As Filed with the Securities and Exchange Commission on June 22, 2001,
Registration No. 333-59726
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
Artwork and Beyond, Inc.
------------------------------------------------------
(Exact name of Registrant as Specified in Its Charter)
Delaware 5900 11-3507594
- ------------------------------ ---------------------------- ------------------
State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
Artwork and Beyond, Inc.
761 Coates Avenue
Holbrook, New York 11741
(631) 471-0065
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Howard Blum
President
761 Coates Avenue
Holbrook, New York 11741
(631) 471-0065
(Name, address, including zip code, and telephone number
including area code, of agents for service)
------------------------------------
Copies to:
Steven F. Wasserman, Esq.
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
(212) 704-0100
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If this Form is 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. |_|
Continued overleaf
CALCULATION OF REGISTRATION FEE
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=============================== ================ ===================== ================= ====================
Proposed
Proposed Maximum Maximum
Title of Each Class of Amount To Be Offering Price Per Aggregate Amount Of
Securities To Be Registered Registered Security (1) Offering Price Registration Fee
- ------------------------------- ---------------- --------------------- ----------------- --------------------
Common Stock(2) 400,000 $1.50 600,000 $150.00
- ------------------------------- ---------------- --------------------- ----------------- --------------------
Common Stock(3) 600,000 $1.50 900,000 $225.00
- ------------------------------- ---------------- --------------------- ----------------- --------------------
Total $375.00
- ------------------------------- ---------------- --------------------- ----------------- --------------------
Previously paid $375.00
- ------------------------------- ---------------- --------------------- ----------------- --------------------
Amount due 0
- ------------------------------- ---------------- --------------------- ----------------- --------------------
(1) Estimated solely for purposes of calculating registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended.
(2) 400,000 shares of common stock relate to the offering by Artwork and
Beyond.
(3) 600,000 shares of common stock relate to the offering by the selling
securityholder.
-----------------------------
Pursuant to Rule 416 of the Act, this registration statement also
covers such indeterminate additional shares of common stock as may become
issuable as a result of stock splits, stock dividends or other similar events.
-----------------------------
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.
Explanatory note
This registration statement contains two prospectuses: one relating to
the offering by Artwork and Beyond of 400,000 shares of its common stock, par
value $.001, per share, for cash and another prospectus relating to the offering
of 600,000 shares of common stock held by a selling securityholder who may wish
to sell its common stock. The prospectus relating to the selling securityholder
is referred to as the selling securityholder prospectus. Following the
prospectus are substitute pages of the selling securityholder prospectus,
including alternate pages front outside and back cover pages, an alternative
"The Offering" section of the "Prospectus summary" and section entitled "Plan of
distribution." Each of the alternate pages for the selling securityholder
prospectus is labeled "Alternate page for selling securityholder prospectus."
All other sections of the prospectus are to be used in the selling
securityholder prospectus. In addition, cross-references in the prospectus will
be adjusted in the selling securityholder prospectus to refer to the appropriate
sections.
The informaton in this prospectus is not complete and may be changed. These
securities may not e 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.
PROSPECTUS Subject to Completion; dated June 22, 2001
400,000 Shares of Common Stock
of
Artwork and Beyond, Inc.
We are registering 400,000 shares of our common stock for sale on a
"best efforts, all-or-none basis." Pending the sale of the 400,000 shares, all
proceeds will be held in an escrow account. If 400,000 shares are not sold
within 60 days from the date hereof, (which may be extended an additional 30
days in the sole discretion of the company), all monies received will be
refunded to subscribers in full without interest thereon.
Concurrent with this offering, we are registering 600,000 additional
shares of common stock for sale by a selling securityholder who may wish to sell
its shares in the open market or in privately negotiated transactions and is
identified in a separate prospectus. The sale by the selling securityholder will
only be made subsequent to the completion of the offering of the shares by the
company.
------------------------------------
No public trading market for our common stock exists. We anticipate
that our common stock will initially be traded on the OTC Bulletin Board after
this offering. We have not taken any steps to obtain a market maker for our
common stock.
------------------------------------
Our principal executive offices are located at 761 Coates Avenue,
Holbrook, New York 11741. Our telephone number is (631) 471-0065.
------------------------------------
The common stock being offered by this prospectus involves a high
degree of risk. You should read the "Risk Factors" section beginning on page 5
before you decide to purchase any common stock.
------------------------------------
Neither the Securities and Exchange Commission nor any state commission
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is _______, 2001
TABLE OF CONTENTS
Prospectus summary................................................................................................1
Selected financial data...........................................................................................4
Risk factors......................................................................................................5
Start-up Company...............................................................................................5
May Not Adopt the Internet.....................................................................................5
Additional Capital to Continue.................................................................................6
Increasing Our Customer Base...................................................................................6
Initially Depend On One Vendor.................................................................................6
Conflict of Interest...........................................................................................7
Failure to Maintain Our Website................................................................................7
Two Founders, and Their Loss or Unavailability.................................................................8
ARTinaClick Trademark..........................................................................................8
Internet Domain Names..........................................................................................9
Proprietary Rights of Others...................................................................................9
Credit Card Fraud.............................................................................................10
Restrictions on Resale of Shares..............................................................................11
Price of Our Common Stock.....................................................................................11
Lack of a Public Market.......................................................................................11
Restrictions on the Resale of Our Common Stock................................................................12
Dividends.....................................................................................................12
Immediate and Substantial Dilution............................................................................12
Sale of Additional Shares.....................................................................................12
Penny Stock Regulations.......................................................................................13
Anti-Takeover Provisions......................................................................................13
Limitation on Director Liability..............................................................................14
Sales That Impact on Sales....................................................................................14
Rapid Technological Changes...................................................................................14
Forward-looking statements.......................................................................................15
Use of proceeds..................................................................................................15
Concurrent offering..............................................................................................16
Directors, Executive Officers, Promoters and Control Persons.....................................................18
Security ownership of certain beneficial owners and management...................................................21
Our business.....................................................................................................22
Plan of Operations...............................................................................................31
Certain relationships and related transactions...................................................................34
Executive Compensation...........................................................................................34
Description of securities........................................................................................38
Disclosure of commission position on indemnification for securities act liabilities..............................41
Plan of distribution.............................................................................................41
Legal matters....................................................................................................42
Experts..........................................................................................................42
Available Information............................................................................................42
You should rely only on the information contained in this document. We
have not authorized anyone to provide you with information that is different.
This document may only be used where it is legal to sell these securities. The
information in this document may only be accurate on the date of this document.
i
Prospectus summary
You should not rely on forward-looking statements in this prospectus.
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions to identify these
forward-looking statements. Prospective investors should not place undue
reliance on these forward-looking statements, which apply only as of the date of
this prospectus. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by our company described in "Risk factors" and elsewhere in this
prospectus.
This summary highlights certain information contained elsewhere in this
prospectus. You should read the following summary together with the more
detailed information regarding Artwork and Beyond and our financial statements
and the related notes appearing elsewhere in this prospectus.
Our company
Artwork and Beyond is a Delaware corporation which was formed on August
5, 1999. Our primary business is the sale of art, in two major areas:
1. Online retail sale of art which is conducted through its online retail
division, ArtinaClick.com; and
2. Internet based charity art auctions which are conducted through our
internet based charity art auction division, ArtAuctionFundraiser.com.
Artwork and Beyond's online retail division, ArtinaClick.com, provides
the consumer with a "one-stop" shopping experience for the purchase of art
online. ArtinaClick.com offers a vast selection of images ranging from
originals, lithographs, serigraphs, limited editions, prints and posters, to
sports memorabilia and collectables. Items range in price from $5.00 to $1500
with the average sale being approximately $85.00. Items offered are at
substantial savings from traditional retail galleries. We believe that our
business strategy combined with targeted marketing and fulfillment will make it
the premiere Internet site for art buying in the e-commerce space.
Artwork and Beyond's emphasis for the consumer is ease-of-use,
separating artwork into five unique galleries, coupled with a sophisticated and
powerful search engine. In particular, the site tries to avoid the competitions
mistake of offering to many framing options and images. It is management's
belief that the consumer will not feel intimidated by lack of taste or knowledge
and Artwork and Beyond will provide the consumer with a highly satisfying
shopping experience.
The E-commerce divisions sales plan is based on the idea that there is
a pervasive frustration with the normal channels for buying art, as the industry
still functions mainly as a cottage industry. Through careful marketing and
strategic alliances, we will aggregate demand and drive traffic to our site. We
believe that there is significant unrealized demand for art in the sub-luxury
category and it is a product that is highly suitable for web purchases. We
believe that the online shopping experience has significant advantages over the
traditional method of purchasing art. Artwork and Beyond will create the
perception of these advantages in the minds of the buying public, through a
skilled marketing plan, thereby driving traffic to the site. Once at the site,
visitors will be transformed into buyers through the value proposition
articulated above.
Artwork and Beyond's internet based charity art auction division,
ArtAuctionFundraiser.com intends to capitalize on the expertise of both its
supplier Ross Galleries and ArtinaClick.com, to provide online charity art
auctions. There are numerous organizations including, alumni groups, religious
organizations, schools, and health care organizations whose members are
geographically dispersed. These organizations are constantly looking to raise
funds to meet their operating budgets. We believe that an online auction would
enable organizations to raise funds from their members no matter how
geographically dispersed they may be.
We believe that the online auction is at this point a proven concept,
given sites such as eBay and Amazon, and little or no consumer resistance needs
to be overcome. In addition, barriers to entry for newcomers wishing to offer
charity auctions are significant, as credibility working with charities is
difficult to build. We have entered into a fulfillment agreement with Ross
Galleries located in Holbrook, NY. Ross Galleries has 25 full-time employees in
a 20,000 sq. ft. facility. Ross Galleries has been in the charity art business
for 13 years, has worked with 1700 different organizations, and conducted over
4000 land-based auctions. Management believes that the cost of implementing
online charity auctions will be minimal, given Ross Galleries existing
infrastructure.
Our principal place of business is located at 761 Coates Avenue,
Holbrook, New York, 11741. Our general phone number is (631) 471-0065.
2
The offering
Shares outstanding before offering(1)....................... 9,000,000 shares of common stock.
Shares offered by Artwork and Beyond........................ 400,000 shares of common stock.
Plan of distribution........................................ Artwork and Beyond will offer and sell
400,000 shares for cash at a price of
$1.50 per share.
Use of Proceeds............................................. Artwork and Beyond will receive the
proceeds to be derived from the sale of an
aggregate of 400,000 shares of common
stock.
Concurrent offering
Shares offered by Selling securityholders........................600,000 shares of common stock
Plan of distribution.............................................The offering of our shares of common stock
is being made by one of our shareholders
who wishes to sell its shares. Sales of
our common stock may be made by the
selling securityholder in the open market
or in privately negotiated transactions
and at market prices, fixed prices or
negotiated prices. See "Risk
Factors-Restrictions on Resale"
Use of Proceeds..................................................We will not receive any of the proceeds
from the sale of the shares owned by the
selling securityholder.
- -------------------------
(1) As of June 21, 2001.
3
Selected Financial Data
.........The following selected financial data is qualified by reference to, and
should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The financial information set forth below is audited with respect to
the annual period ended December 31, 2000 and the two months ended December 31,
1999, as derived from Artwork and Beyond's financial statements.
Three Months Ended Year Ended 8/5/99 (inception)-
3/31/01 12/31/00 12/31/99
------------------------ ------------------------ ----------------------------
(unaudited)
Statement of Operations Data:
Revenues ............................. $53,723 $19,113 $-0-
Costs of goods sold .................. 27,034 -0- -0-
Operating expenses.................... 162,785 791,658 23,919
Loss from operations.................. <136,096> <772,455> <23,919>
Interest income....................... 7,418 10,542 -0-
Net loss.............................. <128,678> <761,913> <23,919>
As of As of As of
3/31/01 12/31/00 12/31/99
Actual
Selected Balance Sheet Data:
Cash and cash equivalents......... $525,481 $661,151 $36,081
Working capital................... 426,736 553,892 36,081
Total assets...................... 560,527 688,930 36,081
Total liabilities................. 107,534 107,259 -0-
Stockholders' equity (deficit)...... 452,993 581,671 36,081
4
Risk factors
You should carefully consider the following risk factors and all other
information contained in this prospectus before investing in our common
stock. Investing in our common stock involves a high degree of risk. Any of
the following risks could adversely affect our business, financial condition
and results of operations and could result in a complete loss of your
investment. The risks and uncertainties described below are not the only ones
we may face.
Risks Related to Our Business
We are a start-up company and we expect to encounter risks and difficulties
frequently faced by start-up companies in new and rapidly evolving markets.
We were founded in August 1999 by Howard Blum and Jay Camina and
commenced operations on December 1, 2000. Prior to that date, our operations
have consisted primarily of development of our business plan, negotiating a
fulfillment agreement with Ross Galleries, Inc., completion of our web site
www.ArtinaClick.com, and otherwise organizing our operations. An investor in our
shares must consider the risks and difficulties frequently encountered by
start-up companies in new and rapidly evolving markets. These challenges include
our need to establish our brand name awareness, and our need to attract and
retain customers at a reasonable cost.
In addition, although we have substantial data on what specific works
of art sell, we may have limited insight into other trends that may emerge and
affect our business, because we are a start-up company and our market is in an
early stage of development. We cannot be certain that our business strategy will
be successful or that we will successfully address these risks. Any failure to
do so would seriously harm our business and operating results.
Consumers may not adopt the Internet as a way of buying artwork.
If we do not attract and retain a high volume of online customers to
our web site at a reasonable cost, our business will not succeed. We may not be
able to convert a large number of consumers from traditional shopping methods to
online shopping for artwork and as a result may never achieve widespread
customer acceptance of shopping for artwork online. Specifically, Consumers may
not wish to change the way they purchase art and may feel it is necessary to
view the actual works of art rather than pictures before purchasing them. In
addition, Consumers may not be willing to make orders online due to perceived
difficulty of placing complex orders online or pricing that does not meet
customer expectations of "finding competitive prices on the internet." As a
result, we may never drive sufficient revenues from our operations in order to
become a profitable enterprise.
