to be "penny stock" as that term is
defined in Rule 3a51-1 of the Securities and Exchange Commission. Penny
stocks are stocks (i) with a price of less than $5.00 per share; (ii) that are
not traded on a "recognized" national exchange; (iii) whose prices are not
quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must
still meet requirement (i) above); or (iv) in issuers with net tangible assets
less than $2,000,000 (if the issuer has been in continuous operation for at
least three years) or $5,000,000 (if in continuous operation for less than
three years), or with average revenues of less than $6,000,000 for the last
three years. Until November 1999, there had been no "established public
market" for our Common Stock during the last five years. While our stock has
traded between $.15 and $5.36 per share since November 1999, there is no
assurance that this price level will continue, as there has thus far been low
volume, and our stock may be deemed to be penny stock at any time. Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 of
the Securities and Exchange Commission require broker/dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account. Potential investors in our Common Stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be a
"penny stock."
Moreover, Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stocks to that investor.
This procedure requires the broker/dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker/dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for investors in our Common Stock to resell their shares to
third parties or to otherwise dispose of them.
19. The status of some of our patents, trademarks, licenses, franchisees,
concessions, royalty payments or vendor contracts is pending.
We have applied for a federal trademark of "Peoplesway" and
"Peoplesway.com." However, as of this date, these federal trademarks have not
been granted. We have secured the use of Peoplesway.com on the Internet,
which cannot be used to access any other Web site as long as we remain current
with our Internet registration of the name. Agreements and licenses with our
vendors are directly between DRM and our vendors, other than Proflowers.com,
Page 7
with which we have an oral agreement, cancelable upon notice by either party.
We have no direct control over the cancellation of these contracts, and if
they are canceled, it may hinder our ability to be profitable or to continue
operations.
20. This offering is being conducted by our officers and directors; there is
no minimum offering amount.
We intend to conduct this offering through our officers and directors who
have no experience in selling securities. In addition, there is no minimum
offering amount. While we do intend to continue the offering until all shares
are sold, there can be no assurance that we will sell even a minimum number of
shares. Should this happen we will utilize other means of raising capital.
Our ability to continue our growth will depend on our ability to raise capital
from other sources.
USE OF PROCEEDS
The net proceeds of this offering will be $383,900 (gross proceeds of
$400,000 less offering costs of $16,100) if all the Shares are sold. We
intend to use the net proceeds according to the following schedule:
Shares Sold in Offering
-----------------------------------
10% 25% 50% 100%
PROCEEDS
Gross Proceeds $40,000 100,000 200,000 400,000
Less offering costs 16,100 16,100 16,100 16,100
------- ------- ------- -------
Net proceeds 23,900 83,900 183,900 383,900
USES
Inventory and
Product Research
and Development $4,780 20,975 45,975 76,780
Restructuring Debt for
Legal, Accounting and
Development Cost 4,780 16,780 27,585 38,390
Software and Hardware
Equipment Needs 11,950 37,755 91,450 249,535
Ongoing Operational Expenses
(i.e. advertising, training
materials, cash reserves, etc.) 2,390 8,390 18,390 19,195
DETERMINATION OF OFFERING PRICE
Our Common Stock is traded on the OTC Bulletin Board under the symbol
"PLWY." The price of the Shares we are offering pursuant to this prospectus
was determined by the low bid price for our stock as of the close of business
on February 22, 2002.
Page 8
BUSINESS OF PEOPLESWAY.COM,INC.
Peoplesway.com, Inc. is an electronic commerce and Internet services
company that maintains an Internet destination called "Peoplesway," located at
www.peoplesway.com. Our Web site offers goods and services for sale,
including: cosmetics and beauty products, health supplements, jewelry, and
flowers, which can be obtained directly through the Web site, or by calling
our customer service team members. The majority of our goods and services are
available through an alliance with DRM, Inc. and its member network of
approximately 14,000 independent contractors who may purchase and sell our
products and services through the use of our Web site. We do not retain an
inventory of any product we sell. Payment comes directly to us from customers
through a secure Internet server that accepts credit card transactions. We
then forward these orders to DRM or other vendors, who then will drop ship
products to customers as orders are received through our Peoplesway Web sites.
Recent History
- --------------
Peoplesway, Inc., a closely-held North Carolina corporation incorporated
in August 1999, was acquired by Prospector Energy, Inc. ("Prospector") in a
reverse acquisition, as a wholly-owned subsidiary on September 1, 1999 in a
stock for stock tax free exchange, whereby all outstanding shares of
Peoplesway were exchanged for 12,500,000 shares of Prospector. At inception,
Prospector was authorized to issue 30,000,000 shares of common voting stock,
par value one cent ($0.01) per share. Pursuant to the acquisition of
Peoplesway and resulting amendments to the articles of incorporation, the
authorized shares of Common Stock increased to 100,000,000, the par value was
changed to $.001, a 400 to 1 reverse split of Prospector's common stock was
effected, resulting in 107,328 shares being issued and outstanding immediately
prior to the acquisition, and the company changed its name to Peoplesway.com,
Inc. Following the conversion of a convertible debenture, there are an
additional 3,000,000 shares outstanding, for a total of 15,607,969 shares of
Common Stock outstanding. During November 2000, 2,675,000 of these shares were
sent back to the Company's treasury and retired.
All references in this document to "Peoplesway," "the Company," "us,"
"we" or "our", refer to the Nevada parent, formerly known as Prospector
Energy, Inc., and the North Carolina subsidiary. The principal offices of
Peoplesway are located at 2969 Interstate Street, Charlotte, North Carolina
28208, and its phone number is (704) 393-7591.
Prior History
- -------------
Peoplesway was organized as a Utah corporation on October 30, 1980, for
the purpose of purchasing, owning, holding, selling, disposing of and
otherwise dealing in the oil and gas business and other natural resources. It
became a public company through an offering of Common Stock to residents of
the State of Utah, pursuant to an exemption from registration under
then-existing Rule 147, Securities Act of 1933. Following the offering,
Prospector acquired an interest in Four Winds Mineral Venture, a Louisiana
partnership that held a 66% interest in a Costa Rican oil and gas company, in
exchange for the issuance 11,250,000 shares of Common Stock. This acquisition
proved unsuccessful, and thereafter business operations ceased and the company
was dormant from 1983 until 1997, when it actively began seeking a merger or
acquisition candidate, which it accomplished in 1999 when it entered into the
Page 9
Acquisition Agreement with Peoplesway. As Prospector never left the
development stage and was dormant until 1997, we have re-designated our
inception date to be January 1, 1997.
Charter Amendments
- ------------------
The following amendments to the Articles of Incorporation have been
effected since we were organized:
. Effected a name change from Prospector Energy, Inc. to
Peoplesway.com, Inc., effective September 13, 1999.
. Effected a 400 to 1 reverse split of the Common Stock, effective
September 22, 1999.
. Increased the authorized capital to 100,000,000 shares, effective
September 22, 1999.
. Changed domicile from the State of Utah to the State of Nevada on
September 24, 1999.
Internet Commerce
- -----------------
The Internet is a worldwide series of interconnected electronic and/or
computer networks. Individuals and companies have recently recognized that the
technological capabilities of the Internet provide a medium for not only the
promotion and communication of ideas and concepts, but also for the
presentation and sale of information, goods and services. According to
statistics reported by the Computer Industry Almanac, there are projected to
be 110 million Internet users in the United States by the end of 1999, and
nearly 14 million users in Canada by year-end. Of this number, approximately
25% purchase goods and services online, according to a December 1999 study by
Scarborough Research.
Historically, the Internet has been accessible principally through
personal computers. Recently, several companies have announced "Web TV"
products designed for attachment to television sets for the purpose of
allowing access to the Internet without the need for a personal computer.
Although these products do not permit the full range of functions provided by
personal computers, they do permit many of the features of the Internet to be
viewed on television sets. Management believes that the new Web TV products
are expected to substantially increase the number of people who will shop
online by accessing the Internet. Already, online purchases have increased
100% in the past year, according to a November, 1999 study by Yankelovich
Partners, Inc.
The term "Internet commerce" encompasses the use of the Internet for
selling goods and services. The use of the Internet as a marketing and
advertising tool is enhanced by the ability to communicate information through
the Internet to a large number of individuals, businesses and other entities.
Because of the "virtual" nature of electronic commerce, the online
presence for certain merchants can significantly reduce or eliminate the costs
of maintaining a physical retail facility. Online merchants can also achieve
significant savings by eliminating traditional product packaging, print
Page 10
advertising and other point of purchase materials. Marketing on the Internet
can be especially advantageous for smaller companies because it removes many
physical and capital barriers to entry and serves to level the competitive
playing field by allowing smaller companies to effectively compete with larger
companies.
Internet Security
- -----------------
One of the largest barriers to a potential customer's willingness to
conduct commerce over the Internet is the perceived ability of unauthorized
persons to access and use personal information about the user, such as credit
card account numbers, social security numbers and bank account information.
Concerns about the security of the Internet include the authenticity of the
user (i.e., is the user accurately identified), verification and certification
methods of who these users are, and privacy protection for access to private
information transmitted over the Internet. However, recent advances in this
area have greatly reduced the possibility of such unauthorized access or use.
IMC Worldwide, Inc. provides our Unix-based computer system and hosts our Web
site and our independent contractor Web sites, employing state-of-the-art
encryption software to ensure the privacy and protection of our customers. We
have not experienced any occasion in which a user's credit card was
misappropriated while transacting business on Peoplesway.
