As Filed with the Securities and Exchange Commission on March 21, 2000
Registration No. 333-__________
===============================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLDWIDE DATA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 7389 2-3810724
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification No.)
(Address and telephone number of
principal executive offices and principal)
BRONSON B. CONRAD
President
36 TORONTO STREET, SUITE 250
TORONTO, ONTARIO
CANADA, M5C 2C5
(416) 214-6296
Copies of communications to:
STEPHEN M. DAVIS
HELLER EHRMAN WHITE & McAULIFFE LLP
711 FIFTH AVENUE
NEW YORK, NEW YORK 10022-3194
TELEPHONE: (212) 832-8300
TELECOPIER: (212) 832-3353
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional Common Stock for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box: []
CALCULATION OF REGISTRATION FEE
Title of each class of Proposed Proposed
securities to be Amount to be maximum offering maximum Amount of
registered registered (1) price per unit (2) offering price registration fee
- ---------------------- -------------- ------------------- ------------------ -----------------
Common Stock, par
value $.001 per share 1,188,155 shares $ 3.44 $ 4,087,253.20 $1,079.03
--------------------- -------------------- ------------------ -----------------
______________________
(1) Represents the estimated maximum number of shares of the Common Stock of
the Registrant which may be issued to the Selling Stockholders upon the
conversion of convertible debentures and the exercise of the warrants for
Common Stock. In the event of a stock split, stock dividend or similar
transaction involving the Common Stock of the Registrant, in order to
prevent dilution, the number of shares registered shall be automatically
increased to cover additional shares in accordance with Rule 416(a) under
the Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
calculated in accordance with Rule 457(c) on the basis of the average of
the bid and ask prices reported on the Over-the-Counter ("OTC") Electronic
Bulletin Board on March 15, 000.
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 THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)
OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING
PURSUANT TO SAID SECTION 8(A) MAY DETERMINE.
SUBJECT TO COMPLETION, DATED March 16, 2000
PROSPECTUS
WorldWide Data, Inc.
1,188,155 SHARES
COMMON STOCK
This Prospectus covers 1,188,155 shares of Common Stock of Worldwide
Data, Inc. held by a limited number of our stockholders named in this
Prospectus. We will receive none of the proceeds from this offering. On March
15, 2000, the closing price of our Common Stock, which is quoted on the
Electronic Bulletin Board under the symbol "WWDI" was $3.50 per share.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy our filings at the SEC's public reference rooms in Washington, D.C., New
York, New York or Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the Internet web site maintained by the SEC at
"http://www.sec.gov."
We have filed this Registration Statement on Form SB-1 (together with
all amendments and exhibits thereto, the Registration Statement) with the SEC
under the Securities Act with respect to the Common Stock offered hereby. This
Prospectus is part of that Registration Statement, and, as permitted by the
SEC's rules, does not contain all of the information set forth in the
Registration Statement. For further information with respect to us or our Common
Stock, you may refer to the Registration Statement and to the exhibits and
schedules filed as part of the Registration Statement. You can review a copy of
the Registration Statement and its exhibits and schedules at the public
reference room maintained by the SEC, and on the SEC's web site, as described
above.
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PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial information appearing elsewhere in this
Prospectus. This prospectus contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. When used in this prospectus, the words "believe," "could," "estimate,"
"expect," "intend," "may," "should," "will," and "would" and similar expressions
are intended to identify forward-looking statements. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. Such risks and uncertainties include
those discussed under the caption "Risk Factors". Unless the context requires
otherwise, all references herein to the "Company" or "Worldwide" mean Worldwide
Data, Inc. and its wholly-owned subsidiary, Worldwide Online Corp.
The Company
WorldWide was incorporated in Delaware in April 9, 1995 and owns all
of the Common Stock of WorldWide Online Corp., an Internet service provider
located in Toronto and organized under the laws of the Province of Ontario.
Through our wholly-owned subsidiary, we provide individuals and businesses an
array of e-business solutions and services that enable enterprises to capitalize
on the power of the Internet to reach and support customers and markets. Our
principal executive offices are located at 36 Toronto Street, Suite 250,
Toronto, Ontario M5C 2C5, and our telephone number is (416)-214-6416.
We have specifically tailored our service offerings for small or
growing enterprises seeking rapid delivery of cost-effective, high value-added,
comprehensive solutions for their e-business initiatives. Our services consist
of (i) e-Business Consulting, (ii) Internet Solutions, (iii) Application
Hosting, (iv) Providing Internet Service and (v) Customer Support. By offering
a seamless integration of these services, we believe that we are a full service
provider of e-business solutions for small or growing enterprises. We enable
our clients to overcome the obstacle described above by combining high-quality
cost-effective e-business services with application hosting and Internet access
to deliver sophisticated e-business solutions and services that otherwise might
be unavailable to them.