After completion of the offering, we will need additional capital to continue to
operate and expand our business.
5
We expect to have working capital of approximately $600,000 available
from the net proceeds of this offering. All of the expenses of this offering are
being paid for by Biofarm, Inc. See "Certain Relationships and Related
Transactions". This working capital should permit us to continue to operate our
business for approximately 12 to 18 months after completion of the offering. If
we are unable to raise sufficient additional capital, we may be unable to
satisfy our continuing working capital requirements from operations or other
sources. Our inability to raise additional capital would also inhibit our
ability to achieve of our business plan.
Increasing our sales will depend largely on increasing our customer base, rather
than making sales to repeat customers.
We expect our customers initially to be individuals and families
purchasing artwork for home and office decoration and, to a lesser extent, as
gifts. Unlike consumer products, which are used and repurchased, art is
purchased for long-term use. Therefore, while we expect that we will have repeat
customers if they have a favorable experience in purchasing from our web site,
we expect that sales to repeat customers will be limited. Accordingly, we will
have to attract new customers in order to expand our revenues and achieve
profitability.
We will initially depend on one vendor; if it does not perform, we will not be
able to effectively ship orders.
To generate the significant customer traffic, volume of purchases and
repeat purchases that we believe are crucial to obtaining sufficient revenues,
we must develop and maintain customer trust in the timing and accuracy of our
product deliveries. We expect to initially purchase all of the artwork that we
will offer from only one vendor, Ross Galleries. Our business could be
significantly disrupted if Ross Galleries were to suffer adverse developments
that affect its ability to supply artwork to us. If for any reason Ross
Galleries is unable or unwilling to supply products to us in sufficient
quantities and in a timely manner, we may not be able to secure alternative
vendors on acceptable terms in a timely manner, or at all.
Negotiating and implementing relationships with additional vendors or
distributors may not be possible due to our early stage of operations or may
take substantial time and resources. In addition, we have agreed with Ross
Galleries that we will only purchase artwork from other suppliers if Ross
Galleries is not able to provide the same or better quality of art and framing
at a lower price. This may make it difficult for us to establish relationships
with new vendors. If we cannot develop and maintain relationships with vendors
that allow us to obtain sufficient quantities of merchandise on acceptable
commercial terms, our business may be materially adversely affected.
6
Because we will rely on third parties to fulfill orders, we will depend
on their systems for tracking inventory and financial data. In addition, our
future order fulfillment and distribution process will require us to cooperate
with our vendors with respect to the coordination of separate information
technology systems. To the extent there are any problems, we cannot ensure that
such problems will be resolved on a timely basis or at all. In addition, if we
establish new vendor relationships, we cannot be sure that we will be able to
integrate our respective information systems on a timely basis. If our vendors'
systems fail or are unable to scale or adapt to changing needs, we may not have
adequate, accurate or timely inventory or financial information. Our failure to
have adequate, accurate or timely inventory and financial information would harm
our ability to manage our business effectively.
We will also rely on third-party carriers for product shipments,
including shipments to and from distribution facilities. We therefore will be
subject to the risks, including employee strikes and inclement weather,
associated with our vendors and of our carriers' ability to provide product
fulfillment and delivery services to meet our fulfillment and shipping needs.
Failure to deliver products to our customers in a timely and accurate manner
would harm our reputation, the Artwork and Beyond brand and our business and
results of operations.
There is a conflict of interest between us and Ross Galleries.
Ross Galleries will initially be our only supplier of the artwork that
we will offer on our web site. Jay Camina, one of our founders and our
President, is also the sole owner of Ross Galleries. Mr. Camina will determine
the prices at which Ross Galleries will sell artwork to us. Accordingly, a
conflict of interest exists between Mr. Camina's position with Ross Galleries
and his position with us.
Failure to maintain our website could effect our ability to attract and retain
customers.
The satisfactory performance, reliability and availability of our web
site, transaction processing systems and network infrastructure will be critical
to our reputation and our ability to attract and retain customers and to
maintain adequate customer service levels. From time to time, we may experience
temporary system interruptions for a variety of reasons, including power
failures and software bugs. We may not be able to correct any problem in a
timely manner. Because we intend to outsource certain aspects of our system
(including software development and web site hosting) and because some of the
reasons for a system's interruption may be outside of our control, we also may
not be able to exercise sufficient control to remedy the problem quickly or at
all. Any future system interruption that results in the unavailability of our
web site or reduced order fulfillment performance could result in negative
publicity and reduce the volume of goods sold and the attractiveness of our web
site, which would negatively affect our business.
7
To the extent that customer traffic on our web site grows
substantially, we will need to expand the capacity of our systems to accommodate
a larger number of visitors. We will be required to add additional software and
hardware and further develop and upgrade our existing technology,
transaction-processing systems, network infrastructure and distribution
facilities to accommodate increased traffic on our web site and increased sales
volume through our transaction-processing systems. Any inability to scale our
systems may cause unanticipated system disruptions, slower response times,
degradation in levels of customer service, impaired quality and speed of order
fulfillment, or delays in reporting accurate financial information. We are not
certain that we will be able to accurately project the rate or timing of
increases, if any, in the use of our web site or in a timely manner to
effectively upgrade and expand our transaction-processing systems or to
integrate smoothly any newly developed or purchased modules with our existing
systems.
We depend upon the continued availability of our two founders, and their loss or
unavailability could put us at a competitive disadvantage.
Our success depends largely on the skills, experience and reputation of
our two founders Howard Blum and Jay Camina. The loss or unavailability of
either of these individuals for any significant period of time could have a
material adverse effect on our business, prospects, financial condition and
results of operations. There can be no assurance that we will be able to replace
these key individual in the event their services become unavailable. See
"Management."
Failure to protect the ARTinaClick trademark could damage the Company.
We filed an application for a United States trademark registration for
"ARTinaClick." We may be unable to secure this registration. It is also possible
that our competitors or others will adopt service names similar to ours, thereby
impeding our ability to build brand identity and possibly leading to customer
confusion. In addition, there could be potential trade name or trademark
infringement claims brought by owners of other registered trademarks or
trademarks that incorporate variations of the term "ARTinaClick." Any claims or
customer confusion related to our trademark, or our failure to obtain trademark
registration, would negatively affect our business.
We may rely on a combination of patent, trademark, trade secret and
copyright law and contractual restrictions to protect the proprietary aspects of
our technology. These legal protections afford only limited protection for our
intellectual property and trade secrets. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
sales formats or to obtain and use information that we regard as proprietary.
Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets and domain name and determine the
validity and scope of the proprietary rights of others. If third parties prepare
and file applications in the United States that claim trademarks that we use or
have registered, we may oppose those applications and be required to participate
in proceedings before the United States Patent and Trademark Office to determine
priority of rights to the trademark, which could result in substantial costs to
us. Any litigation or adverse priority proceeding could result in substantial
costs and diversion of resources and could seriously harm our business and
operating results. Finally, we may in the future sell our products
internationally, and the laws of many countries do not protect our proprietary
rights to as great an extent as do the laws of the United States. Many countries
have a "first-to-file" trademark registration system. As a result, we may be
prevented from registering or using our trademarks in certain countries if third
parties have previously filed applications to register or have registered the
same or similar trademark. Our means of protecting our proprietary rights may
not be adequate, and our competitors could independently develop similar
technology.
8
Maintenance of our internet domain names.
We have registered the internet domain names "artworkandbeyond,"
"ARTinaClick" and "art auction fundraiser" and we may register one or more other
domain names to use as our internet address. Domain names generally are
regulated by internet regulatory bodies. The regulation of domain names in the
U.S. and in foreign countries is subject to change. Regulatory bodies could
establish additional top-level domains, appoint additional domain name
registrars or modify the requirements for holding domain names. As a result, we
may not acquire or maintain the "artworkandbeyond" domain name or other domain
names that we register in all of the countries in which we conduct business.
Further, we may not be able to prevent third parties from registering domain
names that damage us while not infringing upon our trademark and other
proprietary rights.
The relationship between regulations governing domain names and laws
protecting trademarks and similar proprietary rights is unclear. Therefore, we
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise decrease the value of our trademarks and other proprietary
rights.
We may be found to infringe proprietary rights of others.
Third parties may claim infringement by us with respect to past,
current or future technologies. We expect that participants in our markets will
be increasingly subject to infringement claims as the number of services and
competitors in our industry segment grows. Any such claim, whether meritorious
or not, could be time-consuming, result in costly litigation, cause service
upgrade delays or require us to enter into royalty or licensing agreements. Such
royalty or licensing agreements might not be available on terms acceptable to us
or at all.
Our net sales would be harmed if we experience significant credit card fraud.
A failure to adequately control fraudulent credit card transactions
would harm our net sales and results of operations because we will not carry
insurance against this risk. Under current credit card practices, we will be
liable for fraudulent credit card transactions because we will not obtain a
cardholder's signature.
9
Risks Associated with our Securities
Restrictions on Resale of shares held by selling securityholders could depress
the future price of our common stock when these restrictions are removed.
Certain restrictions are applicable to the 420,000 shares of the
600,000 shares of our common stock offered for sale by the selling
securityholder in this prospectus. For a period of 6 months from the date of the
closing of this offering, an aggregate of 420,000 shares being offered by the
selling securityholder will not be eligible for resale. Such lock-up will
terminate upon the (a) expiration of such 6 month period, (b) the issuance by
the company for any reason of any additional shares of common stock, (c) mutual
agreement of the company and the selling securityholder and (d) request by the
company. The sale in the public market of such shares of common stock or the
expectation of sales may adversely affect the prevailing market price of our
common stock.
The price of our common stock in this offering has been arbitrarily determined.
The offering price of our common stock has been arbitrarily determined
by Artwork and Beyond and does not necessarily bear any relationship to our
assets, book value, revenues, prospects or other established criteria of value.
Lack of a public market for our common stock.
There is no public market for our common stock and no assurance can be
given that a market will develop or that any shareholder will be able to
liquidate his investment without considerable delay, if at all. There is no
underwriter engaged in connection with this transaction and there can be no
assurance that any brokerage firm will act as a market maker of our securities.
If a market should develop, the price may be highly volatile. In addition, an
active trading market for our common stock may not develop or be sustained. Our
sale of an aggregate of 400,000 shares for cash and the sale by the selling
securityholder of 600,000 shares of our common stock in the public market may
cause the market price of our common stock to fall. Factors such as those
discussed in this "Risk factors" section may have a significant impact on the
market price of our common stock. Due to the anticipated low price of our common
stock, many brokerage firms may not be willing to effect transactions in our
common stock. Even in a purchaser finds a broker willing to effect a transaction
in our common stock, the combination of brokerage commissions, state transfer
taxes, if any, and other selling costs may exceed the selling price.
Investors may face significant restrictions on the resale of our common stock
due to state and federal laws and regulations.
Because our common stock has not been registered for resale under the
blue sky laws of any state, our shareholders and those persons desiring to
purchase our common stock in any trading market that may develop in the future
should be aware that there may be significant state blue sky law restrictions on
the ability of investors to sell, and on purchasers to buy, our common stock.
Accordingly, investors should consider the secondary market for our common stock
to be a limited one. Investor may be unable to resell their stock without the
significant expense of state registration or qualification.
10
We do not intend to pay dividends to our stockholders.
We have never paid any dividends to our stockholders. We currently
intend to retain any future earnings for funding growth and, therefore, do not
expect to pay any dividends in the foreseeable future. If we determine that we
will pay dividends to the holders of our common stock, there is no assurance or
guarantee that such dividends will be paid on a timely basis.
Investors will be subject to immediate and substantial dilution in the net
tangible value per share of their shares after completion of the offering.
Our net tangible book value per share prior to the offering is
approximately $453,000. After the offering, we expect our net tangible book
value per share to be approximately $1,053,000. Therefore, there will be an
increase in the net tangible book value per share for our existing stockholders
of approximately $.06. There will be dilution to investors in the net tangible
book value per share of approximately $1.39. In addition, our founders have paid
approximately $.15 per share for the 9,000,000 shares of our common stock that
they own, whereas the investors will have paid $1.50 per share for their shares.
We may sell additional shares of our common stock without stockholder consent,
which will dilute the investors' percentage interest in Artwork and Beyond.
After completion of the offering, purchasers of the securities in this
offering will own 1,000,000 shares, or 10% of our issued and outstanding shares.
We may raise additional capital after completion of the offering by issuing
additional shares of common stock. Our management will have the right to
determine the number of shares that we will offer and the purchase price per
share without the consent or approval of the investors. In addition, the
investors will have no right to purchase shares in any subsequent offering in
order to maintain their percentage ownership interest in Artwork and Beyond.
Penny stock regulations may impose certain restrictions on marketability of our
securities.
The Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define a "penny stock" to be any equity security
that has a market price (as defined) of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. As a result,
our common stock is subject to rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
11
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a risk disclosure document mandated by the Commission relating to the penny
stock market. The broker-dealer must also disclose the commission payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of investors to sell our securities in the secondary market and the
price at which such purchasers can sell any such securities.
Shareholders should be aware that, according to the Securities and
Exchange Commission, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse.
Our management is aware of the abuses that have occurred
historically in the penny stock market. Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our common stock.
Anti-takeover provisions may adversely affect the value of our outstanding
securities.
Pursuant to our Certificate of Incorporation, our Board of Directors
may issue up to one million (1,000,000) shares of preferred stock in the future
with such preferences, limitations and relative rights as the Board may
determine without stockholder approval. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying or
preventing a change in control of Artwork and Beyond without further action by
the stockholders. We have no present plans to issue any shares of preferred
stock. In addition, we are subject to the anti-takeover provisions of Section
203 of the Delaware General Corporation Law, which will prohibit us from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the persons
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The application of Section 203 also could have the effect
of delaying or preventing a change of control of our company.
12
Limitation on director liability.