Alliance with DRM
- -----------------
The majority of our goods and services are available through an alliance
with DRM, Inc. and its subsidiaries, RMC Group, Inc. and RMC Group Canada,
Ltd. ("DRM"). DRM began offering health and beauty products in 1982, and its
sales from inception have exceeded $250,000,000 from both U.S. and Canada
operations. It has a member network of approximately 14,000 independent
contractors who may purchase and sell our products and services through the
use of our Web site. We have established agreements with DRM to market and
sell to DRM independent contractors. RMC Group, Inc. was established in 1993
and took over the distribution rights for the United States from DRM. In 1998
RMC became a subsidiary of DRM. RMC Group Canada, Ltd. was established in
1987 as a subsidiary of DRM. It was established to service the Canadian
market.
Products and Services
- ---------------------
Products and services we currently offer include:
Health and beauty products. We offer products through DRM from their
Rose Marie Collection, including cosmetics, personal hygiene products, skin
care, hair care, and bath products. In addition, DRM supplies Body Management
System nutritional products, including weight loss and anti-aging supplements.
DRM manufactures and packages these products through a licensing agreement
with a health and beauty product manufacturer.
Flowers. We also sell fresh flowers and arrangements delivered to your
door, through an arrangement with Proflowers.com, Inc.
Page 11
Marketing and Advertising
- -------------------------
By leveraging the DRM sales force, we are simultaneously opening Internet
Web sites and marketing the current Peoplesway product lines. Each independent
contractor is encouraged by us and DRM to open a sub-Web site at
Peoplesway.com. For example, John Doe would have a site address of
www.peoplesway.com/johndoe. John Doe will advertise his site and will receive
a commission for each sale ordered on his site. John Doe's only responsibility
is to advertise his site. Inventory, shipping, merchant accounts, payments
and customer service will be handled by Peoplesway, its subsidiaries and its
affiliates. It is envisioned that thousands of site owners will individually
advertise to thousands of Internet shoppers to come and shop at their site. As
of December 31, 2001, after over twenty-four months of operations, we have
added 1,400 new members and have in excess of 500 active sub websites.
Properties
- ----------
We maintain offices at 2969 Interstate Street, Charlotte, North Carolina.
We share 1,900 square feet of office space and 2,600 square feet of warehouse
space with RMC Group, Inc., to whom we pay a fee based upon a percentage of
sales per month as a subtenant for space and utilities. The rent terms
approximate fair market value within the local area. RMC Group, Inc. allows
us to use its office equipment, including computers and related hardware. The
primary system is an HP 9000 computer network operating on a Unix system.
Currently RMC Group, Inc. leases this equipment. We believe that we
currently have sufficient space and computer systems to carry on our
operations for the foreseeable future. If RMC Group, Inc., was to terminate
our sub-tenancy or use of office equipment and computer system, there is no
assurance that we can continue as a going concern.
Legal Proceedings
- -----------------
We are not a party to any legal proceedings, nor, to the best of our
knowledge, are any such proceedings threatened or contemplated.
MANAGEMENT'S DISCUSSION AND ANALYSIS
With the exception of historical facts stated herein, the matters
discussed in this report are "forward looking" statements that involve risks
and uncertainties that could cause actual results to differ materially from
projected results. Such "forward looking" statements include, but are not
necessarily limited to, statements regarding anticipated levels of future
sales and earnings from operations of the Company. Readers of this report are
cautioned not to put undue reliance on "forward looking" statements, which
are, by their nature, uncertain as reliable indicators of future performance.
The Company disclaims any intent or obligation to publicly update these
"forward looking" statements, whether as a result of new information, future
events, or otherwise. In addition the uncertainties include, but are not
limited to, competitive conditions involving E-commerce, and the sales of
cosmetics, flowers, beauty and fragrance products over the Internet.
Page 12
Selected Financial Data
- -----------------------
For the year ended March 31, 2001 and the seven months ended March 31,
2000:
2001 2000
---- ----
Net Revenues $ 789,625 $ 316,040
Net Loss (166,360) (166,513)
Net Loss per Common Share (.01) (.02)
Weighted Average Common
Shares Outstanding 14,939,219 9,724,401
At March 31, 2001 and 2000:
2001 2000
---- ----
Total Assets $ 173,329 $ 102,366
Working Capital Deficit (158,941) (149,906)
Shareholders' Deficit (273,941) (149,906)
No dividends have been declared or paid during the period presented.
For the nine month periods ended December 31, 2001 and December 31,
2000(unaudited):
2001 2000
---- ----
Net Revenues $ 317,005 602,549
Net Income (Loss) 18,361 (87,488)
Net Gain/Loss per Common Share <.01 <.01
At December 31, 2001 and 2000:
2001 2000
---- ----
Total Assets 243,290 173,329
Working Capital Deficit (118,810) (172,137)
Shareholders' Deficit (246,652) (273,941)
Results of Operations
- ---------------------
For the Year Ended March 31, 2001 and the Seven Months Ended March 31, 2000
- ---------------------------------------------------------------------------
Sales
-----
Net revenues for the year ended March 31, 2001 were $789,625 on retail
sales of $1,029,074 versus $316,040 in net revenues for the period ended March
31, 2000 on retail sales of $408,395, an increase of $473,585 or 150%. Retail
sales consisted of product sales, monthly service fees and business aid sales.
We reduce retail sales by wholesale distributor allowances in the
determination of net revenues. Net revenues are the amount actually paid to
the Company.
Page 13
Other revenues include membership fees, handling fees and web hosting
revenue. Other revenue increased to $103,660 from $30,164 in the comparable
period in 2000. This was primarily attributable to an increase in the number
of orders shipped as the result of increased sales and our participation in
web hosting revenue.
We plan to accelerate growth of sales in fiscal 2002 by increasing
expenditures on marketing, establishing more sub websites and strategic
relationships and growing public awareness of services.
Income/Loss
-----------
Net loss for the year ended March 31, 2001 was $166,360 as compared to a
net loss of $166,513 in the comparable period in 2000. We recognized an
increase of gross profit of $262,034 for the year ended March 31, 2001 offset
by an increase of $212,633 in expenses as detailed below and an increase of
$49,428 in interest expense in connection with the three notes payable
incurred during the year.
We expect to continue to incur losses at least through fiscal 2002 and
there can be no assurance that we will achieve or maintain profitability or
that our revenue growth can be sustained in the future.
Expenses
--------
Selling, general and administrative expenses for the year ended March 31,
2001 were $480,353 versus $267,720 in the comparable period in 2000. The
following increases in expenses were noted during the year ended March 31,
2001: Automobile expenses increased $11,019 due to employee travel
reimbursements made during the year. Furniture and equipment rental increased
$40,353 due primarily to new computer and office equipment used during the
year. Salaries and subcontract labor increased a total of $129,244 due to
additional staff hired to administer our operations and market our products
and services.
Interest expense increased $49,248 in connection with the notes payable
issued to three investors during the year ended March 31, 2000. We anticipate
incurring approximately the same amount of these expenses during fiscal 2002,
except for the $45,000 in interest from the stock options issued in connection
with the three notes payable, which was a one time charge for 2001.
We expect increases in certain expenses such as advertising through
fiscal 2002 as the Company moves toward increasing development and marketing
of our products and services.
Cost of Sales
-------------
One of the largest factors in the variations in the cost of sales as a
percentage of net sales is the cost of products.
Cost of sales for the period ended March 31, 2001 was $426,384 versus
$214,833 in the comparable period in 2000. The increase was primarily
attributable to an increase in sales for the year. Gross margins and product
prices remained relatively constant during the year.
Page 14
Retail sales and net revenue for the period do not include sales of a
cooperative advertising campaign (Peoplesway Giveaway Certificates) that was
offered to new web site owners. Approximately $209,215 in net revenues and
$105,110 in related prepaid expenses from these sales are included on the
balance sheet as deferred revenue and prepaid expenses, respectively, in the
March 31, 2001 balance sheet. The certificates are valid one-year from the
time of purchase and expire at various times throughout March 31, 2002. As
the certificates are redeemed with an order by customers or expire, the sales
will be included in revenues for that period. There are certain commission
expenses on these sales that are also reflected on the balance sheet under
prepaid expenses. This expense will also be recorded on the income statement
in the period that the certificates are redeemed or expire. Since this was a
new product announcement, a large number of the then current web site owners
placed orders for the Peoplesway Giveaway Certificates and therefore these
sales for the period were a much larger percentage than we expect in the
future. Had all the income and expense of these sales been included in income
for the period, our loss would have been approximately $(62,255).
Impact of Inflation
-------------------
We believe that inflation has had a negligible effect on operations
during the period. We believe that we can offset inflationary increases in
the cost of sales by increasing sales and improving operating efficiencies.
Trends, Events, and Uncertainties
---------------------------------
Demand for the Company's products will be dependent on, among other
things, market acceptance of the Company's concept, the quality of its Web
site and general economic conditions, which are cyclical in nature. Inasmuch
as a major portion of the Company's activities is the receipt of revenues from
the sales of its products, the Company's business operations may be adversely
affected by the Company's competitors and prolonged recessionary periods.
For the Three and Nine Months Ended December 31, 2001 and 2000
- --------------------------------------------------------------
Retail Sales and Net Revenues
-----------------------------
Retail sales and net revenues for the nine months ended December 31, 2001
were $430,978 and $313,418, respectively, versus retail sales and net revenues
of $777,031 and $543,922, respectively for the comparable period in 2000, a
decrease of 44% and 42%, respectively. This decrease in net revenues was
primarily attributable to an overall decline in business due to the World
Trade Center terrorist attacks and disaster on September 11, 2001. Net
revenues consisted of product sales, monthly service fees and business aid
sales. We plan to accelerate growth of sales in 2002 by increasing
expenditures on marketing and growing public awareness of products.