From our inception in 1995 through 1998, our operating activities
primarily consisted of providing Internet access to individuals and small and
growing enterprises. Since 1998, however, the focus of our business and the
significant portion of our revenues has been derived from our e-Business
Consulting, Internet Solutions, Application Hosting and Customer Support
services.
Our services enable us to develop, build and maintain e-commerce
websites for our clients, and create revenue-generating programs for our clients
that attract consumers to their respective sites. In addition, we complement
these offerings with a call center and related services that provide customer
service and support.
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The Offering
Common Stock offered by us None
Common Stock offered by the selling 1,188,155 shares
stockholders
Common Stock outstanding after the offering 4,851,255 shares
assuming the conversion of all convertible
debentures and the exercise of all warrants
Use of proceeds We will not receive proceeds
from the sale of the shares
offered hereby.
Summary Consolidated Financial Data
Year Ended December 31,
1999 1998
---- ----
(in thousands, except
percentages and share data)
Consolidated Statement of Operations Data:
Revenues
Online services $ 495 $ 338
Aircraft leasing 64 -
------------- -------------
559 338
Cost of sales 429 288
------------- -------------
Gross profit 130 50
Goodwill expense 104 78
Selling, general & administrative expenses 417 417
------------- -------------
Loss from operations (391) (445)
Other income & expenses
Gain from sale of aircraft 120 -
Interest income 23 2
------------- -------------
Income (loss) before taxes (248) (443)
Provision for income taxes - -
------------- -------------
Net income (loss) (248) (443)
============= =============
Basic and diluted loss per share (0.08) (0.20)
============= =============
Weighted average shares used in basic net
income per share calculation 3,026 2,246
============= =============
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RISK FACTORS
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER CAREFULLY THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS
PROSPECTUS, INCLUDING THE FINANCIAL STATEMENTS AND RELATED NOTES, BEFORE
DECIDING TO INVEST IN SHARES OF OUR COMMON STOCK. WHILE THESE ARE THE RISKS AND
UNCERTAINTIES WE BELIEVE ARE MOST IMPORTANT FOR YOU TO CONSIDER, YOU SHOULD KNOW
THAT THEY ARE NOT THE ONLY RISKS OR UNCERTAINTIES FACING US OR WHICH MAY
ADVERSELY AFFECT OUR BUSINESS. IF ANY OF THE FOLLOWING RISKS OR UNCERTAINTIES
ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS WOULD
LIKELY SUFFER. IN THAT EVENT, THE MARKET PRICE OF OUR COMMON STOCK COULD
DECLINE, AND YOU COULD LOSE ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON
STOCK.
RISKS RELATED TO OUR BUSINESS
We have a history of operating losses and may never be profitable.
We have been operating at a significant loss since our formation, and you
cannot assume that our plans will either materialize or prove successful. There
is no assurance that our operations will become profitable. In the event our
plans are unsuccessful, you may lose all or a substantial part of your
investment.
Our Future Success is Uncertain Because We Have Significantly Changed Our
Business.
Prior to 1998, we primarily acted as an Internet service provider and
provided limited strategic planning and Internet systems integration services.
From 1998 to 1999, we added application hosting to our service offerings and
substantially increased our capacity to provide e-Business Consulting and
Internet Solutions. Due to these recent significant changes, we are subject to
the risk that we will fail to implement our business model and strategy. This
risk is heightened because we are operating in the new and rapidly evolving e-
business solutions market. Our historical results of operations do not reflect
our new service offerings. Consequently, our historical operating results and
pro forma financial information may not give you an accurate indication of how
we will perform in the future.
We May Need Additional Capital, Which May Not Be Available To Us, And
Which, If Raised, Will Dilute Your Ownership Interest In Us.
We need to raise additional funds which we intend to do through public
or private equity or debt financings in order to:
. Support additional capital expenditures;
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. Take advantage of acquisition or expansion opportunities;
. Develop new services; or
. Address additional working capital needs.
If we cannot obtain financing on terms acceptable to us or at all, we
will be unable to complete some or all of these activities. As a result, we
could grow more slowly or stop growing. Any additional capital raised through
the sale of equity will dilute your ownership interest in us and may be on terms
that are unfavorable to holders of our Common Stock.
Our Business Will Suffer If Growing Enterprises Do Not Adopt And Accept
Application Hosting Services.
Our ability to increase revenues and achieve profitability depends,
among other things, on the adoption and acceptance of third-party application
hosting services by our target market of growing enterprises. Information
technology service providers, including us, only recently have begun to offer
third-party application hosting services. The market for these services has
only recently begun to develop and is evolving rapidly.