As permitted by Delaware law, our Certificate of Incorporation limits
the liability of our directors for monetary damages for breach of a director's
fiduciary duty except for liability in certain instances. As a result of our
charter provision and Delaware law, stockholders may have limited rights to
recover against directors for breach of fiduciary duty.
Risks Related to Internet Commerce
Our sales could be negatively affected if we are required to charge taxes on
purchases.
We do not intend to collect sales or other similar taxes in respect of
goods that we sell, except from purchasers located in New York. However, one or
more states or the federal government may seek to impose sales tax collection
obligations on out-of-state companies that engage in or facilitate online
commerce, and a number of proposals have been made at the state and local level
that would impose additional taxes on the sale of goods and services through the
internet. Such proposals, if adopted, could substantially impair the growth of
electronic commerce, and could adversely affect our opportunity to derive
financial benefit from such activities. Moreover, a successful assertion by one
or more states or the federal government that we should collect further sales or
other taxes on the sales of products through us could negatively affect our
revenues and business.
If we do not respond to rapid technological changes, our services could become
obsolete and our business would be seriously harmed.
The internet and the online commerce industry are characterized by
rapid technological change, changes in user and customer requirements and
preferences, frequent new product and service introductions embodying new
technologies and the emergence of new industry standards and practices that
could render our web site and proprietary technology and systems obsolete. To
remain competitive, we must continue to enhance and improve the responsiveness,
functionality and features of our online gallery. Our success will depend, in
part, on our ability to license leading technologies useful in our business,
enhance our existing services, develop new services and technology that address
the increasingly sophisticated and varied needs of our prospective customers and
respond to technological advances and emerging industry standards and practices
on a cost-effective and timely basis. The development of a web site and other
proprietary technology entails significant technical, financial and business
risks. We may not be able to successfully implement new technologies or adapt
our web gallery, proprietary technology and transaction-processing systems to
customer requirements or emerging industry standards. If we are unable, for
technical, legal, financial or other reasons, to adapt in a timely manner in
response to changing market conditions or customer requirements, such inability
could adversely impact our ability to build the Artwork and Beyond brand and
attract and retain customers.
13
Forward-looking statements
You should not rely on forward-looking statements in this prospectus.
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions to identify these
forward-looking statements. Prospective investors should not place undue
reliance on these forward-looking statements, which apply only as of the date of
this prospectus. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by our company described in "Risk factors" and elsewhere in this
prospectus.
Use of proceeds
We estimate that the net proceeds from the sale of the 400,000 shares
of common stock that we are offering will be $600,000. All of the expenses of
this offering are being paid for by Biofarm, Inc. See "Certain Relationships and
related party transactions."
We intend to use all of such proceeds for working capital. We will
retain broad discretion over the use of the net proceeds of this offering. The
amounts and timing of the expenditures may vary significantly depending on
numerous factors, such as the progress of our development efforts, technological
advances and the competitive environment for our products.
Pending use of the net proceeds, we intend to invest the net proceeds
in short-term, interest-bearing, investment-grade securities. We will not
receive any of the proceeds from the sale of the shares owned by the selling
securityholder.
Dilution
As of March 31, 2001, the Company had a net tangible book value of
$452,993 or $.05 per share (assuming that the Company had 9,000,000 Shares
outstanding as of that date), derived from the Company's balance sheet as of
that date. Net tangible book value per Share means the tangible assets of the
Company less all liabilities, divided by the number of Shares outstanding taking
into consideration the 3.7917519 for 1 stock split in April 2001 as if that
split was completed in March 2001. After giving effect to the sale of the Shares
offered hereby at a price of $1.50 per Share, net tangible book value as
adjusted would be $1,052,993 or $.11 per share. The result will be an immediate
increase in net tangible book value per share of $.06 to existing shareholders
and an immediate dilution to new investors of $1.39 (93%) per share. "Dilution"
is determined by subtracting net tangible book value per share after the
offering from the offering price to investors. The following table illustrates
this dilution.
14
Assumed value of Shares offered hereby.......................................... $1.50
Net tangible book value per Share, before the offering........................ $.05
Increase per share attributable to the sale by the Company of the Shares offered
hereby.......................................................................... $.06
----
Pro forma net tangible book value per Share, after the offering................. $ .11
Dilution per Share to new investors............................................. $1.39
The following table summarizes the investments of all existing
shareholders and new investors after giving effect to the sales of the
Securities offered hereby assuming no exercise of the Underwriter's
Over-Allotment Option:
Percentage Aggregate Percentage Average
Shares of Total Consideration of Total Price Per
Purchased Shares Paid Invested Share
--------- ---------- ------------- ---------- ---------
Existing Shareholders....................... 9,000,000 95.7% 1,367,503 69.5% $ .15
Public Shareholders......................... 400,000 4.3% 600,000 30.5% $1.50
-------- ---- --------- -----
Total 9,400,000 100% 1,967,503 100%
========= ==== ========= ====
Concurrent offering
The registration statement of which this prospectus is a part also
includes a prospectus with respect to an offering of up to 600,000 shares of
Artwork and Beyond common stock, all of which may be sold in the open market, in
privately negotiated transactions or otherwise, directly by one (1) selling
securityholder.
We will not receive any proceeds from the sale of such 600,000 shares
of common stock. The selling securityholder is paying all of the expenses
associated with this offering and the concurrent offering. See "Certain
Relationships and Related Transactions." Sales of such 600,000 shares of common
stock by the selling securityholder or the potential of such sales may have a
material adverse effect on the market price of the common stock offered hereby.
15
Directors, Executive Officers, Promoters and Control Persons
Officers and directors
The names and ages of the directors and executive officers of Artwork
and Beyond are set forth below. All Directors are elected annually by the
stockholders to serve until the next annual meeting of the stockholders and
until their successors are duly elected and qualified. Officers are elected
annually by the Board of Directors to service at the pleasure of the Board.
Name Age Position(s) with the Company
- ---- --- ----------------------------
Howard Blum 41 Chief Executive Officer,
Co-Chairman of the Board
Jay Camina 40 Co-Chairman of the Board
J. R. LeShufy 76 Director
Background of Executive Officers, Directors and Significant Employees
Howard Blum Mr. Blum has served as Chief Executive Officer and Co-Chairman of
the Board of the company since August 1999. Howard Blum has spent 17 years in
the investment industry. He has worked for firms such as Schroder Wertheim,
Oppenheimer, and Bluestone Capital and is currently employed at Global Emerging
Markets, North America, a U.K.-based investment group and venture capital firm.
Mr. Blum spent the early part of his career managing funds for high net-worth
individuals and corporations. He has managed funds in excess of $50 million
dollars. For the last five years, Mr. Blum has been involved in structuring
various investment and merchant banking transactions and has raised over $100
million dollars for companies in technology, entertainment, and industrial
manufacturing. Mr. Blum graduated with a BA in Economics from New York
University.
Jay Camina Mr. Camina has served as Co-Chairman of the Board of the Company
since August 1999. Jay Camina has spent his entire career in the art and picture
framing industry. From 1979-1981 Mr. Camina was manager of a 30,000 square foot
custom framing facility for Frame King, a franchise of 28 custom frame shops.
This facility was the sole manufacturer of frames for the company's franchises.
From 1981-1988 Mr. Camina worked for a fund-raising art auction company where he
became familiar with all aspects of the art auction industry and was responsible
for managing the manufacturing facility. From 1988 to the present, Mr. Camina
has been sole owner and President of Ross Galleries. Ross Galleries, who has 25
employees, is vertically integrated, housing purchasing, manufacturing, sales
and operations all under one roof. Mr. Camina's company has grown to become one
of the leading fund-raising art auction companies in the country, conducting
over 400 events each year.
16
J.R. LeShufy Mr. LeShufy has served as Director since September 2000. J.R.
LeShufy was founder of Collectors' Guild Ltd. and Consolidated Fine Arts, the
country's largest club for collectors of limited editions of graphics and
sculpture. He was privileged to work with and publish some of the leading
artists of the 20th Century, such as: Picasso, Chagall, Miro, Calder, Dali,
Manzu, Siquieros, Tamayo, Soyer and Ben Shahn, amongst others. Mr. LeShufy is
President of Trilenium Corp., a research and development company in computer
software and hardware. He has spent several years working with various divisions
of the Russian Academy of Sciences developing the transfer of intellectual
property to the West. Mr. LeShufy serves on the boards of InKine Pharmaceutical
Company, Inc. and TeleServices Internet Group, Inc.
Advisory Board
Artwork and Beyond has an Advisory Board of individuals who serve for a term of
one year. The members of the advisory board are chosen by Howard Blum, the
Company's Chief Executive Officer. The Advisory Board assists Artwork and Beyond
in forming strategic relationships, and identifying potential customers. Each
member of the Advisory Board has received options to purchase 2500 shares of
common stock at an exercise price of $1.50 per share. The Advisory Board is
comprised of the following individuals:
Todd Lindsley - Todd Lindsley is a national fund raising consultant. He has over
18 years of direct fund-raising and consulting experience, during which he has
organized or overseen 30 national campaigns which raised over $1 billion
cumulatively in charitable gift support. Earlier in his career he served
Hartwick College, Glimmerglass Opera, and The University of North Carolina at
Chapel Hill as Director of Alumni Relations, Director of Development/Campaign
Director, and Assistant Dean for Development and External Affairs. He currently
serves as President for his own fund-raising consulting firm where he serves as
counsel to museums, hospitals, colleges, and other non-profit organizations. He
holds a B.A. in Government from the College of William and Mary in Virginia.
Karen LeShufy - Karen LeShufy has been a fine art publisher/distributor for 20
years and is President of Editions Des Legendes, which has an exclusive
agreement with the Toulouse-Lautrec family to recreate the works of Henri de
Toulouse-Lautrec. Ms. LeShufy has been a consultant and worked on joint ventures
with The Rockefeller Collection, American Express, Diners' Club, Fox
Broadcasting and The New York Daily News. Karen has created and marketed
programs for direct sale to galleries and the public, as well as direct
marketing/mail order via television and print media. Ms. LeShufy has published
for artists such as Dali, Tamayo, Siquieros, Manzu, Burton Morris, Bill Gallo,
Gartner, Charon, Noyer and Salinas.
Cynthia Kacar - Ms. Kacar, President and founder of CircaVentures, has been a
strategic growth and investment banking advisor and consultant to numerous
Internet technology and content companies in Silicon Valley and throughout the
U.S. She has worked with a range of companies from technology start-ups to large
Internet portal companies. She has been an investment banking advisor and
liaison with major venture capital and investment banking groups for Internet
companies that span from content and technology start-ups in pre-IPO mode to
public companies seeking secondary financing on the public equity markets or M &
A strategies. Ms. Kacar was formerly a consultant with McKenna High Tech
Strategies, where she worked on Internet strategies for companies such as
Matsushita and Motorola. Ms. Kacar is the owner/founder/board advisor of several
Internet companies including TENonline, a travel Internet company and
SuperTuner, a company pioneering a video aggregation technology. She holds a BA
in Biology from Lehigh University and an MBA in Finance and Marketing from the
University of St. Thomas in Houston, Texas.
17
Compensation
Artwork and Beyond has no stock option, retirement, incentive, defined
benefit, actuarial, pension or profit-sharing programs for the benefit of its
officers or directors, but the Board of Directors may recommend adoption of one
or more such programs in the future. We have no employment contract or
compensatory plan or arrangement with any officer of Artwork and Beyond. For the
year ended December 31, 2000, Howard Blum, the Company's Chief Executive
Officer, received a salary of $37,500. For the year ended December 31, 2000,
Jason Norbeto, the Company's Chief Operating Officer, received a salary of
$75,000. On September 30, 2000, the Company granted to Mr. Norbeto an option to
purchase 180,000 shares of common stock, exercisable at $0.92 per share. The
options vest one half on November 15, 2000, and the balance on May 15, 2001, and
expire in September 2005. The exercise price equaled the fair value of the stock
on the date of grant and, accordingly, the Company has not recorded any
compensation expense related to these options. Mr. Norbeto's appointment with
the Company terminated on December 31, 2000. There were no other salaries paid
during the year ended December 31, 2000.
Each director of Artwork and Beyond is entitled to receive reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
of Artwork and Beyond but do not receive compensation for services that they
have provided as directors. There is no compensation committee and no
compensation policies have been adopted. Artwork and Beyond may elect to pay
non-cash consideration in the form of options to directors in the future. In the
future, we may elect a cash payment as well as a non-cash consideration.
18
Security ownership of certain beneficial owners and management
The following table sets forth information, as of June 21,
2001 with respect to the beneficial ownership of the outstanding shares of our
common stock, $.001 par value, as of such date plus, where relevant for
particular beneficial owners, shares which such beneficial owner has the right
to acquire) by (i) any holder known to us owning more than five percent (5%) of
the outstanding shares; (ii) our officers and directors; and (iii) the directors
and officers of Artwork and Beyond as a group:
Number of Shares Percentage (%) of
Name of Beneficial Owner* Common Stock Ownership
- ------------------------- ---------------- -----------------
Howard Blum(1) 3,791,752 42%
Jay Camina(2) 3,791,752 42%
J. R. LeShufy(3) 0 0
Giltner B. Stevens 1,197,113 13.3%
Biofarm, Inc. 600,000 6.67%
All Officers and Directors as a group 7,583,504 84%
(2 persons)
* The address of all persons listed in this section is c/o Artwork and
Beyond, Inc., 761 Coates Avenue, Holbrook, New York 11741.
(1) Howard Blum is the Chief Executive Officer and Co-Chairman of the Board
of Directors.
(2) Jay Camina is the Co-Chairman of the Board of Directors.
(3) J.R. Le Shufy is a Director of Artwork and Beyond.
19
Our business
Summary
Artwork and Beyond is a Delaware corporation which was formed on August
5, 1999. Our primary business is the sale of art, in two major areas:
1. Online retail sale of art which is conducted
through its online retail division,
ArtinaClick.com; and
2. Internet based charity art auctions which
are conducted through our internet based
charity art auction division,
ArtAuctionFundraiser.com.