Expenses
--------
Selling, general and administrative expenses for the nine-month period
ended December 31, 2001 were $219,267, versus $341,923 for the comparable
period in 2000, a decrease of 36%. Notable expense decreases for the nine
months ended December 31, 2001 include overall labor costs and rent that
Page 15
decreased. Such decreases were primarily attributable to management's attempt
to streamline operations during the period ended December 31, 2001. We
anticipate incurring approximately the same amount of these expenses during
the remainder of the current fiscal year. This decrease in expenses would
have been greater since we incurred $45,650 in non-cash expenses attributable
to the issuance of common shares in exchange for services received for the
quarter ending December 31, 2001.
We also expect increases in certain expenses such as advertising through
fiscal 2002 as the Company moves toward increasing development and marketing
of our products.
Cost of Sales
----------------
One of the largest factors in the variations in the cost of sales as a
percentage of net revenues is the cost of products.
Cost of sales for the nine months ended December 31, 2001 was $108,578
versus $348,114 for the same period in 2000. The decrease was due to the
decrease in the Company's sales during the period. Gross product margins and
product prices remained relatively constant during the year.
Impact of Inflation
-------------------
We believe that inflation has had a negligible effect on operations
during the year. We believe that we can offset inflationary increases in the
cost of sales by increasing sales and improving operating efficiencies.
Trends, Events, and Uncertainties
---------------------------------
Demand for our products will be dependent on, among other things, market
acceptance of the Peopleway.com concept, the quality of our Web site and
general economic conditions, which are cyclical in nature. Inasmuch as a
major portion of our activities is the receipt of revenues from the sales of
its products, our business operations may be adversely affected by our
competitors and prolonged recessionary periods.
Liquidity and Capital Resources
-------------------------------
For the Nine Months Ended December 31, 2001 and 2000
- ----------------------------------------------------
Cash flows used in operations were $10,174 for the nine months ended
December 31, 2001 versus cash used of $99,635 for the same period in 2000.
Management believes this represents a significant achievement in operations
from the prior year period.
Cash flows provided by financing activities was $24,838 for the nine
months ended December 31, 2001 versus cash generated of $2,517 in the same
period in 2000. The cash flows used in financing activities during the nine
months ended December 31, 2001 reflected $24,838 in additional notes payable
issued by the Company.
Page 16
We have funded our cash needs from inception through December 31, 2001
with a series of related party debt and equity transactions.
We will substantially rely on the existence of revenue from product sales
and from the projected revenues of www.Peoplesway.com. We project that we will
need additional capital to fund operations over the next 12 months. If the
projected revenues of www.Peoplesway.com fall short of needed capital, the
Company will not be able to sustain its capital needs for more than six
months. We will then need to obtain additional capital through equity or
debt financing to sustain operations for an additional year. A lack of
significant revenues beginning in the second six months of fiscal 2002 will
significantly affect the cash position of the Company and move the us toward a
position where the raising of additional funds through equity or debt
financing will be necessary.
On a long-term basis, liquidity is dependent on continuation and
expansion of operations, receipt of revenues, additional infusions of capital
and debt financing. We are considering launching a wide scale marketing and
advertising campaign. Our current available capital and revenues are not
sufficient to fund such a campaign. If we choose to launch such a campaign,
it will require substantially more capital. If necessary, we plan to raise
this capital through an additional follow-on stock offering. The funds raised
from this offering will be used to develop and execute the marketing and
advertising strategy, which may include the use of television, radio, print
and Internet advertising. However, there can be no assurance that we will be
able to obtain additional equity or debt financing in the future, if at all.
If we are unable to raise additional capital, our growth potential will be
adversely affected. Additionally, we will have to significantly modify our
plans.
MANAGEMENT
Directors and Executive Officers and Significant Employees
- ----------------------------------------------------------
The following table identifies all current executive officers, directors
and significant employees of Peoplesway. The officers and directors will
serve until the next annual meeting of the stockholders or until their
successors are elected or appointed and qualified, or they resign or are
terminated.
Date
Name Age Position Position Commenced
- ---- --- -------- ------------------
Donald R. "Pete" Monroe 57 Chairman August 1999
Matthew M. Monroe 32 President and Director August 1999
Eugene M. Johnston 38 Chief Executive Officer, August 1999
Secretary/Treasurer and
Director
None of our directors holds directorships in other reporting companies.
Page 17
Business Experience and Personal Background
- -------------------------------------------
Management and Key Personnel
----------------------------
Donald R. "Pete" Monroe, Chairman
----------------------------------
Education: BS, Mathematics, UNC of Pembroke, Magna Cum Laude
Present work positions: Chairman of the Board of Directors,
Peoplesway.com, Inc., 1999 to present; Chairman of the Board of Directors,
DRM, Inc., 1978 to present.
Work history: 1966-1970, United States Department of Defense,
Mathematician and System Programmer for Naval Weapons Laboratory, Dahlgren,
Virginia; 1970-1972, Private Business, Independent Distributor, Direct Sales
Industry, Virginia and Alabama; 1972-1973, GWT Enterprises, Vice President,
Direct Sales Industry, Orlando, Florida; 1973-1978, Koscot, Inc., President,
Direct Sales Industry, Orlando, Florida; 1978-present, DRM, Inc. and
subsidiaries: WeCare Distributors, Inc., RMC Group, Inc., RMC Group Canada,
Ltd., KAM Marketing, LLC, Owner/Chairman, direct Sales Industry, Charlotte,
North Carolina; 1999-present, Chairman, Peoplesway.com, Inc., Direct Sales
Industry, Charlotte, North Carolina.
Present responsibilities: As Chairman of DRM and Chairman of Peoplesway,
Mr. Monroe oversees marketing, product development, production, seeks business
opportunities, and strategic alliances with other companies and organizations.
He continuously directs and coordinates financial programs to provide funding
for new or continuing operations in order to maximize return on investments,
and increase productivity.
Mr. Monroe has two sons and one daughter and resides with his wife in
Charlotte, North Carolina.
Matthew M. Monroe, President and Director
------------------------------------------
Education: BS, Journalism & American Studies, University of Southern
Mississippi.
Present work positions: President, Peoplesway.com, Inc., 1999 to present;
Vice President of Marketing, RMC Group, Inc., 1993 to present
Work history: 1993-present, RMC Group, Inc., Vice President, Direct
Sales Industry, Charlotte, North Carolina; 1999-present, President/Director,
Peoplesway.com, Inc, Direct Sales Industry, Charlotte, North Carolina
Present responsibilities: For both Peoplesway and RMC Group, Inc., Mr.
Monroe is responsible for new product development, monthly and quarterly
newsletter (circulating to as many as 5,000 readers), product catalogues,
brochures, company product announcements, customer specials, sales force
training, sales presentations, and event coordinating. Mr. Monroe trains top
level producers on sales force automation. Mr. Monroe worked with other
management team members on bringing RMC Group, Inc., closer to the sales force
home office. After two years of development and beta testing, the sales force
Page 18
now uses a software program that dials directly into the mainframe database.
This allows the independent contractor access to customer ordering information
as well as complete data filters to run valuable reports for sales leadership
information. Mr. Monroe also developed the Peoplesway concept and business
model over the past three years.
Mr. Monroe has one son and resides in Huntersville, North Carolina.
Eugene M. Johnston, Chief Executive Officer, Secretary/Treasurer
and Director
----------------------------------------------------------------
Education: BA, Business Administration, University of North Carolina at
Charlotte.
Work history: 1984-1992, WeCare Distributors, Inc., Vice President,
Direct Sales Industry, Charlotte, North Carolina; 1993-present, RMC Group,
Inc., Vice President, Direct Sales Industry, Charlotte, North Carolina;
1999-present, Chief Executive Officer, Secretary/Treasurer/Director,
Peoplesway.com, Inc., Direct Sales Industry, Charlotte, North Carolina
Present responsibilities: Mr. Johnston is responsible for all day-to-day
operations of Peoplesway and RMC Group, Inc. In addition to his daily
administrative duties, Mr. Johnston works closely with Marketing and Sales.
He is involved in company training and motivation and travels throughout the
US and Canada helping to conduct training seminars. Mr. Johnston was also
instrumental in recently upgrading the company computer system to ensure it
was Year 2000 compliant, including the web related software.
Mr. Johnston has two children and resides with his wife in Charlotte,
North Carolina.
Family Relationships
- --------------------
The following table details the family relationships among our directors
and officers.
Name Position Relationships
- ---- -------- -------------
Donald R. "Pete" Monroe Chairman Father of Matthew M. Monroe;
Uncle of Eugene M. Johnston
Matthew M. Monroe President Son of Donald R. "Pete" Monroe;
and Director Cousin of Eugene M. Johnston
Eugene M. Johnston Chief Executive Nephew of Donald R. "Pete" Monroe;
Officer Cousin of Matthew M. Monroe
There are no arrangements or understandings pursuant to which any of them
were elected as officers.
There have been no events under any bankruptcy act, no criminal
proceedings and no judgments or injunctions material to the evaluation of the
ability and integrity of any director or executive officer during the past 5
years.
Page 19
Executive Compensation
- ----------------------
The following table sets forth compensation paid to our executive
officers since our inception.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION PERIOD SALARY(1) BONUS SARS(#) COMPENSATION($)
- ------------------ ------ --------- ----- ------------ ---------------
Eugene Johnston
CEO, Secretary, Year Ended
Treasurer and Director 3/31/00 -0- -0- -0- -0-
Year Ended
3/31/01 -0- -0- -0- -0-
Matthew Monroe
President, Chief
Operating Year Ended
Officer and Director 3/31/00 -0- -0- -0- -0-
Year Ended
3/31/01 -0- -0- -0- -0-
Donald Monroe
Chairman Year Ended
3/31/00 -0- -0- -0- -0-
Year Ended
3/31/01 -0- -0- -0- -0-
There are no arrangements or agreements for employment, compensation, or
change in control that exist with the Peoplesway for either our officers or
directors. Our officers and directors are presently compensated by DRM and/or
RMC Group, Inc., at the same levels at which they were compensated prior to
the formation of Peoplesway, and it is anticipated that this arrangement will
continue for the foreseeable future. All other individuals who provide
services for us are either additional employees of DRM and/or RMC Group, Inc.,
which are paid directly by those companies, or by our independent contractors,
and it is anticipated that this arrangement will continue for the foreseeable
future.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth the shares held by those persons who own
more than five percent of Peoplesway's Common Stock as of January 16, 2002,
based upon 13,102,469 shares outstanding.