Our Business Will Suffer If Growing Enterprises Do Not Accept E-Business
Solutions.
Our ability to increase revenues and achieve profitability depends on
the widespread acceptance of e-business solutions by commercial users,
particularly growing enterprises. The market for e-business solutions is
relatively new and is undergoing significant change. The acceptance and growth
of e-business solutions will be limited if the Internet does not prove to be a
viable commercial market.
We Rely On Key Employees Whose Absence Could Adversely Impact Our Ability
To Execute Our Business Strategy.
Our future success will depend in large part on our ability to
attract, motivate and retain highly qualified employees. Competition for these
employees is intense and the process of locating technical and management
personnel with the combination of skills and attributes required to execute our
business strategy is often lengthy. Once these employees are hired, there can
still be intense competition for their services from other businesses, including
other start-up or Internet-related businesses. If we are successful in
implementing our business strategy, additional strain will be placed on our
managerial, operating, financial and other resources. In addition, we are
highly dependent upon the experience, abilities and continued efforts of our
senior management, especially Romeo Colacitti, our Chief Executive Officer. We
do not presently maintain "key man" life insurance with respect to the members
of our senior management. Our inability to attract key personnel or the loss of
the services of one or more of the key members of our senior management,
including Mr. Colacitti, could have a material adverse impact on our business,
financial condition or results of operations. The Company has not entered into
an employment contract with Mr. Colacitti or any other Company employee.
We Have Limited Experience In Marketing Our Services And Limited Marketing
And Customer Support Resources.
Our success depends to a significant degree on our ability to
continually replace subscribers who terminate our services and attract and
retain new subscribers. We have limited marketing experience and limited
marketing, customer support and other resources. Full-scale marketing of our
services to individuals and small businesses may require us to rely on third
party distribution channels, such as retail stores, catalogs, book publishers
and computer hardware and software vendors. We may not be able to develop or
maintain relationships with these parties. Our business plan will also require
us to expand our customer service and support capabilities in order to satisfy
increasing customer demands. We may not be able to successfully expand our
customer service or support capabilities, and our marketing efforts may not
result in initial or continued acceptance for our Internet access services.
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We May Lose Customers If We Are Unable To Respond To Technological Change
In The Industry.
The market for business Internet service is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging nature of these products and services and their
rapid evolution will require that we continually improve the performance,
features and reliability of our system, particularly in response to our
competition. We can provide no assurance that we will be successful in
responding quickly, cost effectively or sufficiently to these developments. In
addition, we may be required to make substantial expenditures in order to adapt
to new Internet technologies or standards. These expenditures could have a
material adverse effect on our business, financial condition or results of
operations.
We May Lose Customers Or Incur Significant Expenses As A Result Of Security
Breaches Of Our Network.
Despite our implementation of security measures, our networks may be
vulnerable to unauthorized access, computer viruses and other disruptive
problems. Internet service providers and online service providers have in the
past experienced, and may in the future experience, interruptions in service as
a result of the accidental or intentional actions of Internet users, current and
former employees or others. A person gaining unauthorized access to our network
may be able to view and download confidential information stored on our systems
or the systems of our subscribers. We could be found liable to our subscribers
for unauthorized access and we may lose potential subscribers if they perceive
our system to be unsafe. Although we have implemented industry standard security
measures, similar measures have been circumvented in the past, and we can
provide no assurance that measures we implement will not be circumvented in the
future. Eliminating computer viruses and alleviating other security problems
may require interruptions, delays or cessation of our services, which could have
a material adverse effect on our business, financial condition or results of
operations.
We Plan To Expand Rapidly; If We Cannot Manage Our Growth Successfully, Our
Growth May Slow Or Stop.
Since January 1999, we have expanded our operations. Our growth has
placed, and will continue to place, a significant strain on our management,
operating and financial systems, and sales, marketing and administrative
resources. If we cannot manage our expanding operations, we may not be able to
continue to grow or we may grow at a slower pace. Furthermore, our operating
costs may escalate faster than planned. In order to manage our growth
successfully we must:
. Improve our management, financial and information systems and
controls;
. Expand, train and manage our employee base effectively; and
. Enlarge our infrastructure for application hosting services.
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Our Quarterly Revenues And Operating Results Are Likely To Vary Which May
Cause The Market Price Of Our Common Stock To Decline.
Our quarterly revenues and operating results are volatile and
difficult to predict. Our quarterly operating results have varied in the past
and are likely to vary significantly from quarter to quarter in the future. It
is likely that in some future quarter or quarters our operating results will be
below the expectations of public market investors. If so, the market price of
our Common Stock may decline significantly.