Our retail division, ArtinaClick.com, provides the consumer with a
"one-stop" shopping experience for the purchase of art online. ArtinaClick.com
offers a vast selection of images ranging from originals, lithographs,
serigraphs, limited editions, prints and posters, to sports memorabilia and
collectables. Items range in price from $5.00 to $1500 with the average sale
being approximately $85.00. Items offered are at substantial savings from
traditional retail galleries. Artwork and Beyond believes that its business
strategy combined with targeted marketing and fulfillment will make it the
premiere Internet site for art buying in the e-commerce space.
Our emphasis for the consumer is ease-of-use, separating artwork into
five unique galleries, coupled with a sophisticated and powerful search engine.
In particular, the site tries to avoid the competitions mistake of offering to
many framing options and images. It is management's belief that the consumer
will not feel intimidated by lack of taste or knowledge and Artwork and Beyond
will provide the consumer with a highly satisfying shopping experience.
The E-commerce divisions sales plan is based on the idea that there is
a pervasive frustration with the normal channels for buying art, as the industry
still functions mainly as a cottage industry. Through careful marketing and
strategic alliances, we will aggregate demand and drive traffic to our site. We
believe that there is significant unrealized demand for art in the sub-luxury
category and it is a product that is highly suitable for web purchases. We
believes that the online shopping experience has significant advantages over the
traditional method of purchasing art. Artwork and Beyond will create the
perception of these advantages in the minds of the buying public, through a
skilled marketing plan, thereby driving traffic to the site. Once at the site,
visitors will be transformed into buyers through the value proposition
articulated above.
Artwork and Beyond's internet based charity art auction division,
ArtAuctionFundraiser.com intends to capitalize on the expertise of both its
supplier Ross Galleries and ArtinaClick.com, to provide online charity art
auctions. There are numerous organizations including, alumni groups, religious
organizations, schools, and health care organizations whose members are
geographically dispersed. These organizations are constantly looking to raise
funds to meet their operating budgets. We believe that an online auction would
enable organizations to raise funds from their members no matter how
geographically dispersed they may be.
20
We believe that the online auction is at this point a proven concept,
given sites such as eBay and Amazon, and little or no consumer resistance needs
to be overcome. In addition, barriers to entry for newcomers wishing to offer
charity auctions are significant, as credibility working with charities is
difficult to build.
We have entered into a fulfillment agreement with Ross Galleries
located in Holbrook, NY. Ross Galleries has 25 full-time employees in a 20,000
sq. ft. facility. Ross Galleries has been in the charity art business for 13
years, has worked with 1700 different organizations, and conducted over 4000
land-based auctions. The agreement provides that Ross Galleries will supply
Artwork and Beyond with its art and framing services for a period of seven
years. Management believes that the cost of implementing online charity auctions
will be minimal, given Ross Galleries existing infrastructure. Ross Galleries
will be our primary source of supply.
Online sales of art
Our website commenced full operation on December 1, 2000. Artwork and
Beyond's retail web site www.ArtinaClick.com was designed with enhanced
functionality to provide consumers with the ideal "one-stop shop" online art
experience. Artwork and Beyond has expended approximately $133,000 in the
development and construction of our website. The site carefully focuses
potential buyers on product selection via virtual galleries that are
thematically organized, as well as education and consultation to supplement the
galleries. The following features are offered to prospective consumers:
Product Selection:
The e-commerce site consists of five unique galleries:
o Collector's Gallery -- This gallery consists of customized framed originals
and limited edition lithographs and serigraphs custom-framed by well known
as well as up-and-coming artists. Among the featured artists are Thomas
McKnight, Michel Delacroix, Bev Doolittle, Leroy Neiman, and Thomas
Kinkade.
o Great Masters -- This gallery consists of elegantly framed works by the
great masters such as Renoir, Monet, Rembrandt and Chagall in various media
such as etchings, serigraphs and artagraphs.
o Print Shoppe -- This gallery currently consists of approximately 15,000
images available with a choice of three decorator framing selections.
Artists include names such as Ansel Adams, Howard Behrens, and Tarkay.
21
o Sports Expo -- This gallery consists of custom-framed autographed photos by
sports heroes and celebrities. A Certificate of Authenticity accompanies
all items sold from a handwriting expert guaranteeing each signature.
o "Art Express"-- This gallery contains a subset of selected merchandise from
the above galleries that can be shipped the next business day. Artwork and
Beyond has approximately 1,000 pieces of art that are featured in this
gallery at all times. It is the opinion of management that no company will
be able to successfully compete with Artwork and Beyond in this offering,
as it is extremely unlikely that the competition will have such a wide
selection of framed artwork in stock that can be shipped the next business
day. The relationship with Ross Galleries enables Artwork and Beyond to
implement this service, because the inventory will be culled from Ross
Galleries's offline inventory. Ross Galleries in conjunction with Artwork
and Beyond has carefully selected the artwork in Art Express based on items
sold over twelve years at Ross Galleries. Management believes that this
data will permit us to determine consumer preferences and increase
inventory turnover.
Consumer Service: Artwork and Beyond offers the services of a
customer-care representative who will be available by e-mail or telephone
on a 24 hours, seven days a week, 365 days a year basis to assist with
consumer questions such as the status of orders and shipments, upcoming
events, and questions about site offerings and navigation.
Site Specific Features: The Artwork and Beyond site offers the user an
internal search engine giving shoppers the ability to search by keyword,
subject, artist, style, price range, title, size and medium. This helps
create an easy-to-use shopping environment and enhance the buying
experience. The "My Gallery" pages will allow online users to track their
purchases as well as save favorite selections for later viewing.
Education: Artwork and Beyond anticipates having educational
components, such as interactive tutorials, will help users to understand
contemporary art and to gain confidence in their own preferences. Feature
articles on art collecting, museum and gallery exhibits as well as other
art-related events will keep art lovers up to date on the events, opinions
and controversies animating the art world. Moreover, customers will get
information on featured artists, providing insights into the creative
development process. All this will help aggregate consumer demand by
creating the "stickiness" that accompanies successful online community
building.
Marketing and Sales Strategy
Technology creates not only great opportunities but also many
risks for online merchants. Low barriers to entry encourage competitors to
quickly replicate successful e-offerings, literally overnight. Artwork and
Beyond recognizes this ever-present danger and believes that the first step
in preserving site identity is to offer non-technical benefits that are
difficult to imitate - primarily a high level of service, since service
that exceeds consumer expectations will always be appreciated. Artwork and
Beyond intends to attract its potential customers through the adoption of
an aggressive online and offline marketing strategy which, when combined
with strategic partnerships and joint venture opportunities we believe will
help to position us as the market leader. Currently, ArtinaClick.com is a
premiere merchant in Microsoft's e-shop as well as in Lycos shopping. In
addition, the company has a storefront as a z merchant in Amazon.com. We
believe that our primary customer will be the average American consumer.
22
We are intent on building an online community, building trust and
brand loyalty, thereby facilitating sales revenue and repeat visits.
Customers at the e-commerce site will be given several incentives to join
Artwork and Beyond's growing family - from loyalty-based coupons to
contests and redeemable points. Thus, we believe, the site will build a
large demographic database, from which it will be able to "mine" relevant
marketing information.
In the e-commerce sphere, direct marketing to the target audience
will be the key to the site's success. One aspect of Artwork and Beyond's
marketing strategy will be to co-brand its product line with top regional
and national home furnishing outlets. We believe that these strategic
alliances will enable Artwork and Beyond to attract both male and female
shoppers. Artwork and Beyond will then strive to differentiate between male
and female shoppers by creating gender and lifestyle-specific product
lines. For example, Sports Memorabilia will be targeted towards the male
segment and posters towards college students. We believe that women's
purchases dominate the home decor market and therefore will be a primary
target audience of our marketing efforts. The diversity of Artwork and
Beyond's appeal should be beneficial to its brand equity, long-term sales
and profits. In short, we will follow the time-honored prescription of "get
big, get niche, or get out," reducing marketing costs through a selective
focus on the most profitable niches.
In addition, the site will employ direct mail campaigns; opt in
e-mail campaigns and revenue sharing agreements. This will help leverage
the brand, allowing for other sales opportunities and the creation of
strategic alliances with key players in related industries. There will in
general be 3 types of affiliates:
o sites (profit and non-profit) where we will advertise,
returning a commission of up to 20% of revenue generated to
that site;
o affiliate membership groups and sites, whose members will
get up to a 20% discount on the our art with no commissions
paid to that group (like buyers' clubs); and
o private-label/co-branded sites, which we will design for
other outlets, collecting a percentage of sales.
Currently Artwork and Beyond is a merchant with Commission
Junction, the leading affiliate market solution provider. Within Commission
Junction, Artwork and Beyond has signed up over 1500 affiliate partners. We
will also employ limited strategic media planning techniques, such as
regional advertising. Thus, Artwork and Beyond will be able to track
responses and use targeted marketing messages. Art sites are particularly
suited to this type of Internet advertising since viewers are usually
browsers looking through numerous pages and eliciting multiple exposures.
23
Other marketing approaches will include:
Cross marketing - Create strategic alliances with resellers such as
national and regional home furnishing firms decorators, museum stores,
and office and hospitality markets. Artwork and Beyond will accomplish
this in the following manner:
o We will attempt to private-label web sites for resellers
leveraging the Artwork and Beyond name and expertise. The
site will contain custom-framed images that would be
exclusive to the reseller. We believe the reseller would
induce their consumer to purchase art at opportune times,
such as when purchasing. The images, frames, and mattes can
be selected by the reseller or an Artwork and beyond
consultant. Artwork and Beyond intends to hire regional
sales representatives to offer private label services to
chain stores. The salesperson will demonstrate the private
label service using a laptop and a mock-customized web
site. The benefit to the affiliated chain store would be to
eliminate tangible inventory, increase convenience and have
more extensive offerings for their clients. If the stores
have their own web sites, Artwork and Beyond will create a
link connecting both sites. In addition, Artwork and Beyond
intends to engage sales representatives to make
presentations to businesses in their respective markets.
o We could also work with representatives that are supplying
complimentary products to hotels, hospitals, restaurants,
etc enhancing their ability to offer them additional
product to their clients. Revenue-sharing agreements with
related companies (for instance, home furnishings stores)
will leverage the brand, allowing for increased sales
opportunities and the creation of strategic alliances with
key players in related industries.
Professional markets (Interior decorators and corporate market) -
Artwork and Beyond intends to include decorators in its marketing
effort by providing them with password-protected access to a special
"trade-only" section of the site. Interior decorators working with
Artwork and Beyond would have the ability to immediately select
appropriate images together with their clients from the web site.
Decorators would save a tremendous amount of time and effort by not
having to shop from gallery to gallery. Affiliated decorators could
promote corporate sales in a similar manner.
Joint venture alliances -We will create alliances with other online
sites that do not offer prints as well as online sites that offer
prints but do not offer on-site custom framing.
o Generate online announcements to trade publications
o Announcements to offline gallery and print consumers
o Registration with search engines and directories
o Carefully designed HTML metatags
o Announcements to artists and related trades with promotional
offers
24
o Press releases in industry journals -- Artwork and Beyond will
advertise in trade journals that cater to physicians, attorneys,
hotels, etc. All of these represent potential business for
Artwork and Beyond.
o Encourage links to the Artwork and Beyond site from other key
sites which appeal to Artwork and Beyond's target consumer base
o Direct mail to art enthusiasts identified by mailing lists of
traditional competitors, as well as art magazines and other
sources.
o The development of an aggressive on- and offline advertising
campaign that will build brand awareness
On March 21, 2001, Artwork and Beyond entered into a sales and distribution
agreement with Ivana Haute Couture & Company, Inc. whereby Artwork and Beyond
will produce, package and distribute artwork for the Ivana Haute Couture &
Company, Inc. Ivana World website. The agreement provides that Artwork and
Beyond will fulfill all orders as required for framed art that it will supply
and make available to the Ivana World website. Over time, we will offer other
related products and services, such as mirrors, rugs, sculptures, quilts,
tapestry and accessories. Other product concepts in the pipeline include the
development of a signature home furnishings line.
Internet based charity art auctions
It is estimated that total charitable contributions in the US are in
the billions of dollars on an annual basis. While figures do not exist for the
size of the charity art auction market, given the enormous number of
universities, hospitals, healthcare organizations clubs and other community
organizations, it is management's belief that online charity art auctions will
work extremely well with members of a particular organization. Through its art
auction division ArtAuctionFundraiser.com, Artwork and Beyond has developed an
easy-to-use online method that allows constituents and guests of organizations
to bid online for the highest quality, custom framed artwork with a percentage
of the revenues generated from the auction going back to that particular
organization. ArtAuctionFundraiser.com will plan, organize and conduct the
online auction in a manner that is extraordinarily simple to understand by all
participants, regardless of their Internet proficiency. All that is required for
organizations constituents or guests to participate are a computer with Internet
access. No special technical expertise or online auction experience is needed.
How an on-line charity art auction works
Artwork and Beyond will solicit organizations that it believes would
benefit from on online charity art auction. Once an organization has signed up
for an event, ArtAuctionFundraiser.com will send out custom online invitations
to the organizations constituents and guests via e-mail. The invitation will
detail the dates of the event, the online address (URL) to enter the auction,
and a unique password to the organizations private auction. If the organization
prefers to handle the e-mailing itself, ArtAuctionFundraiser.com will customize
an online invitation for them. In the event the organization only has mailing
addresses, ArtAuctionFundraiser.com will provide them with custom printed
invitations and a press release that can be included in their next mailing.
25
When a bidder arrives at the ArtAuctionFundraiser.com home page, there
will be simple instructions on how to navigate the auction site as well as
bidding instructions. From here, the constituents and guests of an organization
will click on their organization's name or logo, which will take them to a
welcome page that we have designed especially for that organization. This
special welcome page is designed for the group at no cost, and may feature the
colors and logo associated with the organization. This page will allow a space
where a special message from an organization's president, chairperson(s) or any
other appropriate individual may appear. The message will welcome the group's
constituents and guests to the auction and may contain other information the
organization may want to convey. It's now time to enter the auction.