Name and address of Number Percent
Title of Class beneficial owner of shares of class
- -------------- ------------------- --------- --------
Common Donald R. "Pete" Monroe 12,350,000 92.03%
2969 Interstate Street
Charlotte, NC 28208
Page 20
(b) Security Ownership of Management
The following table sets forth the shares held by Peoplesway directors
and officers as of January 16, 2002:
Name and address of Number Percent
Title of Class beneficial owner of shares of class
- -------------- ------------------- --------- --------
Common Donald R. "Pete" Monroe 12,350,000 92.03%
2969 Interstate Street
Charlotte, NC 28208
Common Matthew M. Monroe 18,389 *
2969 Interstate Street
Charlotte, NC 28208
Common Eugene M. Johnston 20,625 *
2969 Interstate Street
Charlotte, NC 28208
Ownership of shares by our directors and officers as a group: 92.32%
- -------------------------
* Less than one percent.
Changes in Control
------------------
We know of no contractual arrangements which may at a subsequent date
result in a change of control in the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Following are the transactions between Peoplesway and members of
management, directors, officers, 5% shareholders, and promoters of Peoplesway:
Agreements with DRM and its Subsidiaries
- ----------------------------------------
The majority of our goods and services are available through an
"alliance" with DRM, Inc. and its subsidiaries, RMC Group, Inc. and RMC
Group Canada, Ltd. ("DRM"). Each of our officers and directors is also an
officer and/or director of DRM, Inc., RMC Group, Inc., and/or RMC Group
Canada, Ltd, and therefore, all sales through us benefit related parties. The
"alliance" between the parties has been evidenced by a formal written
agreement between the parties such that all goods and services, which DRM or
its subsidiaries offer for sale, are listed on, and for sale through, the
Peoplesway Web site. Following each internet sale of a DRM-related good or
service, we then pay to DRM an agreed upon wholesale price.
We have had discussions with public relations companies that would
promote us, but none of these discussions has resulted in any definitive
agreements.
Page 21
MARKET FOR OUR COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
(a) Market Information.
Our Common Stock is currently quoted on the OTCBB under the symbol
"PLWY."
The following quotations were provided by the National Quotation Bureau,
and do not represent actual transactions; these quotations do not reflect
dealer markups, markdowns or commissions.
STOCK QUOTATIONS*
CLOSING BID
Period High Low
------ ---- -----
4/1/99 to 6/30/99 $0.10 $0.10
7/1/99 to 9/30/99 $0.10 $0.10
10/1/99 to 12/30/99 $5.38 $0.10
1/1/00 to 3/31/00 $5.36 $2.50
4/1/00 to 6/30/00 $3.00 $0.50
7/1/00 to 9/30/00 $3.00 $0.51
10/1/00 to 12/30/00 $1.75 $0.25
1/1/01 to 3/31/01 $0.25 $0.25
4/1/01 to 6/30/01 $0.40 $0.25
7/1/01 to 9/30/01 $0.51 $0.40
10/1/01 to 12/31/01 $0.85 $0.20
* Our Common Stock had not traded before the first calendar quarter of 1999
for over ten years.
(b) Holders.
The number of record holders of our securities as of the date of this
report is approximately 318.
(c) Dividends.
We have not declared any cash dividends with respect to our Common Stock,
and we do not intend to declare dividends in the foreseeable future. Our
future dividend policy cannot be ascertained with any certainty. There are no
material restrictions limiting, or that are likely to limit, our ability to
pay dividends on our securities.
PLAN OF DISTRIBUTION
We currently have no underwriter for this offering and we do not intend
to use participating brokers. We intend to offer the shares of our Common
Stock being registered through our officers and directors, including Donald R.
Monroe, Eugene M. Johnston and Matthew M. Monroe. None of these officers will
receive any compensation for shares sold. We will pay participating brokers a
commission of up to the maximum allowable rate. The offering will commence as
of the date of this prospectus and will continue until all the shares are
sold. In this regard, we intend to amend this prospectus as needed. There is
no minimum offering amount. We intend to offer the Shares in states where we
Page 22
can offer them. We may concentrate our sales efforts in the states of North
Carolina, Florida and Texas. We also intend to offer the Shares in Canada.
DESCRIPTION OF COMMON STOCK
We are authorized to issue 100,000,000 shares of our $.001 par value
Common Stock, of which 13,419,969 shares were issued and outstanding as of
February 22, 2002. Holders of Common Stock are entitled to cast one vote for
each share held of record on all matters presented to shareholders.
Shareholders do not have cumulative rights; hence, the holders of more than
50% of the outstanding Common Stock can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
In the event of liquidation, holders of Common Stock will share pro rata in
any distribution of our assets after payment of all liabilities. We do not
anticipate that any dividends on Common Stock will be declared or paid in the
foreseeable future. Holders of Common Stock do not have any rights of
redemption or conversion or preemptive rights to subscribe to additional
shares if issued by us. However, one unaffiliated private investor holds a
contractual preemptive right to purchase additional shares. All of the
outstanding shares of our Common Stock are fully paid and nonassessable.
Penny Stock and NASD Sales Practices Rules
- ------------------------------------------
Our Common Stock is currently defined as a "penny stock" under the
Exchange Act and rules of the Securities and Exchange Commission. The
Exchange Act and such penny stock rules generally impose additional sales
practices and disclosure requirements on broker-dealers who sell our
securities to persons other than "accredited investors" or in transactions not
recommended by the broker-dealer. For transactions covered by the penny stock
rules, the broker-dealer must make a written suitability determination for
each purchaser and receive the purchaser's written agreement prior to the
sale. In addition, the broker-dealer must make certain required disclosures
in penny stock transactions, including the actual sale or purchase price and
actual bid and offer quotations, and the compensation to be received by the
broker-dealer and certain associated persons, provide monthly account
statements showing the market value of each penny stock held in a customer's
account, and deliver certain standardized risk disclosures required by the
Securities and Exchange Commission. Consequently, the penny stock rules
affect the ability of broker-dealers to make a market in or trade our shares
and may also affect the ability of purchasers of shares to resell those shares
in the public market.
In addition to the "Penny Stock" rules described above, the NASD has
adopted rules that require that in recommending an investment to a customer
that a broker-dealer have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers' financial
status, tax status, investment objectives and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low priced securities will not be suitable for at
least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our Common Stock, and
this has an adverse effect on the market for our shares.
Page 23
EXPERTS
The March 31, 2001 financial statements included in this Prospectus have
been audited by Parrella & Associates, P.A., Pompano Beach, Florida,
independent certified public accountants, to the extent and for the periods
set forth in their report.
The financial statements for the period September 1, 1999 through March
31, 2000 included in this Prospectus have been audited by Michael J.
Bongiovanni, C.P.A., Charlotte, North Carolina, independent certified public
accountant, to the extent and for the periods set forth in his report.
CHANGES IN AND DISAGREEMENTS WITH OUR ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the year ended March 31, 2001 the Company's independent auditors,
Michael J. Bongiovanni, P.A., declined to stand for re-election. Michael J.
Bongiovanni had issued a report dated May 9, 2000 that was modified as to the
uncertainty of the Company's ability to continue as a going concern.
There were never any disagreements with Michael J. Bongiovanni, P.A. on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to
satisfaction of the auditor, would have caused them to make reference to the
subject matter of the disagreement in connection with the audit report.
The decision to change to Parrella & Associates, P.A. for the audit of
the March 31, 2001 financial statements was approved by the Board of
Directors.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for us by Krys Boyle Freedman & Sawyer, P.C., Denver, Colorado.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY COMMON STOCK IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the forgoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
Page 24
PEOPLESWAY.COM,INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
INDEPENDENT AUDITORS' REPORT ...................................... F-2
INDEPENDENT AUDITORS' REPORT (MARCH 31, 2000) ..................... F-3
BALANCE SHEET AS OF MARCH 31, 2001 ................................ F-4
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2001
AND THE SEVEN MONTHS ENDED MARCH 31, 2000 ........................ F-5
STATEMENT OF STOCKHOLDERS' DEFICIT FOR THE YEAR ENDED MARCH 31,
2001 AND THE SEVEN MONTHS ENDED MARCH 31, 2000 ................... F-6
STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2001
AND THE SEVEN MONTHS ENDED MARCH 31, 2000 ........................ F-7
NOTES TO FINANCIAL STATEMENTS ..................................... F-8
BALANCE SHEETS AS OF DECEMBER 31, 2001 AND MARCH 31, 2001 ......... F-16
STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
DECEMBER 31, 2001 AND 2000 ....................................... F-17
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31,
2001 AND 2000 .................................................... F-18
NOTES TO FINANCIAL STATEMENTS ..................................... F-19
F-1
[LETTERHEAD OF PERRELLA & ASSOCIATES, P.A.]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders
Peoplesway.com, Inc.
Charlotte, North Carolina
We have audited the accompanying balance sheet of Peoplesway.com, Inc. as
of March 31, 2001 and the related statements of operations, stockholders'
deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our 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 Peoplesway.com, Inc.
as of March 31, 2001, and the results of its operations and its cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note C
to the financial statements, the Company has suffered recurring losses from
operations, its current liabilities exceeds its current assets and its
cash flows from operating activities are negative. This raises
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described
in Note C. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Perrella & Associates, P.A.