Once inside the actual auction site, an organizations patrons can
peruse the wide variety of custom framed artwork and authentic sports
memorabilia. Each auction item is displayed using the finest digital imagery
available on the world wide web. Organizations supporters will have the ability
to browse through the items up for auction or use a simple search function to
locate just what they desire. Once a piece of artwork or memorabilia is found,
bidding may begin. Bidding instructions are clearly written and easy to follow.
When bidding on an item, there is immediate notification by e-mail that the bid
has been received. Additionally, the bidder is always notified if they have been
outbid, thereby enabling the opportunity to bid again. At the end of the
auction, the successful bidders are notified by e-mail. Method of payment by the
highest bidders will be secured by credit card. ArtAuctionFundraiser.com will
accept American Express, Master, Visa and Discover credit cards. The sold works
of art are then prepared for shipment directly to the successful bidders. Once
the auction has ended and all financial settlements are complete, your
organization will receive its entire commission along with a complete accounting
of all bidders names, e-mail addresses, and purchases.
Additional revenue sources
ArtAuctionFundraiser.com has programs that can produce a continuous
revenue stream for organizations in addition to the commission from the online
auction. ArtAuctionFundraiser.com offers an after sale program it can implement
on behalf of organizations. With an organization's permission,
ArtAuctionFundraiser.com would e-mail auction participants, notifying them of
specials or promotions available at Artwork and Beyond's retail art site
www.ArtinaClick. com. Should supporters respond to our e-mail and make a
purchase, the organization will earn a commission on that sale. Commission will
be paid to an organization each and every time a purchase is made.
Another program we will offer would enable organizations to become an
affiliate partner with ArtinaClick.com With this program an ArtinaClick.com
banner is placed discreetly on an organization's web site. The banner ad would
inform visitors that ArtinaClick.com is a fundraising affiliate of the
organization. When a visitor to that organizations site clicks on our banner ad,
he/she will be taken to our site. Whenever a purchase is made, the organization
will receive a commission on that sale.
26
ArtinaClick is a premiere merchant with GreaterGood.com. GreatGood.com
is one of the leading charity malls, whereby a user can purchase merchandise and
a percentage of the sale goes back to a particular organization. The GreaterGood
shopping mall is also located on approximately 5000 non for profit web sites
that are part of the GreaterGood.com network.
ARTinaClick is a premiere art merchant in MyOnlyCatalog.com.
MyOnlyCatalog is an e-shopping destination site that brings together merchants
and consumers in one convenient setting. MyOnlyCatalog allows shoppers to browse
a large selection of catalogs, searching by individual companies, product
categories, or specific items, using one shopping bag and one convenient
checkout process to purchase merchandise from hundreds of catalogs, all at one
web location.
Competition
Our primary competition in the e-commerce space includes companies such
as Art.com, ArtSelect, NextMonet and Barewalls. Our current competitors have
longer operating histories, greater name recognition, larger customer bases and
greater financial, and technical resources then Artwork and Beyond. There are a
number of companies that compete with us in the auction market, the largest of
which are eBay and Amazon.com. Both of these companies have far longer operating
histories, greater name recognition, larger customer bases and greater financial
and technical resources.
In addition, new technologies and the expansion of existing
technologies may increase competitive pressures. As a result of increased
competition, we may experience reduced operating margins, as well as loss of
market share and brand recognition. We cannot be certain that we will be able to
compete successfully against current and future competitors and competitors
could have a material adverse effect on our revenue growth and earnings.
Intellectual Property
Our ability to compete successfully and achieve future revenue growth
will depend, in part on our ability to protect our proprietary technology and
operate without infringing the rights of others. We have filed an application
for a United States Registration for "ArtinaClick.com".
Employees
As of June 10, 2001, we have 5 full-time employees and 3 part-time
employees. We have employees in production, marketing, administration, and
management. None of our employees are represented by a labor union and we have
not experienced any work stoppages. We consider our employee relations to be
good.
27
Facilities
We currently lease approximately 5,000 square feet of general office
space in Holbrook, New York which serves as our executive offices. The lease is
month-to-month and the monthly rental is $2,916.67. Our current facilities will
provide adequate space to house the business through our current growth,
however, as we continue to execute our plan, additional operational and
administrative space may be required. We believe that adequate additional space
is available on competitive terms.
Legal proceedings
There are no material legal proceedings pending to which we are a
party, and we are unaware of any contemplated material legal actions against us.
28
Plan of Operations
Artwork and Beyond is a Delaware corporation which was formed on August
5, 1999. The Company closed on a private placement in September of 2000 in which
$1,200,000 was raised. To date, the proceeds of the offering have been used for
the following:
o Completion of the Companies retail web site www.ARTinaClick.com.
The site was launched in December of 2000.
o Marketing of the retail site, which includes agreements with
Microsoft and Lycos.
o Hiring of personal.
o Marketing and personal for www.ArtAuctionFundraiser.com
o Working Capital
Our primary business is the sale of art, in two major areas:
1. Online retail sale of art; and
2. Internet based charity art auctions.
The Company's online retail division, ARTinaClick.com, provides the
consumer with a "one-stop" shopping experience for the purchase of art online.
ARTinaClick offers a vast selection of images ranging from originals,
lithographs, serigraphs, limited editions, prints and posters, to sports
memorabilia and collectables. Items range in price from $5.00 to $1500 with the
average sale being approximately $85.00. Items offered are at substantial
savings from traditional retail galleries. The company believes that its
business strategy combined with targeted marketing and fulfillment will make it
the premiere Internet site for art buying in the e-commerce space.
The Company currently markets its products and services through two
distinct sales models, affiliate programs and advertising programs. ARTinaClick
currently advertises on both the Microsoft and Lycos shopping network. In this
model, ARTinaClick pays a monthly fixed fee to have all of its items listed in
the shopping channel of Microsoft and Lycos. Traffic is driven to ARTinaClick
from both Microsoft and Lycos. If a sale is made, there are no funds due
Microsoft or Lycos. The relationship is solely as an advertiser on their
networks.
The second sales channel utilized by ARTinaClick is the affiliate
network. In this program, a third party site places an ARTinaClick banner ad or
link onto their site. When a user clicks on that ad or link they are taken to
ARTinaClick.com. When a sale is made, the referring site receives a commission.
The commission can range from 10% -15% of the gross sale. In the affiliate model
there are no upfront or advertising fees to ARTinaClick. The only fees paid are
as a result of a sale. Currently ARTinaClick has affiliate deals with the
following companies:
GreaterGood.com
Charity Mall.com.
MyOnlyCatalog.com
29
In addition, ARTinaClick is a merchant with over 1500 affiliates in the
Commission Junction network.
The Company anticipates generating additional revenue by continuing to
sign up affiliate partners and through strategic offline advertising. The
Company's offline advertising will consist of FSI's (free standing inserts) in
newspapers and traditional mailings. The cost of FSI's for circulation of
1,000,000 households is approximately $5,000.00. We anticipate running two to
four times a year. The Company will rent lists of new homeowners and those
individuals who have recently moved from list rental companies. The cost is
approximately .25-.50 per name. We anticipate mailing test samples on a
quarterly basis.
ARTinaClick's retail online business competes in a market that is
highly competitive and expects competition to intensify in the future. We
currently or potentially compete with a variety of companies, both on the
Internet and in brick-and-mortar galleries. Our competitors have significantly
greater financial, technical, and marketing resources s. Those that have
established a presence on the Internet have already begun to establish a
customer base and their brand. Our Internet competitors include ArtSelect,
NextMonet, Barewalls, and Guild.com, among others. Our brick-and-mortar
competitors include national galleries such as Deck the Walls and Wentworth
Galleries as well as a variety of regional and local galleries. All of these
companies have existed for a longer period, have greater financial resources,
have established marketing relationships with leading manufacturers, strategic
partners and advertisers, and have secured greater presence in distribution
channels. Some of these companies may also commence or expand their presence on
the Internet. We believe that there are also numerous other smaller
entrepreneurial companies that are focusing significant resources on developing
web sites to market and sell artwork on the Internet that will compete directly
with our web site.
The Company's Internet based charity art auction division,
ArtAuctionFundraiser.com intends to capitalize on the expertise of both its
supplier Ross Galleries and ARTinaClick.com, to provide online charity art
auctions. ArtAuctionFundraiser was launched on May 1, 2000. There are numerous
organizations including, alumni groups, religious organizations, schools, health
care organizations, and public radio stations, whose members are geographically
dispersed. These organizations are constantly looking to raise funds to meet
their operating budgets. The Company believes that an online auction would
enable organizations to raise funds from their members no matter how
geographically dispersed they may be. ArtAuctionFundraiser provides
organizations with a turn- key service at no cost, enabling them to conduct
online charity art auctions. Services include:
1. Custom online invitations and traditional invitations.
30
2. Customized press release.
3. A customized homepage for organizations to welcome constituents
and guests.
4. A professional fund-raising consultant to guide organizations in
preparing and promoting for the auction.
5. Display at least 1000 custom-framed works of art ready to hang.
6. Free processing of all M/C, Visa, Discover, and AmEx payments.
7. A full accounting of all purchases and bidders.
8. Certificate of authentication on all artwork.
9. A commission of 10% to organizations on all sales that result
from an affiliate program with ARTinaClick.com.
10. A banner link from organizations website to the auction.
Currently the Company has two full time sales men who are contacting
organization through traditional telemarketing. These sales men are compensated
strictly on commission.
The Company believes that the online auction is at this point a proven
concept, given sites such as eBay and Amazon, and little or no consumer
resistance needs to be overcome. In addition, barriers to entry for newcomers
wishing to offer charity auctions are significant, as credibility working with
charities is difficult to build.
We have entered into a fulfillment agreement with Ross Galleries
located in Holbrook, NY for both ARTinaClick.com and ArtAuctionFundraiser.com.
Ross Galleries has 25 full-time employees in a 20,000 sq. ft. facility. Ross
Galleries has been in the charity art business for 13 years, has worked with
1700 different organizations, and conducted over 4000 land-based auctions.
Management believes that the cost of implementing online charity auctions will
be minimal, given Ross Galleries existing infrastructure.
The Company anticipates receiving additional funds in conjunction with
its current offering. The funds will be used for:
o Marketing of the online retail art business.
o Marketing of the online Internet based charity art auction
business.
o Inventory if needed.
o Personal.
31
In the event these funds are not raised the Company believes that it
has enough cash to build out its model over the next twelve months. In the event
the funds are raised, the build out will be accelerated. Artwork and Beyond
expects to hire additional employees to market its on line charity art auctions.
These employees will be commission based. At the present time the Company does
not expect any significant capital to be spend on plant and equipment.
Certain relationships and related transactions
To the best of management's knowledge, other than as set forth below,
there were no material transactions, or series of similar transactions, or any
currently proposed transactions, or series of similar transactions, to which
Artwork and Beyond was or is to be a party, in which the amount involved exceeds
$60,000, and in which any director or executive officer, or any security holder
who is known by us to own of record or beneficially more than 5% of any class of
our common stock, or any member of the immediate family of any of the foregoing
persons, has an interest.
In November 1999, Artwork and Beyond entered into a seven year (7)
Supply Agreement with Ross Galleries, whereby Artwork and Beyond would purchase
prints of work of art, framed and unframed, including lithographs, exclusively
from Ross Galleries and Ross Galleries would supply such art to the Company
exclusively for sale on the internet. Pursuant to the agreement, the Company
shall purchase all of its requirements for art from Ross Galleries, provided,
however, that the Company may purchase art from a third party (i) if such art is
not available through Ross Galleries, or (ii) if the same quality of art offered
by Art Galleries is available from a third party at a lower price. During the
term of the agreement, Ross Galleries is prohibited from selling art through the
internet or supplying framed art to any third party for sale directly or
indirectly through the internet. Since the inception of the agreement through
March 31, 2001, the Company has made payment to Ross Galleries in the amount of
$31,557.44
In January 2001, Biofarm, Inc., an unaffiliated entity, entered into a
Subscription Agreement with Artwork and Beyond and acquired an aggregate of
600,000 shares of Artwork and Beyond's common stock in exchange for the payment
of all of the expenses of this offering (see "Selling Securityholder" and
"Principal Shareholders" herein). In addition, Biofarm agreed to a lock-up of
420,000 shares of the 600,000 shares of common stock offered for sale by the
selling securityholder in this prospectus. For a period of 6 months from the
date of the closing of this offering, an aggregate of 420,000 shares being
offered by the selling securityholder will not be eligible for resale. Such
lock-up will terminate upon the (a) expiration of such 6 month period, (b) the
issuance by the company for any reason of any additional shares of common stock,
(c) mutual agreement of the company and the selling securityholder and (d)
request by the company. It is estimated that Biofarm will incur expenses of
approximately $95,000.00.
32
Executive Compensation
The following table sets forth for each of the last three fiscal years
ended December 31, 2000, December 31, 1999 and December 31, 1998 the
remuneration paid by the Company to its Chief Executive Officer and the four
other most highly compensated executive officers:
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------------------------------------------
NAME AND FISCAL AWARDS OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1) COMPENSATION
- -------------------------------------------------------------------------------------------------------------------
Howard Blum 2000 $37,500 -0- -0- -0-
Chief Executive Officer
and Co-Chairman of the Board
Jason Norbeto (2) 2000 $75,000 -0- 180,000 -0-
Chief Operating Officer
(1) Options to purchase shares of Common Stock.
(2) Mr. Norbeto's appointment with Artwork and Beyond terminated on
December 31, 2000.
33
The following table sets forth certain information with respect to
options granted during the last fiscal year to the Company's executive officers
named in the above Summary Compensation Table.