Perrella & Associates, P.A.
Pompano Beach, Florida
June 21, 2001
F-2
[LETTERHEAD OF MICHAEL J. BONGIOVANNI, P.A.]
INDEPENDENT ACCOUNTANTS' REPORT (MARCH 31, 2000)
------------------------------------------------
To the Board of Directors and Stockholders
Peoplesway.com, Inc.
Charlotte, North Carolina
We have audited the accompanying statements of operations,
stockholders' deficit, and cash flows for the period from September
1, 1999 (date of reorganization) through March 31, 2000 of Peoplesway.com,
Inc. (FKA Prospector Energy, Inc.). 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 from material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows
of Peoplesway.com, Inc. for the period from September 1, 1999 (date
of reorganization) through March 31, 2000 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note C
to the financial statements, the Company has suffered recurring losses from
operations, its current liabilities exceeds its current assets and its
cash flows from operating activities are negative. This raises
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described
in Note C. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Michael J. Bongiovanni, C.P.A.
Michael J. Bongiovanni, C.P.A.
Charlotte, North Carolina
May 9, 2000
F-3
PEOPLESWAY.COM, INC.
BALANCE SHEET
AS OF MARCH 31,2001
ASSETS
------
CURRENT ASSETS:
- ---------------------------------------------------------------
Cash and cash equivalents. . . . . . . . . . . . . . . $ 1,392
Due from related parties . . . . . . . . . . . . . . . 53,631
Prepaid expenses . . . . . . . . . . . . . . . . . . . 105,110
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . 160,133
----------
FIXED ASSETS:
- ---------------------------------------------------------------
Furniture and office equipment . . . . . . . . . . . . 16,321
Accumulated depreciation . . . . . . . . . . . . . . . (3,125)
NET FIXED ASSETS . . . . . . . . . . . . . . . . . . . 13,196
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $ 173,329
--------
LIABILITIES AND STOCKHOLDERS' DEFICIT
- ---------------------------------------------------------------
CURRENT LIABILITIES:
- ---------------------------------------------------------------
Accounts payable and accrued expenses . . . . . . . . . $ 48,267
Excess of outstanding checks over bank balance . . . . 10,894
Deferred revenue - prepaid certificate . . . . . . . . 209,215
Due to related parties . . . . . . . . . . . . . . . . 56,894
Note payable - stockholder . . . . . . . . . . . . . . 7,000
TOTAL CURRENT LIABILITIES. . . . .. . . . . . . . . . . 332,270
LONG TERM LIABILITIES:
- ---------------------------------------------------------------
Notes payable . . . . . . . . . . . . . . . . . . . . . . 115,000
TOTAL LONG TERM LIABILITIES . . . . . . . . . . . . . . . 115,000
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . 447,270
----------
STOCKHOLDERS' DEFICIT:
- ---------------------------------------------------------------
Common stock ($.001 par value, 100,000,000 shares authorized;
12,932,969 issued and outstanding at March 31, 2001). . 12,932
Additional paid-in-capital . . . . . . . . . . . . . . . 46,000
Retained deficit . . . . . . . . . . . . . . . . . . . . (332,873)
TOTAL STOCKHOLDERS' DEFICIT. . . . . . . . . . . . . . . (273,941)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT. . . . . . . $173,329
----------
The accompanying notes are an integral part of these financial statements
F-4
PEOPLESWAY.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2001 AND THE SEVEN MONTHS ENDED MARCH 31, 2000
2001 2000*
REVENUES AND RELATED COSTS:
- --------------------------------------------
Retail sales. . . . . . . . . . . . . . . . $ 1,029,074 $ 492,759
Less: Distributor allowances on
product purchases . . . . . . . . . . . . . (343,109) (206,883)
685,965 285,876
------------ -----------
Other revenue . . . . . . . . . . . . . . . 103,660 30,164
NET REVENUES. . . . . . . . . . . . . . . . 789,625 316,040
------------ -----------
COST OF RETAIL SALES. . . . . . . . . . . . (426,384) (214,833)
GROSS PROFIT. . . . . . . . . . . . . . . . 363,241 101,207
------------ -----------
EXPENSES:
- -------------------------------------------
Advertising . . . . . . . . . . . . . . . . 1,115 1,138
Auto. . . . . . . . . . . . . . . . . . . . 11,019 -0-
Depreciation. . . . . . . . . . . . . . . . 3,125 -0-
Furniture & equipment rental. . . . . . . . 40,353 -0-
Insurance . . . . . . . . . . . . . . . . . 15,679 23,804
Legal & professional. . . . . . . . . . . . 39,167 20,874
Licenses & fees . . . . . . . . . . . . . . 250 5,245
Management fees . . . . . . . . . . . . . . 15,848 7,877
Office expenses and supplies. . . . . . . . 24,957 21,104
Rent. . . . . . . . . . . . . . . . . . . . 47,634 46,605
Repairs & maintenance . . . . . . . . . . . 3,252 2,597
Salaries and related expenses . . . . . . . 89,260 16,923
Subcontract labor . . . . . . . . . . . . . 137,285 80,378
Telephone . . . . . . . . . . . . . . . . . 31,770 24,438
Travel, entertainment and promotion . . . . 8,702 10,787
Utilities . . . . . . . . . . . . . . . . . 10,937 5,950
TOTAL EXPENSES. . . . . . . . . . . . . . . 480,353 267,720
------------ -----------
OPERATING LOSS. . . . . . . . . . . . . . . (117,112) (166,513)
------------ -----------
OTHER EXPENSES:
- -------------------------------------------
Interest expense. . . . . . . . . . . . . . (49,248) -0-
NET LOSS. . . . . . . . . . . . . . . . . . $ (166,360) $ (166,513)
------------ -----------
Net loss per share -
basic and fully diluted . . . . . . . . . $ (0.01) $ (0.02)
=========== ===========
Weighted average shares . . . . . . . . . 14,939,219 9,724,401
============ ===========
*Date of reorganization was August 25, 1999
The accompanying notes are an integral part of these financial statements
F-5
PEOPLESWAY.COM, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED MARCH 31, 2001 AND THE SEVEN MONTHS ENDED MARCH 31, 2000
Common Common Additional
Stock Stock Paid-in Retained
(000's) $ Capital Deficit
Balances, September 1, 1999* . . . . . . . . -0- $ -0- $ -0- $ -0-
Retroactive restatement
(recapitalization) of equity due
to reverse acquisition of public
shell and related 1 for 400 reverse
stock split. . . . . . . . . . . . . . . . . 15,607 15,607 -0- -0-
Initial capital contribution . . . . . . . . -0- -0- 1,000 -0-
Net loss for the seven months
ended March 31, 2000 . . . . . . . . . . . . -0- -0- -0- (166,513)
Balances, March 31, 2000 . . . . . . . . . . 15,607 15,607 1,000 (166,513)
Retirement of common stock . . . . . . . . . (2,675) (2,675) -0- -0-
Issuance of common stock options . . . . . . -0- -0- 45,000 -0-
Net loss for the year. . . . . . . . . . . . -0- -0- -0- (166,360)
Balances, March 31, 2001 . . . . . . . . . . 12,932 $ 12,932 $ 46,000 $(332,873)
*Date of reorganization was August 25, 1999
The accompanying notes are an integral part of these financial statements
F-6
PEOPLESWAY.COM, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31, 2001 AND THE SEVEN MONTHS ENDED MARCH 31, 2000
2001 2000*
CASH FLOWS FROM OPERATING ACTIVITIES:
- --------------------------------------------------
Net loss . . . . . . . . . . . . . . . . . . . $(166,360) $(166,513)
Adjustments to reconcile net loss to net cash
used in operating activities:
Retroactive recapitalization of equity due to
reverse acquisition of public shell and related
retirement of common shares . . . . . . . . . (2,675) 15,607
Depreciation . . . . . . . . . . . . . . . . . 3,125 -0-
Issuance of common stock options . . . . . . . 45,000 -0-
(Increase) in prepaid expenses . . . . . . . . (3,380) (101,730)
Increase in accounts payable and
accrued expenses . . . . . . . . . . . . . . . 45,369 13,512
Increase in deferred revenue - prepaid certificate 12,365 196,850
Increase in outstanding checks over bank balance . 5,274 5,621
(Increase) in due from related parties . . . . . . (53,631) -0-
NET CASH USED BY OPERATING ACTIVITIES. . . . . . . (114,913) (36,653)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- --------------------------------------------------
Expenditures for furniture and office equipment. . (16,321) -0-
NET CASH USED IN INVESTING ACTIVITIES. . . . . . . (16,321) -0-
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- - --------------------------------------------------
Proceeds from initial capital contribution . . . . -0- 1,000
Proceeds from notes payable. . . . . . . . . . . . 115,000 -0-
Proceeds from stockholder loan . . . . . . . . . . -0- 7,000
Proceeds from related parties. . . . . . . . . . . 16,990 29,289
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . 131,990 37,289
NET INCREASE IN CASH
AND CASH EQUIVALENTS . . . . . . . . . . . . . . . 756 636
CASH AND CASH EQUIVALENTS:
BEGINNING OF THE PERIOD. . . . . . . . . . . . . . 636 0
END OF THE YEAR. . . . . . . . . . . . . . . . . . $ 1,392 $ 636
*Date of reorganization was August 25, 1999
The accompanying notes are an integral part of these financial statements
F-7
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------------
Business and Basis of Presentation - Peoplesway.com, Inc. (the Company)
was organized under the laws of the State of North Carolina on August 25,
1999. On September 1, 1999, Peoplesway.com, Inc. legally amended its
Articles of Incorporation to effect a name change from Prospector Energy,
Inc. and commenced operations as of that date simultaneously with its
reverse acquisition. On September 1, 1999, the Company acquired 100% of the
outstanding common stock of Prospector Energy, Inc. The transaction was
accounted for as a reverse merger in accordance with Accounting Principles
Board Opinion No. 16 wherein the stockholders of Peoplesway.com, Inc.
retained the majority of the outstanding common stock of the Company after the
merger. Peoplesway.com, Inc. had no prior operating history for several
years while functioning under its former name of Prospector Energy, Inc.