(1) Option/SAR Grants In Last Fiscal Year
Number of Securities Percent of Total Exercise or Base
Underlying Options/SARS Granted to Price
Name Options/SARS Granted (#) Employees in Fiscal Year% ($/Sh) Expiration Date
- ---- ------------------------- ------------------------- --------- ---------------
Jason Norbeto 180,000 100% $.92 September 2005
The following table sets forth certain information with respect to
options exercised during the last fiscal year by the Company's executive
officers named in the Summary Compensation Table, and with respect to
unexercised options held by such persons at the end of the last fiscal year:
Aggregate Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End
Option/SAR Values
Shares Number of Securities Value of Unexercised in the
Acquired on Value Realized Underlying Unexercised Money Options/SARs at
Name Exercise (#) $ Options/SARS at FY-End (#) FY-End ($) (1)
- ---- ------------ -------------- --------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
None
Employment Agreements
As of April 23, 2001, Artwork and Beyond does not have any employment
agreements with any of its employees.
34
Stock Option Plans and Agreements
Incentive Option Plan - In January 2000, our Directors adopted and the
stockholders of Artwork and Beyond approved the adoption of Artwork and Beyond
2000 Incentive Stock Option Plan ("Incentive Option Plan"). The purpose of the
Incentive Option Plan is to enable us to encourage key employees and Directors
to contribute to the success of Artwork and Beyond by granting such employees
and Directors incentive stock options ("ISOs").
The Incentive Option Plan will be administered by the Board of
Directors or a committee appointed by the Board of Directors ("Committee") which
will determine, in its discretion, among other things, the recipients of grants,
whether a grant will consist of ISOs or a combination thereof, and the number of
shares to be subject to such options.
The Incentive Option Plan provides for the granting of ISOs to purchase
Common Stock at an exercise price to be determined by the Board or the Committee
not less than the fair market value of the Common Stock on the date the option
is granted.
The total number of shares with respect to which options may be granted
under the Incentive Option Plan is 450,000 shares of common stock. ISOs may not
be granted to an individual to the extent that in the calendar year in which
such ISOs first become exercisable the shares subject to such ISOs have a fair
market value on the date of grant in excess of $100,000. No option may be
granted under the Incentive Option Plan after January 2010 and no option may be
outstanding for more than ten years after its grant. Additionally, no option can
be granted for more than five (5) years to a stockholder owning 10% or more of
our outstanding Common Stock and such options must have an exercise price of not
less than 110% of the fair market value on the date of grant.
Upon the exercise of an option, the holder must make payment of the
full exercise price. Such payment may be made in cash or in shares of common
Stock, or in a combination of both. We may lend to the holder of an option funds
sufficient to pay the exercise price, subject to certain limitations.
The Incentive Option Plan may be terminated or amended at any time by
the Board of Directors, except that, without stockholder approval, the Incentive
Option Plan may not be amended to increase the number of shares subject to the
Incentive Option Plan, change the class of persons eligible to receive options
under the Incentive Option Plan or materially increase the benefits of
participants.]
On September 30, 2000, the Company granted to an employee an option to
purchase 180,000 shares of common stock, exercisable at $0.92 per share. The
options vest one half on November 15, 2000, and the balance on May 15, 2001, and
expire in September 2005. The exercise price equaled the fair value of the stock
on the date of grant and, accordingly, the Company has not recorded any
compensation expense related to these options.
35
There were no stock option transactions during the initial period ended
December 31, 1999.
Description of securities
General
The following description of our capital stock does not purport to be
complete and is subject to and qualified in its entirety by our certificate of
incorporation and bylaws, which are included as exhibits to the registration
statement of which this prospectus forms a part, and by the applicable
provisions of Delaware law.
We are authorized to issue up to 20,000,000 shares of common stock,
$.001 par value per share, of which 9,000,000 shares were issued and outstanding
as of April 23, 2001. Our certificate of incorporation authorizes 1,000,000
shares of "blank check" preferred stock, none of which are outstanding.
Common Stock
Subject to the rights of holders of preferred stock, if any, holders of
shares of our common stock are entitled to share equally on a per share basis in
such dividends as may be declared by our Board of Directors out of funds legally
available therefor. There are presently no plans to pay dividends with respect
to the shares of our common stock. Upon our liquidation, dissolution or winding
up, after payment of creditors and the holders of any of our senior securities,
including preferred stock, if any, our assets will be divided pro rata on a per
share basis among the holders of the shares of our common stock. The common
stock is not subject to any liability for further assessments. There are no
conversion or redemption privileges nor any sinking fund provisions with respect
to the common stock and the common stock is not subject to call. The holders of
common stock do not have any pre-emptive or other subscription rights.
Holders of shares of common stock are entitled to cast one vote for
each share held at all stockholders' meetings for all purposes, including the
election of directors. The common stock does not have cumulative voting rights.
All of the issued and outstanding shares of common stock are fully
paid, validly issued and non-assessable.
Preferred Stock
None of the 1,000,000 "blank check" preferred shares are currently
outstanding. Our Board of Directors has the authority, without further action by
the holders of the outstanding common stock, to issue shares of preferred stock
from time to time in one or more classes or series, to fix the number of shares
constituting any class or series and the stated value thereof, if different from
the par value, and to fix the terms of any such series or class, including
dividend rights, dividend rates, conversion or exchange rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price and the liquidation preference of such class or series.
36
Warrants
As of June 21, 2001, we have 100,000 warrants outstanding, exercisable
at $3.70 per share, which expire on April 20, 2002.
The exercise price of the warrants and the number of shares issuable
upon exercise of the warrants will be subject to adjustment to protect against
dilution in the event of stock dividends, stock splits, combinations,
subdivisions and reclassifications.
Delaware Anti-Takeover Law Provisions
As a Delaware corporation, we are subject to Section 203 of the General
Corporation Law. In general, Section 203 prevents an "interested stockholder"
(defined generally as a person owing 15% or more of a Delaware corporation's
outstanding voting stock) from engaging in a "business combination" (as defined)
with such Delaware corporation for three years following the date such person
became an interested stockholder unless (i) before such person became an
interested stockholder, the board of directors of the corporation approved the
transaction in which the interested stockholder became an interested stockholder
or approved the business combination, (ii) upon consummation of the transaction
that resulted in the interested stockholder's becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
stock held by the directors who are also officers of the corporation and by
certain employee stock plans), or (iii) following the transaction in which such
person became an interested stockholder, the business combination is approved by
the board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder. Under section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the public announcement or notification of one of certain
extraordinary transactions involving the corporation and a person who had not
been an interested stockholder during the previous three years or who became an
interested stockholder with the approval of the corporation's board of directors
and if such business combination is approved by a majority of the board members
who were directors prior to any person's becoming an interested stockholder. The
provisions of Section 203 requiring a super-majority vote to approve certain
corporate transactions could have the effect of discouraging, delaying or
preventing hostile takeovers, including those that might result in the payment
of a premium over market price or changes in control or management of Artwork
and Beyond.
37
Limitation on liability of directors
Our certificate of incorporation provides that a director of Artwork
and Beyond will not be personally liable to Artwork and Beyond or its
stockholders for monetary damages for breach of the fiduciary duty of care as a
director, including breaches which constitute gross negligence. By its terms and
in accordance with the Delaware General Corporation Law, however, this provision
does not eliminate or limit the liability of a director of Artwork and Beyond
(i) for breach of the director's duty of loyalty to Artwork and Beyond or its
stockholders, (ii) for acts or omissions not in good faith or which involve
international misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, (relating to unlawful payments or
dividends or unlawful stock repurchases or redemptions), (iv) for any improper
benefit or (v) for breaches of a director's responsibilities under the Federal
Securities laws.
Dividend policy
We have not paid any dividends on our Common Stock since our inception
and do not intend to pay dividends on our common stock in the foreseeable
future. Any earnings which we may realize in the foreseeable future will be
retained to finance the growth of Artwork and Beyond.
Shares eligible for future resale
As of June 21, 2001, we had an aggregate of 9,000,000 shares of our
common stock issued and outstanding, all of which are "restricted securities,"
which may be sold only in compliance with Rule 144 under the Securities Act of
1933, as amended. Rule 144 provides, in essence, that a person holding
restricted securities for a period of one year after payment therefor may sell,
in brokers' transactions or to market makers, an amount not exceeding 1% of the
outstanding class of securities being sold, or the average weekly reported
volume of trading of the class of securities being sold over a four-week period,
whichever is greater, during any three-month period. (Persons who are not our
affiliates and who had held their restricted securities for at least two years
are not subject to the volume or transaction limitations.) The sale of a
significant number of these shares in the public market may adversely affect
prevailing market prices of the our securities.
Transfer agent and registrar
The transfer agent and registrar for our common stock is Continental
Stock Transfer & Trust Company, 2 Broadway, New York, New York 10004.
38
Disclosure of commission position on indemnification for
securities act liabilities
Our bylaws provide that we will indemnify our officers and directors
for costs and expenses incurred in connection with the defense of actions,
suits, or proceedings against them on account of their being or having been
directors or officers of Artwork and Beyond, absent a finding of negligence or
misconduct in the performance of their duties.
Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers or persons controlling Artwork and
Beyond pursuant to the foregoing provisions, we have been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is unenforceable.
Plan of distribution
Escrow of Offering Funds
400,000 shares will be offered on a "best efforts, all-or-none" basis.
If 400,000 shares are not sold within 60 days from the date hereof, all monies
received will be refunded to subscribers in full without interest thereon
(unless the offering is extended for an additional 30 days). Each subscriber
will receive from the Company confirmation of his subscription to purchase
shares of common stock with instructions to forward their funds to __________.
All proceeds raised in this offering will be deposited by noon of the next
business day following receipt, in an escrow account maintained at Chase
Manhattan Bank, 770 Lexington Avenue, New York, New York 10021-8182. All
subscriber checks will be made payable to "Chase Manhattan Bank as escrow agent
for Artwork and Beyond". During the period of escrow subscribers will not be
entitled to a refund of their subscription. If at the end of the offering
period, 400,000 shares have been sold, all funds in the escrow account will be
released to Artwork and Beyond.
Restrictions on Resale
Certain restrictions are applicable to the 420,000 shares of the
600,000 shares of our common stock offered for sale by the selling
securityholder in this prospectus. For a period of six months from the date of
the closing of this offering, an aggregate of 420,000 shares being offered by
the selling securityholder will not be eligible for resale. Such lock-up will
terminate upon the (a) expiration of such six month period, (b) the issuance by
the company for any reason of any additional shares of common stock, (c) mutual
agreement of the company and the selling securityholder and (d) request by the
company. See ("Certain Relationships and Related Transactions"). The sale in the
public market of such shares of common stock or the expectation of sales may
adversely affect the prevailing market price of our common stock.
Legal matters
The validity of the common stock offered hereby will be passed upon for
Artwork and Beyond by Berlack, Israels & Liberman LLP, New York, New York.
39
Experts
Certain of the financial statements of Artwork and Beyond included in
this prospectus and elsewhere in the registration statement, to the extent and
for the periods indicated in their reports, have been audited by Merdinger,
Fruchter, Rosen & Corso, P.C., independent certified public accountants, whose
reports thereon appear elsewhere herein and in the registration statement.
Available Information
We have filed with the Commission, Washington, D.C. 20549, a
Registration Statement on Form SB-2 under the Securities Act with respect to our
common stock offered hereby. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules to the registration statement. For further information with respect to
Artwork and Beyond and our common stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement. Statements contained in this prospectus concerning the
contents of any contract or any other document are not necessarily complete;
reference is made in each instance to copy of such contract or any other
document filed as an exhibit to the registration statement. Each such statement
is qualified in all respects by such reference to such exhibit. The registration
statement, including exhibits and schedules thereto, may be inspected without
charge at the Commission's principal office in Washington D.C., and copies of
all or any part thereof may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, 13th
Floor, New York, New York 10048 after payment of fees prescribed by the
Commission. The Commission also maintains a World Wide Web site which provides
online access to reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at the
address http://www.sec.gov.
You should rely only on the information contained in this prospectus.
We have not, authorized any other person to provide your with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not, making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this prospectus is accurate as of the date on
the front cover of this prospectus only. Our business, financial condition,
results of operations and prospects may have changed since that date.
40
ARTWORK AND BEYOND, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
F-1
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-3
BALANCE SHEET F-4
STATEMENT OF OPERATIONS F-5
STATEMENT OF STOCKHOLDERS' EQUITY F-6
STATEMENT OF CASH FLOWS F-7
NOTES TO FINANCIAL STATEMENTS F-8 to F-14
F-2
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF ARTWORK AND BEYOND, INC.:
We have audited the accompanying balance sheet of Artwork and Beyond, Inc. (A
Development Stage Company) as of December 31, 2000, and the related statements
of operations, stockholders' equity 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 generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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 Artwork and Beyond, Inc. as of
December 31, 2000, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
February 20, 2001
F-3
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
BALANCE SHEET
March 31, December 31,
2001 2000
---------------------- ------------------
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 525,481 $ 661,151
Escrow receivable 8,789 -
---------------------- ------------------
Total current assets 534,270 661,151
PROPERTY AND EQUIPMENT, net 26,257 27,779
---------------------- ------------------
Total assets $ 560,527 $ 688,930
====================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 84,471 $ 84,000
Notes payable - shareholder 23,063 23,259
---------------------- ------------------
Total current liabilities 107,534 107,259
---------------------- ------------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value;
1,000,000 shares authorized, no shares issued
and outstanding - -
Common stock, $0.001 par value;
20,000,000 shares authorized,
9,000,000 shares issued and outstanding 9,000 9,000
Additional paid-in capital 1,358,503 1,358,503
Deficit accumulated during
the development stage (914,510) (785,832)
---------------------- ------------------
Total stockholders' equity 452,993 581,671
---------------------- ------------------
Total liabilities and stockholders' equity $ 560,527 $ 688,930
====================== ==================
The accompanying notes are an integral part of these financial statements.
F-4
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
August 5, August 5,
1999 1999
Three Months Ended (inception) (inception)
March 31, Year Ended to to
------------------------------- December 31, December 31, March 31,
2001 2000 2000 1999 2001
-------------- -------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited)
Sales $ 53,723 $ - $ 19,113 $ - $ 72,836
Cost of sales 27,034 - - - 27,034
-------------- -------------- -------------- -------------- --------------
Gross profit 26,689 - 19,113 - 45,802
Selling, general and
administrative expenses 162,785 60,121 791,568 23,919 978,272
-------------- -------------- -------------- -------------- --------------
Loss from operations before
interest income and provision for
income taxes (136,096) (60,121) (772,455) (23,919) (932,470)
Interest income 7,418 - 10,542 - 17,960
-------------- -------------- -------------- -------------- --------------
Loss before provision for income
taxes (128,678) (60,121) (761,913) (23,919) (914,510)
Provision for income taxes - - - - -
-------------- -------------- -------------- -------------- --------------
Net loss $ (128,678) $ (60,121) $ (761,913) $ (23,919) $ (914,510)
============== ============== ============== ============== ==============
Loss per common share - basic and
diluted $ (.014) $ (.007) $ (0.09) $ (.005) $ (.12)
============== ============== ============== ============== ==============
Weighted average shares outstanding 9,000,000 7,583,504 8,721,594 4,124,289 7,583,504
============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements.
F-5
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Common Stock Additional During
-------------------------------- Paid-in Development
Shares Amount Capital Stage Total
----------------- -------------- --------------- -------------- ---------------
Balance, August 5, 1999 (inception) - $ - $ - $ - $ -
Issuance of common stock for cash
- - on December 1, 1999 3,791,752 3,792 26,208 - 30,000
- - on December 1, 1999 3,791,752 3,792 26,208 - 30,000
Net loss - - - (23,919) (23,919)
----------------- -------------- --------------- ------------------- ---------------
Balance, December 31, 1999 7,583,504 7,584 52,416 (23,919) 36,081
Conversion of note payable to common
stock at May 15, 2000 379,175 379 349,621 - 350,000
Issuance of common stock for cash
- - on September 30, 2000 704,185 704 649,296 - 650,000
- - on September 30, 2000 54,169 54 49,947 - 50,001
- - on September 30, 2000 54,169 54 49,947 - 50,001
- - on September 30, 2000 54,169 54 49,947 - 50,001
- - on September 30, 2000 56,876 57 52,443 - 52,500
Issuance of common stock to induce
participation - September 30, 2000 113,753 114 104,886 - 105,000
Net loss - - - (761,913) (761,913)
----------------- -------------- --------------- ------------------- ---------------
Balance, December 31, 2000 9,000,000 9,000 1,358,503 (785,832) 581,671
Net loss (unaudited) - - - (128,678) (128,678)
----------------- -------------- --------------- ------------------- ---------------
Balance, March 31, 2001 (unaudited) 9,000,000 $ 9,000 $ 1,358,503 $ (914,510) $ 452,993
================= ============== =============== =================== ===============
The accompanying notes are integral part of these financial statements.
F-6
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
August 5, August 5,
1999 1999
Three Months Ended (inception) (inception)
March 31, Year Ended to to
------------------------------- December 31, December 31, March 31,
2001 2000 2000 1999 2001
-------------- -------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (128,678) $ (60,121) $ (761,913) $ (23,919) $ (914,510)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 1,522 746 3,034 - 4,556
Common shares issued to
induce participation - 105,000 - 105,000
(Increase) in escrow receivable (8,789) - - - (8,789)
(Decrease) increase in:
Accrued expenses 471 3,566 84,000 - 84,471
-------------- -------------- -------------- ------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (135,474) (55,809) (569,879) (23,919) (729,272)
CASH FLOWS FROM INVESTING ACTIVITY
Purchase of property and equipment - (15,295) (30,813) - (30,813)
-------------- -------------- -------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable shareholder (196) - - - (194)
Proceeds from short-term note payable - 35,400 23,259 - 23,259
Proceeds from issuance of convertible
note - - 350,000 - 350,000
Issuance of common stock for cash - - 852,503 60,000 912,503
-------------- -------------- -------------- ------------- -------------
NET CASH USED IN PROVIDED BY
FINANCING ACTIVITIES (196) 35,400 1,225,762 60,000 1,285,566
-------------- -------------- -------------- ------------- -------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (135,670) (35,704) 625,070 36,081 525,481
CASH AND CASH EQUIVALENTS
- Beginning of Period 661,151 36,081 36,081 - -
-------------- -------------- -------------- ------------- -------------
CASH AND CASH EQUIVALENTS
- End of Period $ 525,481 $ 377 $ 661,151 $ 36,081 $ 525,481
============== ============== ============== ============= =============
CASH PAID DURING THE PERIOD FOR:
Interest Expense $ - $ - $ - $ - $ -
============== ============== ============== ============= =============
Income Taxes $ - $ - $ - $ - $ -
============== ============== ============== ============= =============
NON-CASH FINANCING ACTIVITY:
Conversion of note to common stock $ - $ - $ 350,000 $ - $ 350,000
============== ============== ============== ============= =============
The accompanying notes are an integral part of the financial statements.
F-7
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements include the accounts
of Artwork and Beyond, Inc. (the "Company"), a Delaware
corporation formed on August 5, 1999.
The Company conducts its operations from offices located in
Holbrook, Long Island, New York.
Unaudited Financial Information
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary
to present fairly its financial position as of March 31,
2001 and 2000, and the results of its operations and cash
flows for the three months ended March 31, 2001 and 2000.
These statements are condensed and therefore do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial
statements. The results of operations for the three months
ended March 31, 2001 and 2000 are not necessarily indicative
of the results to be expected for the full year.
Nature of Operations
The Company is currently a development-stage company under
the provisions of the Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards
("SFAS") No. 7.
The Company was formed for the purpose of providing a medium
for the purchase of artwork on the internet. The Company
will offer artwork through its website on the internet and
provide this artwork directly from the supplier (see Note
4). The Company will generate revenues by the sale of such
artwork and framing, and does not currently carry any
inventory. It is the Company's goal to become the dominant
provider in the charity art auction market and retail
market, both online and offline. It is anticipated that
operating revenue will accelerate during the second and/or
third quarter of the year 2001.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
Revenue Recognition
Revenue is recognized from sales when artwork is shipped.
Substantially all revenue is paid for prior to the artwork
being shipped.
F-8
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 MARCH 31, 2001
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with original maturities of three months or less
to be cash equivalents.
Concentration of Credit Risk
The Company places its cash in what it believes to be
credit-worthy financial institutions. However, cash balances
may exceed FDIC insured levels at various times during the
year.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents and accounts
payable approximates fair value due to the relatively short
maturity of these instruments.
Property and Equipment
Property and equipment are recorded at cost. Repairs and
maintenance costs are charged to operations as incurred.
Depreciation is computed using straight-line methods
calculated to amortize the cost of assets over their
estimated useful lives, generally three to seven years. Upon
retirement or other disposition of property and equipment,
the cost and related depreciation will be removed from the
accounts and the resulting gains or losses recorded.
Organization Costs
In accordance with American Institutes of Certified Public
Accountants' Statement of Position ("SOP") 98-5 "Reporting
on the Costs of Start-Up Activities", the Company expenses,
as incurred, costs related to organizational and start-up
activities.
Cost of Computer Software
In accordance with SOP 98-1, "Accounting for Costs of
Computer Software Developed or Obtained for Internal Use",
the Company expenses, as incurred, such related costs.
Advertising Costs
Advertising costs are expensed as incurred and included in
selling, general and administrative expenses. For the year
ended December 31, 2000 and thru the month ended March 31,
2001 advertising expense was approximated $1,500.
Income Taxes
Income taxes are provided for based on the liability method
of accounting pursuant to SFAS No. 109, "Accounting for
Income Taxes". Deferred income taxes, if any, are recorded
to reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities
and their financial reporting amounts at each year-end.
F-9
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Loss per share
The computation of basic earnings per share ("EPS") is
computed by dividing income available to common stockholders
by the weighted average number of outstanding common shares
during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period. The
computation of diluted EPS does not assume conversion,
exercise or contingent exercise of securities that would
have an anti-dilutive effect. At December 31, 2000 and March
31, 2001, the Company had 559,175 potentially dilutive
securities outstanding. On April 25, 2001 the Company
effected a 3.7917519 for 1 split of its common stock. All
share and per share amounts in the financial statements have
be restated to give retroactive effect to this stock split.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income", establishes
standards for the reporting and display of comprehensive
income and its components in the financial statements. The
items of other comprehensive income that are typically
required to be displayed are foreign currency items, minimum
pension liability adjustments, and unrealized gains and
losses on certain investments in debt and equity securities.
At December 31, 2000 and March 31, 2001, and for the periods
then ended, the Company had no items of other comprehensive
income and has, therefore, not presented a Statement of
Comprehensive Income.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
March 31, December 31,
2001 2000
----------- -----------
Equipment and Furniture $ 30,813 $ 30,813
Less: Accumulated Depreciation (4,556) (3,034)
----------- -----------
$ 26,257 $ 27,779
========== ==========
Depreciation expense for the twelve months ended December
31, 2000 is $3,034 and for the three months ended March 31,
2001 is $1,522.
F-10
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
NOTE 3 - INCOME TAXES
The components of the provision for income taxes for the
year ended December 31, 2000 are as follows:
2000
---------------
Current Tax Expense
U.S. Federal $ -
State -
--------------
Total Current -
--------------
Deferred Tax Expense
U.S. Federal -
State -
--------------
Total Deferred -
--------------
Total Tax Provision (Benefit) from
Continuing Operations $ -
=============
The reconciliation of the effective income tax rate to the
Federal statutory rate is as follows:
Federal Income Tax Rate 34.0%
Effect of Valuation Allowance (34.0)%
------------
Effective Income Tax Rate 0.0%
============
At December 31, 2000, the Company had net carryforward
losses of approximately $700,000. Because of the current
uncertainty of realizing the benefits of the tax
carryforward, a valuation allowance equal to the tax
benefits for deferred taxes has been established. The full
realization of the tax benefit associated with the
carryforward depends predominantly upon the Company's
ability to generate taxable income during the carryforward
period.
Deferred tax assets and liabilities reflect the net tax
effect of temporary differences between the carrying amount
of assets and liabilities for financial reporting purposes
and amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and
liabilities as of December 31, 2000 are as follows:
2000
-------------
Deferred Tax Assets
Loss Carryforwards $ -
Less: Valuation Allowance (-)
------------
Net Deferred Tax Assets $ -
============
Net operating loss carryforwards expire in 2020.
F-11
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
NOTE 4 - RELATED PARTY TRANSACTIONS
In November 1999, the Company entered into an agreement with
a related company (an officer, director and shareholder of
the Company owns this related company) whereby the Company
will purchase prints of works of art, framed and unframed,
exclusively from this related entity. The related entity has
agreed to supply such art at competitive terms, on an
exclusive basis to the Company for sale on the internet. The
agreement is for a seven-year term, but can be terminated on
180 days written notice by either party.
Additionally, the Company leases its office space from this
related company.
At December 31, 2000 and March 31, 2001, the Company is
obligated to a shareholder pursuant to a non-interest
bearing demand note for $23,259 and $23,063, respectively.
NOTE 5 - OPTIONS AND WARRANTS
a) Options
In January 2000, the Company adopted an incentive stock
option plan ("ISO") which provides for the issuance of
options to purchase 450,000 shares of common stock. The plan
was established to provide employee incentives.
The Company will use the intrinsic value method (APB Opinion
25) to account for its stock options granted to officers,
directors, and employees. Under this method, compensation
expense is recorded over the vesting period based on the
difference between the exercise price and quoted market
price on the date the options are granted.
ISOs may not be granted to an individual to the extent that
in the calendar year in which such ISOs first become
exercisable the shares subject to such ISOs have a fair
market value on the date of grant in excess of $100,000. No
option may be granted under the ISO after January 2010 and
no option may be outstanding for more than ten years after
its grant. Additionally, no option can be granted for more
than five years to a stockholder owning 10% or more of the
Company's outstanding common stock and such options must
have an exercise price of not less than 110% of the fair
market value on the date of the grant. To date, no options
have been granted pursuant to the ISO plan.
On September 30, 2000, the Company granted to an employee an
option to purchase 180,000 shares of common stock,
exercisable at $0.92 per share. The options vest one half on
November 15, 2000, and the balance on May 15, 2001, and
expire in September 2005. The exercise price equaled the
fair value of the stock on the date of grant and,
accordingly, the Company has not recorded any compensation
expense related to these options.
There were no stock option transactions during the initial
period ended December 31, 1999.
F-12
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
NOTE 5 - OPTIONS AND WARRANTS (Continued)
A summary of stock option transactions is as follows:
Year ended
December 31,
2000
------------
Outstanding, beginning -
Granted at an exercise price of $0.92 per share 180,000
--------
Outstanding, ending 180,000
========
Exercisable, ending 90,000
=========
The above number of options and exercise price reflect the
effect of the stock split described in Note 7.
The Company accounts for its stock option transactions under
the provisions of APB No. 25. The following pro forma
information is based on estimating the fair value of grants
based upon the provisions of SFAS No. 123. The fair value of
each option granted during the periods indicated has been
estimated as of the date of grant using the Black-Scholes
option pricing model with the following assumptions:
Risk free interest rate 5%
Life of the options 18 months
Expected dividend yield 0%
Expected volatility 0%
Weighted fair value of options granted $0.25
Accordingly, the Company's pro forma net loss and net loss
per share assuming compensation cost was determined under
SFAS No. 123 would have been the following:
Net loss $(788,163)
Net loss per basic share $ (0.09)
Weighted average option price per share
Granted $ 0.92
Exercised -
Cancelled -
Outstanding at end of period 0.92
Exercisable at end of period 0.92
Weighted average remaining life
of options outstanding 57 months
F-13
ARTWORK AND BEYOND, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND MARCH 31, 2001
NOTE 5 - OPTIONS AND WARRANTS (Continued)
b) Warrants
The Company has issued outstanding warrants to purchase
379,175 shares of common stock. The warrants are exercisable
on or before April 20, 2002 at an exercise price of $0.98
per share. The above number of warrants and exercise price
reflect the effect of the stock split described in Note 7.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company entered into a month-to-month lease for its
office space, at a monthly amount of $2,917 from a related
entity (see Note 4). Rental expense was $29,150 for the
twelve months ended December 31, 2000, and $12,399 for the
three months ended March 31, 2001.