The Company provides E-commerce Internet web sites for sale of its
products, primarily cosmetics, beauty products, health supplements,
jewelry, specialty items and flowers, to customers across the world. The
majority of its customers are in the United States of America and
Canada.
Inherent in the Company's Internet related business are various risks
and uncertainties, including its limited operating history, recent
development of the Internet market and unproved acceptance and effectiveness
of Web E-commerce, unproven business model, risks associated with
technological change, and the limited history of commerce on the Internet. The
Company's success may depend in part upon the emergence of the Internet as a
communications medium, prospective product development efforts, and the
acceptance of the Company's products by the marketplace.
F-8
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT')
- -------------------------------------------------------------------
Cash and Cash Equivalents - For purposes of the Statement of Cash Flows,
the Company considers liquid investments with an original maturity of three
months or less to be cash equivalents.
Management's Use of Estimates - The preparation of financial statements
in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities, disclosures of
contingent assets and liabilities at the date of financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition- Revenue is recognized when the products are
shipped. Internet related service revenue is recorded when earned,
which is after completion of web site set-up or appropriate service. All
revenue transactions are reviewed for credit worthiness prior to commencement
of the revenue process.
Web Site Research and Development - All costs incurred during the
application development stage of web site research and development are
capitalized. All training and application maintenance costs incurred
during the post implementation (operation stage) are expensed. GJGene
JohnstonThis is where we changed this statement 4/12/00.All upgrades and
enhancements incurred during the post implementation (operations stage)
are capitalized.
Comprehensive Income (Loss) - The Company adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income", which establishes standards for the
reporting and display of comprehensive income and its components in the
financial statements. There were no items of comprehensive income (loss)
applicable to the Company during the periods covered in the financial
statements.
Advertising Costs - Advertising costs are expensed as incurred. The Company
does not incur any direct-response advertising costs. Advertising expense
totaled $1,115 and $1,138 for the years ended March 31, 2001 and 2000,
respectively.
Capitalized Software Costs - Software development costs are required to
be capitalized when a product's technological feasibility has been
established by completion of a working model of the product and ending
when a product is available for general release to customers. To date,
completion of a working model of its products and general release has
substantially coincided. As aresult, the Company has not capitalized any
software development costs since such costs have not been significant.
Net Loss per Common Share - Statement of Financial Accounting Standard
(SFAS) No.128 requires dual presentation of basic and diluted EPS with a
reconciliation of the numerator and denominator of the EPS computations.
Basic earnings per share amounts are based on the weighted average
F-9
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT')
- -------------------------------------------------------------------
shares of common stock outstanding. If applicable, diluted earnings per
share would assume the conversion, exercise or issuance of all potential
common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Accordingly, this presentation has been adopted for the period
presented. There were no adjustments required to net loss for the period
presented in the computation of diluted earnings per share.
Income Taxes - Income taxes are provided in accordance with Statement
of Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for
Income Taxes." A deferred tax asset or liability is recorded for all
temporary differences between financial and tax reporting and net
operating loss-carryforwards.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that, some portion or all of the
deferred tax asset will not be realized. Deferred tax assets and liabilities
are adjusted for the effect of changes in tax laws and rates on the
date of enactment.
Fair Value of Financial Instruments - The carrying amounts reported in
the balance sheet for cash, accounts payable and debt approximate fair value
based on the short-term maturity of these instruments.
Impairment of long-lived assets - The Company evaluates the recoverability
of its property and equipment, and other assets in accordance with
Statements of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets to be Disposed of" which requires
recognition of impairment of long-lived assets in the event the net book
value of such assets exceeds the estimated future undiscounted cash flows
attributable to such assets or the business to which such intangible
assets relate.
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS
- ----------------------------------------------
In June of 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities, which the Company has
adopted. The Statement, deferred by SFAS No. 137 is effective for fiscal
years beginning after June 15, 2001 and establishes standards for accounting
and reporting for derivative instruments and hedging activities. Statement of
Financial Accounting Standards No.133 does not have an impact on its financial
statements because the Company does not currently hold any derivative
instruments.
F-10
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE C - GOING CONCERN
- ---------------------------
As shown in the accompanying financial statements, the Company has
suffered recurring losses from operations to date. It experienced a loss of
$166,360 and $166,513 during 2001 and 2000, respectively, and had a net
deficiency in equity of $273,941 and a net working capital deficit of
$172,137 as of March 31, 2001. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
Management's plans in regard to this matter are to raise equity capital and
seek strategic relationships and alliances in order to increase sales in an
effort to generate positive cash flow. Additionally, the Company must
continue to rely upon advances and loans from related parties and investors
in order to improve liquidity and sustain operations. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE D - SUPPLEMENTAL CASH FLOW INFORMATION
- -------------------------------------------------
Supplemental disclosures of cash flow information for the years ended March
31, 2001 and 2000 are summarized as follows:
Cash paid during the period for interest and income taxes:
2001 2000
---- ----
Income Taxes $ -- --
Interest $ 667 --
NOTE E - INCOME TAXES
- -------------------------
Due to the operating loss and the inability to recognize an income tax
benefit therefrom, there is no provision for current or deferred federal or
state income taxes for the years ended March 31, 2001 and 2000.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amount used for federal and state
income tax purposes.
The Company's total deferred tax asset, calculated using federal and
state effective tax rates, as of March 31, 2001 is as follows:
Total deferred tax assets $ 109,391
Valuation allowance (109,391)
-----------
Net deferred tax asset $ --
===========
F-11
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE E - INCOME TAXES (CONT.)
- ---------------------------------
The reconciliation of income taxes computed at the federal statutory income
tax rate to total income taxes for the years ended March 31, 2001 and 2000
is as follows:
2001 2000
---- ----
Income tax computed at the federal statutory rate 34% 34%
State income taxes, net of federal tax
benefit 4% 4%
Valuation allowance (38%) (38%)
----- ----
Total deferred tax asset 0% 0%
===== =====
Because of the Company's lack of earnings history, the deferred tax asset
has been fully offset by a valuation allowance. The valuation allowance
increased by approximately $67,391 in 2001.
As of March 31, 2001, the Company had federal and state net operating
loss carry-forwards in the amount of $287,873, which expire at various times
through the year 2016.
NOTE F - STOCKHOLDER LOANS PAYABLE
- ---------------------------------------
During the year ended March 31, 2000, the Company borrowed $7,000 in
working capital debt financing from one of the Company's officers. The entire
balance is payable on demand with interest at a rate of 8% per annum.
Accrued interest through March 31, 2001 has been waived by the officer and
effects of imputed interest are not material to the financial
statements taken as a whole.
NOTE G - RELATED PARTY TRANSACTIONS, DEPENDENCY AND CONCENTRATION OF RISK
- -------------------------------------------------------------------------
The Company contracted with a company related through common ownership
whereby the related party holding company and its subsidiaries utilize the
Company as its exclusive Internet sales and marketing agent. The related party
company pays all of the Company's employees, with the exception of the
executive officers. In addition, the related party company pays the
majority of the Company's subcontractors. The Company markets the
related parties' product lines and maintains the web sites of site owners
within their network of customers. In exchange, the related parties
provide warehouse space, office space, customer service, warehouse and
management personnel, supplies and other items necessary to provide this
service.
F-12
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE G - RELATED PARTY TRANSACTIONS, DEPENDENCY AND CONCENTRATION OF RISK
- -------------------------------------------------------------------------
(CONT.)
- -------
In accordance with the agreement, the product cost is invoiced to the Company
at cost plus 10%. In addition, the aforementioned non-product related
expenses are invoiced to the Company based on the percentage of Internet sales
to the related parties' total sales. The above relationships present a
concentration of risk in that a substantial volume of business is
transacted with the related parties' customer base and use of its source of
labor. This makes the Company potentially vulnerable to the risk of a
near-term severe impact.
The composition of amounts due to/from related parties in the
accompanying Balance Sheet at March 31, 2001 is as follows:
Due from related party holding company $ 32,227
Due from related party holding company's subsidiary (#1) 21,404
Due to related party holding company's subsidiary (#2) (25,163)
Due to party related through common directorship (16,423)
Due to other related parties (15,308)
Included in the accompanying Statement of Operations are sales to the
customers of the related parties of $666,482 and related party expenses
of $637,783.
NOTE I - DEFERRED REVENUE AND RELATED PREPAID EXPENSES
- --------------------------------------------------------------
The Company provides promotional product redemption certificates for
future customer purchases. These certificates are provided to customers that
sign up as members to the website. The value of these certificates is
recorded as deferred revenue and the related commission expense as prepaid
expenses. Revenues and related expenses are recorded when redeemed or
upon expiration.
Both amounts are presented as "current" in the Balance Sheet because,
in management's estimation, revenue is expected to be earned and
expenses are expected to be incurred in the upcoming operating cycle.
Included in the accompanying Balance Sheet is deferred revenue of $209,215
and related prepaid expenses of $105,110 at March 31, 2001.