The Company has an employment agreement with its chief
operating officer with a one-year term commencing January 3,
2000 at a $75,000 base salary. There is a one-year option
for 2001 at a base salary of $100,000, which the Company has
elected to not exercise. The agreement also has certain
bonus incentive clauses that call for maximum additional
compensation of $25,000 per year and additional incentives
in the form of stock options.
The Company entered into an agreement in March 2000 with an
entity whereby a fee is to be paid for general business
advice, structuring of transactions and introduction to
potential investors. Additionally, if such entity introduces
a potential acquisition target and such acquisition is
consummated, a fee of 1% of the transaction value will be
paid in stock and 1/2% of the transaction value in cash. In
the fourth quarter of 2000, the Company paid fees to this
entity of $73,150. Included in accrued expenses at December
31, 2000 and March 31, 2001, is $66,150, which will be paid
to the entity in the third quarter of 2001 with common
stock, at the fair market value when earned of $3.50.
NOTE 7 - SUBSEQUENT EVENT
In April 2001 the Company effected a stock split of its
common shares by issuing 3.7917519 newly issued shares of
$.001 par value common for each prior outstanding common
share. The split increased the Company's authorized $.001
par value common stock shares to 20,000,000.
F-14
- ----------------------------------------------------------- --------------------------------------------------------
You should rely only on the information contained
in this document. We have not authorized anyone to provide
you with information that is different. This document may
only be used where it is legal to sell these securities. The
information in this document may only be accurate on the
date of this document. Artwork and Beyond, Inc.
Additional risks and uncertainties not presently
known or that are currently deemed immaterial may also Distribution of 400,000 shares of
impair our business operations. The risks and common stock
uncertainties described in this document and other risks
and uncertainties which we may face in the future will
have a greater impact on those who purchase our common
stock. These purchasers will purchase our common stock at
the market price or at a privately negotiated price and _______________
will run the risk of losing their entire investment.
PROSPECTUS
---------------
_________, 2001
--------------------------------------------------------
The information in this prospectus is not complete and may be changed. These
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.
[Alternative page for Selling Securityholder prospectus]
PROSPECTUS Subject to Completion; dated ________, 2001
600,000 Shares of Common Stock
of
Artwork and Beyond, Inc.
We are registering 600,000 shares of our common stock for sale by
Biofarm, Inc. This shareholder is referred to throughout this prospectus as
"selling securityholder."
This individual who wishes to sell its shares of our common stock may
offer and sell its shares subsequent to the completion of the offering of the
shares of the Company. These sales may be conducted in the open market or in
privately negotiated transactions and at market prices, fixed prices or
negotiated prices. We will not receive any of the proceeds from the sales of
shares by the selling securityholder.
The shares of common stock being offered hereby will be subject to
certain restrictions. See "Risk Factors -- Restrictions on Resale" and "Plan of
Distribution -- Restrictions on Resale."
No public trading market for our common stock exists. We anticipate
that our common stock will initially be traded on the over-the-counter market
after this offering.
------------------------------------
Our principal executive offices are located at 761 Coates Avenue,
Holbrook, New York 11741. Our telephone number is (631) 471-0065.
------------------------------------
Our common stock being offered by this prospectus involves a high
degree of risk. You should read the "Risk Factors" section beginning on page 5
before you decide to purchase any common stock.
------------------------------------
Neither the Securities and Exchange Commission nor any state commission
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
The date of this Prospectus is ________, 2001
[Alternate page for Selling Securityholder prospectus]
The offering
Shares offered by Selling
Securityholder............................................ 600,000 shares of common stock.
Plan of distribution........................................ The offering of our shares of common stock
is being made by a shareholder of our
company who may wish to sell its shares.
Sales of our common stock may be made by
the selling securityholder in the open
market or in privately negotiated
transactions and at market prices, fixed
prices or negotiated prices. See "Risk
Factors-Restrictions on Resale"
Use of proceeds.............................................. Artwork and Beyond will not receive any
proceeds from the sale of shares owned by
a selling securityholder.
Concurrent offering
Shares offered by Artwork and Beyond......................... 400,000 shares of common stock.
Shares to be sold by Selling Securityholder.................. 600,000 shares of common stock.
Plan of distribution......................................... Artwork and Beyond will offer and sell
400,000 shares for cash at a price of
$1.50 per share.
Use of proceeds.............................................. Artwork and Beyond will receive the
proceeds to be derived from the sale of
an aggregate of 400,000 shares of its common
stock.
[Alternate page for Selling Securityholder prospectus]
Use of proceeds
This prospectus is part of a registration statement that permits the
shareholder of Artwork and Beyond who is identified in this prospectus to sell
its shares of Artwork and Beyond common stock in the open market or in privately
negotiated transactions. This shareholder is referred to throughout this
prospectus as the "selling securityholder". As such, Artwork and Beyond will not
receive any proceeds from this offering.
[Alternate page for Selling Securityholder prospectus]
Concurrent offering
The registration statement of which this prospectus is a part also
includes a prospectus with respect to the offering by Artwork and Beyond for
cash of 400,000 shares of Artwork and Beyond common stock. This distribution may
have a material adverse effect on the market price of the common stock offered
by the selling securityholder.
Plan of distribution
The common stock offered by this prospectus may be sold from time to
time directly by the selling securityholder. Alternatively, the selling
securityholder may from time to time offer those shares through underwriters,
brokers, dealers, agents or other intermediaries. The selling securityholder as
of the date of this prospectus has advised us that at that time there were no
underwriting or distribution arrangements entered into with respect to the
common stock offered hereby. The distribution of the common stock by the selling
securityholder may be effected in one or more transactions that may take place
on the OTC Electronic Bulletin Board (including one or more block transaction)
through customary brokerage channels, either through brokers acting as agents
for the selling securityholder, or through market makers, dealers or
underwriters acting as principals who may resell these shares on the OTC
Electronic Bulletin Board; in privately-negotiated sales; by a combination of
such methods; or by other means. These transactions may be effected at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at other negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the selling
securityholder in connection with sales of the common stock.
The selling securityholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling securityholder. The
selling securityholder also may sell shares short and redeliver the shares to
close out such short positions. The selling securityholder may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus.
The selling securityholder also may loan or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default the broker-dealer may sell the pledged shares pursuant to this
prospectus. Any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 promulgated under the Securities Act may be sold under Rule
144 rather than pursuant to this prospectus. The selling securityholder has
advised us that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of their
securities. There is no underwriter or coordinating broker acting in connection
with the proposed sale of shares by the selling securityholders.
Although the common stock covered by this prospectus is not currently
being underwritten, the selling securityholder or its underwriters, brokers,
dealers or other agents or other intermediaries that may participate with the
selling securityholder in any offering or distribution of common stock may be
deemed "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any profits realized or commissions received
by them may be deemed underwriting compensation thereunder.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), any person engaged in a
distribution of the common stock offered hereby may not simultaneously engage in
market making activities with respect to the common stock for a period of up to
five days preceding such distribution. The selling securityholder will be
subject to the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, including without limitation Regulation M,
which provisions may limit the timing of purchases and sales by the selling
securityholders.
We have advised the selling stockholders that during such time as they
may be engaged in a distribution of the shares, they are required to comply with
Regulation M under the Securities Exchange Act. With certain exceptions,
Regulation M prohibits any selling stockholder, any affiliated purchasers and
any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase, any security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases made
in order to stabilize the price of a security in connection with the
distribution of that security. The foregoing restrictions may affect the
marketability of the shares.
The selling securityholders are subject to the applicable provisions of
the Exchange Act, including, without limitation, Rules 10b-5 and Regulation M
thereunder. Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the common stock may not simultaneously
purchase such securities for a period beginning when such person becomes a
distribution participant and ending upon such person's completion of
participation in a distribution.
In addition, in connection with the transactions in the common stock,
we and the selling securityholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations under that Act, including,
without limitation, the Rules set forth above, and in so far as we and the
selling securityholders are distribution participants, Regulation M. These
restrictions may affect the marketability of the common stock. The selling
securityholders will pay all commissions and certain other expenses associated
with the sale of the common stock.
In order to comply with certain state securities laws, if applicable,
the common stock offered hereby will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the common stock
may not be sold unless they are registered or qualified for sale in such state,
or unless an exemption from registration or qualification is available and is
obtained.
All of the expenses of this offering are being paid for by the selling
securityholder. See "Certain Relationships and Related Transactions". However,
any brokerage or underwriting commissions and similar selling expenses, if any,
attributable to the sale of the common stock will be borne by the selling
securityholders.
We have agreed to indemnify certain of the selling securityholders
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments to which any of those securityholders may be
required to make in respect thereof.
[Alternate page for Selling Securityholder prospectus]
Selling Securityholder
All of the 600,000 shares of Artwork and Beyond common stock being
offered by this selling securityholder's prospectus are owned by and registered
in the name of Biofarm, Inc., a Delaware corporation whose address is 1244 Main
Street, Linfield, PA 19468. Biofarm does not own any other shares of Artwork and
Beyond and as a result after this offering is complete will own none of the
Company shares of common stock.
[Alternative page for Selling Securityholder prospectus]
- ----------------------------------------------------------- --------------------------------------------------------
You should rely only on the information contained
in this document. We have not authorized anyone to provide
you with information that is different. This document may
only be used where it is legal to sell these securities. The
information in this document may only be accurate on
the date of this document. ARTWORK AND BEYOND, INC.
Additional risks and uncertainties not presently
known or that are currently deemed immaterial may also 600,000 shares of
impair our business operations. The risks and common stock
uncertainties described in this document and other risks
and uncertainties which we may face in the future will
have a greater impact on those who purchase our common
stock from the Selling Securityholder. These purchasers
will purchase our common stock at the market price or at a _______________
privately negotiated price and will run the risk of losing
their entire investment. PROSPECTUS
----------------
-----------------
Table of contents
-----------------
Summary.................................................
Selected financial data.................................
Risk factors............................................
Use of proceeds.........................................
Dilution................................................
Concurrent offering.....................................
Plan of distribution....................................
Our business............................................
Management's discussion of financial
condition and results of operations................
Management.............................................. ___________, 2001
Security ownership of certain beneficial
owners and management..............................
Description of securities...............................
Legal matters...........................................
Experts.................................................
Disclosure of Commission's position on
Indemnification for Securities
Act liabilities....................................
Financial statements....................................
--------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law (the "GCL")
empowers a corporation to indemnify its directors and officers and to purchase
insurance with respect to liability arising out of the performance of their
duties as directors and officers. The GCL provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of stockholders or otherwise.
Article Sixth of our Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section 102
of the GCL. Our by-laws provide for indemnification of all persons whom it shall
have the power to indemnify pursuant to Section 145 of the GCL.
The effect of the foregoing is to require Artwork and Beyond to the
extent permitted by law to indemnify the officers and directors of Artwork and
Beyond for any claim arising against such persons in their official capacities
if such person acted in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons
controlling Artwork and Beyond pursuant to the foregoing provisions, we have
been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
We do not currently have any liability insurance coverage for its
officers and directors.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by
Biofarm, Inc. in connection with the sale of the securities being registered.
All amounts are estimates except the SEC registration fee:
SEC registration fee...........................................$375.00
Printing and engraving expenses.............................$10,000.00
Accounting fees and expenses................................$20,000.00
Legal fees and expenses.....................................$50,000.00
Transfer agent's fees and expenses...........................$5,000.00
Miscellaneous...............................................$10,000.00
Total..............................................$95,375.00
II-1
Item 26. Recent Sales of Unregistered Securities.
Set forth below is information regarding the issuance and sales of
Artwork and Beyond 's common stock without registration during the last three
years. Other than as set forth below, no such sales involved the use of an
underwriter and no commissions were paid in connection with the sale of any
securities.
During the fourth quarter of 1999, we issued 7,583,504 shares of
common stock to directors and officers of Artwork and Beyond, pursuant to a
private place memorandum which relied on the exemption afforded by Section 4(2)
of the Securities Act.
During the third quarter of 2000, we issued 1,416,496 shares of
common stock, at $.92 per share, to accredited individual investors pursuant to
the exemption provided by Section 4(2) of the Securities Act. We paid, $73,150
finders fee in connection with such transaction.
During the first quarter of 2001, we issued 600,000 shares of
common stock to Biofarm, Inc. pursuant to a subscription agreement and in
accordance with Section 4(2) of the Securities Act.
Item 27. Exhibits
Exhibit
Number Name
- ------- ----
3.1 Restated Certificate of Incorporation*
3.2 Bylaws*
5.1 Opinion of Berlack, Israels & Liberman LLP**
10.1 Supply Agreement, dated as of November 1, 1999, between Artwork and
Beyond and Ross Galleries.*
10.2 Lease Agreement, between Ross Galleries and Artwork and Beyond, Inc.
10.3 Subscription Agreement, dated January 22, 2001, between Artwork and
Beyond, Inc. and Biofarm, Inc.
10.4 Employment Agreement, dated December 17, 1999, between Artwork and
Beyond, Inc. and Jason Norbeto.
23.1 Consent of Merdinger, Fruchter, Rosen & Corso, P.C., independent
certified public accountants
23.2 Consent of Counsel (see Exhibit 5.1)
*Filed previously.
**To be filed by amendment.
II-2
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of
Securities Act.
(b) 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. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(B) if, in
the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(c) 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 the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the 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.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of New York, State of New
York, on June 22, 2001.
ARTWORK AND BEYOND, INC.
By: /s/ Howard Blum
-----------------------------------
Name: Howard Blum
Title: Chief Executive Officer and
Co-Chairman of the Board
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
NAME TITLE DATE
- ---- ----- ----
/s/ Howard Blum Chief Executive Officer, June 22, 2001
- --------------- Co-Chairman of the Board
Howard Blum
/s/ Jay Camina Co-Chairman of the Board June 22, 2001
- --------------
Jay Camina
/s/ J. R. LeShufy Director June 22, 2001
- -----------------
J. R. LeShufy
II-4