F-13
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE J - NOTES PAYABLE
- --------------------------
Notes payable at March 31, 2001 consist of the following:
Unsecured note payable to unrelated investor
bearing 7% interest. Balloon payment of principal
and interest due October 2002. $100,000
Unsecured note payable to unrelated investor
bearing 7% interest. Balloon payment of principal
and interest due October 2002. $ 10,000
Unsecured note payable to unrelated investor
bearing 7% interest. Balloon payment of principal
and interest due October 2002. $ 5,000
----------
TOTAL $115,000
Less: current portion $ -0-
----------
Long-term portion $115,000
========
NOTE K - STOCK OPTIONS
- --------------------------
In October 2000, the Company issued stock options to the three investors
that had executed the three notes payable. The stock options vested
immediately. The options allow the investors to purchase 115,000 shares of the
Company's stock at $1.00 per share. The options expire at various times
through January 2003. The Company did not grant any registration rights
with respect to any shares of common stock issuable upon exercise of the
options. The Company recorded an expense of $45,000, equal to the estimated
fair value of the options at the date of grant. The fair market value was
calculated using the Black-Scholes options pricing model, assuming 5.83%
risk-free interest, 0% dividend yield, 60% volatility, and a 2.25-year
expected life.
NOTE L - SEGMENT REPORTING
- ------------------------------
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information." This statement requires companies to report information about
operating segments in interim and annual financial statements. It also
requires segment disclosures about products and services, geographic areas
and major customers. The Company determined that it did not have any
separately reportable operating segments as of March 31, 2001 and 2000.
F-14
PEOPLESWAY.COM, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000
===========================================
NOTE M - EQUITY
- ------------------
In connection with its plan of reorganization on September 1, 1999 as
described in Note A, the Company issued 12,500,000 shares of its common
stock for all of the issued and outstanding shares of Peoplesway.com,
Inc. The Company simultaneously changed its name to Peoplesway.com,
increased the par value of its common stock to $.001 and effected a 1 for 400
reverse common stock split on the existing outstanding shares.
During the year ended March 31, 2001, the Company also retired 2,675,000
shares of its common stock that had been issued in connection with a
proposed convertible debenture at the time of reorganization.
F-15
PEOPLESWAY.COM, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND MARCH 31,2001
(Unaudited)
December 31, 2001 March 31, 2001
-------------------------------------
- ----------------------------------------------------------
CURRENT ASSETS:
- ----------------------------------------------------------
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 16,056 $ 1,392
Due from related parties . . . . . . . . . . . . . . . . . . . 110,933 53,631
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 104,305 105,110
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . 231,294 160,133
------------------- ----------------
FIXED ASSETS:
- -----------------------------------------------------------
Furniture and office equipment . . . . . . . . . . . . . . . . 16,321 16,321
Accumulated depreciation . . . . . . . . . . . . . . . . . . . (4,325) (3,125)
NET FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . 11,996 13,196
----------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $243,290 $173,329
------------------ ----------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -----------------------------------------------------------
CURRENT LIABILITIES:
- -----------------------------------------------------------
Accounts payable and accrued expenses. . . . . . . . . . . . . $ 84,176 $ 48,267
Excess of outstanding checks over bank balance . . . . . . . . 10,894 10,894
Deferred revenue - prepaid certificate . . . . . . . . . . . . 204,693 209,215
Due to related parties . . . . . . . . . . . . . . . . . . . . 43,341 56,894
Note payable - stockholder . . . . . . . . . . . . . . . . . . 7,000 7,000
TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . . . . . 350,104 332,270
------------------- ----------------
LONG-TERM LIABILITIES:
- -----------------------------------------------------------
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . 139,838 115,000
TOTAL LONG-TERM LIABILITIES. . . . . . . . . . . . . . . . . . 139,838 115,000
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 489,942 447,270
------------------- ----------------
STOCKHOLDERS' DEFICIT:
- -----------------------------------------------------------
Common stock ($.001 par value, 100,000,000 shares authorized;
13,389,469 issued and outstanding at December 31, 2001) . . . 13,389 12,932
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 91,193 46,000
Retained deficit . . . . . . . . . . . . . . . . . . . . . . . (351,234) (332,873)
TOTAL STOCKHOLDERS' DEFICIT. . . . . . . . . . . . . . . . . . (246,652) (273,941)
------------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT. . . . . . . . . . $ 243,290 $ 173,329
------------------- ----------------
The accompanying notes are an integral part of these financial statements
-------------------------------------------------------------------------
F-16
PEOPLESWAY.COM, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2001 AND 2000
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Dec 31, 2001 Dec 31, 2000 Dec 31, 2001 Dec 31, 2000
REVENUES AND RELATED COSTS:
- -------------------------------------
Retail sales . . . . . . . . . . . . . $ 127,102 $ 318,889 $ 430,978 $ 777,031
Less: Distributor allowances on
product purchases. . . . . . . . . . . (26,162) (95,667) (117,560) (233,109)
100,940 223,222 313,418 543,922
-------------- -------------- -------------- --------------
Other revenue. . . . . . . . . . . . . -0- 7,199 3,587 58,627
NET REVENUES . . . . . . . . . . . . . 100,940 230,421 317,005 602,549
-------------- -------------- -------------- --------------
COST OF RETAIL SALES . . . . . . . . . (21,623) (117,883) (108,578) (348,114)
GROSS PROFIT . . . . . . . . . . . . . 79,317 112,538 208,427 254,435
-------------- -------------- -------------- --------------
EXPENSES:
- -------------------------------------
Selling, general and administrative. . 105,931 130,024 219,267 341,923
TOTAL EXPENSES . . . . . . . . . . . . 105,931 130,024 219,267 341,923
OPERATING (LOSS) . . . . . . . . . . . (26,614) (17,486) (10,840) (87,488)
-------------- -------------- -------------- --------------
OTHER EXPENSES:
- -------------------------------------
Interest expense . . . . . . . . . . . (2,757) -0- (7,521) -0-
NET (LOSS) . . . . . . . . . . . . . . $ (29,371) $ (17,486) $ (18,361) $ (87,488)
-------------- -------------- -------------- --------------
Net (loss) per share -
basic and fully diluted. . . . . . . $ ** $ ** $ ** $ **
Weighted average shares outstanding. 13,161,219 12,932,969 13,009,052 13,144,910
============== ============== ============== ==============
** Less than $.01
The accompanying notes are an integral part of these financial statements
-------------------------------------------------------------------------
F-17
PEOPLESWAY.COM, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2001 AND 2000
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------------------------------------
Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(18,361) $(87,488)
Adjustments to reconcile net (loss) to net cash (used in) operating
activities:
Common stock issued for services . . . . . . . . . . . . . . . . . . 45,650 -0-
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 -0-
(Increase) decrease in prepaid expenses. . . . . . . . . . . . . . . 805 (4,121)
Increase in accounts payable and accrued expenses. . . . . . . . . . 35,909 27,199
Increase (decrease) in deferred revenue - prepaid certificate. . . . (4,522) 15,131
(Increase) in due from related parties . . . . . . . . . . . . . . . (70,855) (50,356)
--------- ---------
NET CASH (USED IN) OPERATING ACTIVITIES. . . . . . . . . . . . . . . (10,174) (99,635)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------
Proceeds from notes payable. . . . . . . . . . . . . . . . . . . . . 24,838 102,152
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . . . . 24,838 102,152
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . 14,664 2,517
--------- ---------
CASH AND CASH EQUIVALENTS:
BEGINNING OF THE PERIOD. . . . . . . . . . . . . . . . . . . . . . . 1,392 636
END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,056 $ 3,153
--------- ---------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
- -------------------------------------------------------------------
Common stock issued for services . . . . . . . . . . . . . . . . . . $ 45,650 $ -
--------- ---------
The accompanying notes are an integral part of these financial statements
-------------------------------------------------------------------------
F-18
NOTES TO FINANCIAL STATEMENTS
-----------------------------
PEOPLESWAY.COM, INC.
December 31, 2001 (UNAUDITED)
ITEM 1.
- -------
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
In the opinion of management, the unaudited financial statements
contain all adjustments consisting only of normal recurring accruals
considered necessary to present fairly the Company's financial position at
December 31, 2001 (unaudited) and March 31, 2001, the results of
operations for the nine months ended December 31, 2001 and 2000, and cash
flows for the nine months ended December 31, 2001 and 2000. The results for
the nine months ended December 31, 2001, are not necessarily indicative of
the results to be expected for the entire fiscal year ending March 31,
2002.
NOTE 2 - (LOSS) PER SHARE
- ------------------------------
The following represents the calculation of (loss) per share:
Three Three Nine Nine
Months Ended Months Ended Months Ended Months
Ended
BASIC & FULLY DILUTED Dec. 31, 2001 Dec. 31, 2000 Dec.31, 2001 Dec.31,
2000
- -----------------------------------------------------------------------------
Net (loss) $ (29,371) $ (17,486) $ (18,361) $ (87,488)
Less- preferred stock dividends -0- -0- -0- -0-
----------------------------------------------------
Net (loss) $ (29,371) $ (17,486) $ (18,361) $ (87,488)
Weighted average number
of common shares
outstanding 13,161,219 12,932,969 13,009,052 13,144,910
----------------------------------------------------
Basic & Fully Diluted
(Loss) per share $ ** $ ** $ ** $ **
====================================================
** Less than $0.01
F-19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the Nevada Revised Statutes and Article VII of our
Articles of Incorporation permit us to indemnify our officers and directors
and certain other persons against expenses in defense of a suit to which they
are parties by reason of such office, so long as the persons conducted
themselves in good faith and the persons reasonably believed that their
conduct was in our best interests or not opposed to our best interests, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. Indemnification is not permitted in
connection with a proceeding by or in the right of the corporation in which
the officer or director was adjudged liable to the corporation or in
connection with any other proceeding charging that the officer or director
derived an improper personal benefit, whether or not involving action in an
official capacity Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel, the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table itemizes our estimated expenses in connection with
the issuance and distribution of the securities being registered hereby.
SEC Registration Fee.................... $ 95.60
Transfer Agent Fees..................... -0-
Legal Fees and Expenses................. 15,000
Accounting Fees and Expenses............ -0-
Miscellaneous........................... 1,000
----------
Total .............................. $16,095.60
==========
II-1
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following securities of Peoplesway were sold by us within the past
three years without registration.
Common Stock
------------
Name Date Number of Shares
Acquired Aggregate Consideration
Donald Bowles December 1996 28,125 (1)
Donald Bowles June 1997 3,000,000 (1)
Donald R. "Pete" Monroe September 1999 12,500,000 (2)
* Please refer to the below information for details on aggregate
consideration
(1) In December 1996, Donald Bowles was issued 11,250,000 shares (28,125
shares after the October 1999 400 to 1 reverse split) in exchange for services
rendered. In June 1997, Peoplesway, then known as Prospector Energy, Inc.,
issued a $50,000 convertible debenture to its then president, Donald Bowles,
for services performed by him for the Company prior to June 1997. Mr. Bowles
subsequently resigned from the Company, after which he assigned the debenture
to Geotech Management Resources, Ltd., a company unaffiliated with Peoplesway.
The debenture was then converted on October 18, 1999 to 3,000,000 shares of
Common Stock of the Company, which were issued to thirteen
individuals/entities, from 25,000 to 750,000 shares each, pursuant to a 144(k)
legal opinion. Subsequent to the issuance of the 3,000,000 shares and review
of the transactions by the Securities and Exchange Commission, it is the
position of the SEC, as expressed in the no action letter to Ken Worm, dated
January 21, 2000, that these individuals and entities are underwriters and
that their shares cannot be sold without a registration statement under the
Securities Act. The shareholders to whom the shares were issued on October
18, 1999, are identified as follows:
Shareholder Shares
- ----------- ------
Kelly Adams 300,000
1026 East 1st Ave.
Salt Lake City, Utah 84103
Nathan E. Alberty 200,000
21037 Norman Shores Dr.
Cornelius, NC 28031
Alliance Leasing 30,000
4685 South Highland Drive #202
Salt Lake City, UT 84117
Peter Falvo 300,000
7736 Avondale
Salt Lake City, Utah 84121
II-2
Patricia Holly Hanzel 150,000
2609 Richelleu Ave., SW
Roanoke, VA 24014
John B. Hanzel 150,000
3376 Londonderry Ln., SW
Roanoke, VA 24018
John F. Hanzel, P.A. 500,000
19425-G Liverpool Parkway
Cornelius, NC 28031
John F. Hanzel, P.A. 150,000
19425-G Liverpool Parkway
Cornelius, NC 28031
Health & Beauty Holdings, Ltd. 750,000
PO Box 701195
St. Cloud, FL 34770-1195
Nicholas Julian 70,000
4685 South Highland Drive #202
Salt Lake City, UT 84117
Lake Norman Tax & Business 100,000
Services, Inc.
21037 Norman Shores Dr.
Cornelius, NC 28031
Sam Lincoln 100,000
339 East 6th Ave. #1212
Salt Lake City, Utah 84103
John Lund 50,000
Address unknown
Nathan W. Drage, P.C. Escrow 150,000
6975 South Union Park Center
#600
Salt Lake City, UT 84047
(2) In September 1999, pursuant to the reverse acquisition transaction
and a stock-for-stock exchange between Prospector Energy, Inc. and
Peoplesway.com, Inc., Donald R. "Pete" Monroe was issued 12,500,000 shares of
Common Stock of Peoplesway, which were valued at par value of $.001 per share,
for total consideration of $12,500.00.
All of the above shares were issued to directors or executive officers
who had access to all material information respecting Peoplesway. The offers
and sales of all of these securities are believed to have been exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, pursuant to Section 4(2) thereof, and from similar applicable states'
securities laws, rules and regulations exempting the offer and sale of these
securities by available state exemptions from required registration.
II-3
(3) The Board of Directors (at a special meeting held of the Board of
Directors on November 13, 2001) approved the issuance of shares to the
following individuals, for services rendered to the corporation. None of
these individuals are an affiliate, officer or director of Peoplesway.com,
Inc. These shares were issued under the exemption provided in Section 4(2) of
the Securities Act of 1933, as amended. The shares bear a restricted legend.
The board determined that as the time of issuance the market value of each
share was the then low bid price of $0.76.
Dorothy & Maurice Washington 300 Shares
5814 Allentown Way
Temple Hills, MD 20748
Linda & Mike Andrusiw 850 Shares
5 Chaparral Way SE
Calgary, AB T2X3J7
CANADA
Patricia Krupa 500 Shares
603 Bonner Ave
Winnipeg, MB R2J2G8
CANADA
Phyllis & Jim Johnston 9,050 Shares
6443 Summerlin Pl
Charlotte, NC 28226
Al and Agnes Kehler 50 Shares
67 Rundle Rd SE
Medicine Hat, AB T1B4A3
CANADA
Art& Bev Boehm 800 Shares
PO Box 337
Hodgeville, SK S0H2B0
CANADA
Deanna Burress 300 Shares
P.O. Box 293
Booneville, MS 38829
John & Dorothy Jones 300 Shares
2512 E. Meredith Dr.
Vienna, VA 22180
Dorothy Werth 600 Shares
3715 Country Lane
Hays, KS 67601
E. E. Monroe 50 Shares
403 Monroe Rd.
Cameron, NC 28326
Edie & Harold Henry 50 Shares
904-611 University Dr.
Saskatoon, SK S7N3Z1
CANADA
II-4
Greg & Lucy Williams 3,550 Shares
2734 E. Shoreham Street
Durham, NC 27707
Lucretia & Vern Hughes 1,200 Shares
Box 1657
Martinsville, SK S0K2T0
CANADA
Nancy Jones-Gibson 100 Shares
2386 E. Bill Miller Rd.
Pekin, IN 47165
Sarinelle & Alberto Potts 50 Shares
1449 Tyson Avenue
Tifton, GA 31794
Eleanor & Don Rudd 250 Shares
87 Ruttan Bay
Winnipeg, MB R0J0R0
CANADA
Sosima Ramos 500 Shares
215 Ferry Rd
Winnipeg, MB R3J1V9
CANADA
Katherine & David Drul 500 Shares
115 Crestwood Crescent
Winnipeg, MB R2J1H8
CANADA
(4) The Board of Directors (at a special meeting held of the Board of
Directors on December 6, 2001) approved the issuance of shares to the
following individuals, for services rendered to the corporation. None of
these individuals are an affiliate, officer or director of Peoplesway.com,
Inc. These shares were issued under the exemption provided in Section 4(2) of
the Securities Act of 1933, as amended. The shares bear a restricted legend.
The board determined that as the time of issuance the market value of each
share was then then low bid price of $0.25.
Dorothy & Maurice Washington 1,000 Shares
5814 Allentown Way
Temple Hills, MD 20748
Donna Davison 200 Shares
76 NOONAN DRIVE
Brandon, MB R7B0V9
CANADA
Linda & Mike Andrusiw 1,000 Shares
5 Chaparral Way SE
Calgary, AB T2X3J7
CANADA
II-5
Patricia Krupa 100 Shares
603 Bonner Ave
Winnipeg, MB R2J2G8
CANADA
Phyllis & Jim Johnston 100 Shares
6443 Summerlin Pl
Charlotte, NC 28226
Robert & Betty Stowe 100 Shares
907 Crooked Creek Drive
Charlotte, NC 28214
Julie B. Jordan 10,000 Shares
409 3RD Street South
Columbus, MS 39701
Leslie Reed 1,000 Shares
63 Diane Court
Columbus, MS 39702
Michael L. Labertew 25,000 Shares
4685 South Highland Drive, Suite 202A
Salt Lake City, UT 84117
ITEM 27. EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
2 Acquisition Agreement (1)
3.1 Articles of Incorporation of Prospector Energy, Inc., a Utah
corporation (including amendments) (1)
3.2 Bylaws (1)
5.1 Opinion of Krys Boyle Freedman & Sawyer, P.C. regarding legality.*
16 Letter regarding change of certifying accountant (1)
23.1 Consent of Parrella & Associates. P.A.*
23.2 Consent of Michael J. Bongiovanni, P.A.*
23.3 Consent of Krys Boyle Freedman & Sawyer, P.C. Contained in Exhibit
5.1.*
99.1 Articles of Incorporation of Peoplesway.com, Inc. (1)
99.2 Articles of Incorporation of Prospector Energy, Inc., a Nevada
corporation (including amendments) (1)
II-6
99.3 Articles of Merger of Peoplesway.com, Inc. into Prospector
Energy, Inc. (1)
- ------------------------------
(1) Filed as an Exhibit to the Registrant's registration statement on Form
10-SB, File No. 0-28657.
* Previously filed.
ITEM 28. UNDERTAKINGS
The undersigned Company hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That for purposes of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
II-7
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Charlotte, State of
North Carolina, on April 3, 2002.
PEOPLESWAY.com, INC.
By: /s/ Eugene M. Johnston
-----------------------------------------
Eugene M. Johnston, Chief Executive
Officer, Secretary/Treasurer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No.1 to the Registration Statement has been signed below by the
following persons in the capacities and on the date(s) indicated.
PEOPLESWAY.com, INC.
Date: April 3, 2002 By: /s/ Eugene M. Johnston
-------------------------------------
Eugene M. Johnston
Chief Executive Officer,
Secretary/Treasurer and Director
Date: April 3, 2002 By: /s/ Matthew M. Monroe
-------------------------------------
Matthew M. Monroe
President and Director
Date: April 3, 2002 By: /s/ Donald R. Monroe
-------------------------------------
Donald R. Monroe
Chairman of the Board