Factors that may cause our results to fluctuate include:
. The amount and timing of demand by our clients for e-business
solution services;
. Our ability to obtain new and follow-on client engagements;
. The number, size and scope of our projects;
. Cancellations or reductions in the scope of major consulting and
systems integration projects;
. Our ability to enter into multiyear contracts with application
hosting clients;
. Cancellations of month-to-month application hosting contracts;
. The length of the sales cycle associated with our service
offerings;
. The introduction of new services by us or our competitors;
. Changes in our pricing policies or those of our competitors;
. Our ability to attract, train and retain skilled personnel in all
areas of our business; and
. Our ability to manage costs, including personnel costs and support
services costs.
We derive a substantial portion of our revenues from providing
professional services. We generally recognize revenues as we provide services.
Personnel and related costs constitute the substantial majority of our operating
expenses. Because we establish the levels of these expenses in advance of any
particular quarter, underutilization of our professional services employees may
cause significant reductions in our operating results for a particular quarter.
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Our Growth Could Be Limited if We Are Unable to Attract and Retain
Qualified Personnel.
We believe that our success depends largely on our ability to attract
and retain highly skilled technical, consulting and managerial personnel. We
may not be able to hire or retain the necessary personnel to implement our
business strategy. In addition, we may need to pay higher compensation for
employees than we currently expect. Individuals with e-business solutions
skills, particularly those with the significant experience which we generally
require, are in very short supply. Competition to hire from this limited pool is
intense.
We May Lose Money On Fixed-Fee Contracts.
We derive a portion of our revenues from fixed-fee contracts. If we
misjudge the time and resources necessary to complete a project, we may incur a
loss in connection with the project. This risk is heightened because we work
with complex technologies in compressed time frames.
Our Failure To Meet Client Expectations Or Deliver Error-Free Services
Could Result In Losses And Negative Publicity.
Many of our engagements involve information technology solutions that
are critical to our clients' businesses. Any defects or errors in these
solutions or failure to meet clients' specifications or expectations could
result in:
. Delayed or lost revenues due to adverse client reaction;
. Requirements to provide additional services to a client at no
charge;
. Refunds of monthly application hosting fees for failure to meet
service level obligations;
. Negative publicity about us and our services, which could adversely
affect our ability to attract or retain clients; and
. Claims for substantial damages against us, regardless of our
responsibility for such failure, which may not be covered by our
insurance policies and which may not be limited by the contractual
terms of our engagement.
We Generate A Significant Portion Of Our Revenues From Services Related To
Packaged Software Applications Of A Limited Number Of Vendors; We Would
Experience A Reduction In Revenues If Any Of Those Vendors Cease Doing
Business With Us.
We derive a significant portion of our revenues from projects in which
we customize, implement or host packaged software applications developed by
third parties. We do not have contractual arrangements with any of these
software vendors. As a result, those software vendors with whom we do not have
contractual arrangements can cease making their
9
products available to us at their discretion. Even in the case of software
vendors with whom we do have contractual arrangements, those arrangements are
either terminable at will by either party or are for terms of one year or less.
In addition, these software vendors may choose to compete against us in
providing strategic consulting, systems integration or application hosting
services. Moreover, our success is dependent upon the continued popularity of
the product offerings of these vendors and on our ability to establish
relationships with new vendors in the future. If we are unable to obtain
packaged applications from these or comparable vendors or, if our vendors choose
to compete with us or the popularity of their products declines, our business
may be adversely affected.
Our Success Is Dependent Upon Pricing Of Our Services And Obtaining
Customers As An Internet Service Provider.
Because we provide commercial Internet subscription services, our
success in this market sector depends upon the willingness of subscribers to pay
the installation costs and monthly fees of our services. We cannot predict
whether demand for our services will materialize at the prices we expect to
charge or whether the market will accept prices we may set. Our failure to
achieve or sustain desired pricing levels or to obtain a sufficient number of
subscribers for our services could have a material adverse effect on our
business, financial condition or results of operations. Our ability to attract
subscribers and generate future revenues will be dependent on a number of
factors, many of which are beyond our control. We can provide no assurance that
we will be able to increase our subscriber base. Because of these variables, we
are unable to accurately forecast our revenues.
Our Markets Are Highly Competitive And Our Failure To Compete Successfully
Will Limit Our Ability To Retain And Increase Our Market Share.
Our markets are new, rapidly evolving and highly competitive. We
expect this competition to persist and intensify in the future. Our failure to
maintain and enhance our competitive position will limit our ability to maintain
and increase our market share, which would result in serious harm to our
business. Many of our competitors are substantially larger than we are, and have
substantially greater financial, infrastructure and personnel resources than we
have. Furthermore, many of our competitors have well established, large and
experienced marketing and sales capabilities and greater name recognition than
we have. As a result, our competitors may be in a stronger position to respond
quickly to new or emerging technologies and changes in client requirements. They
may also develop and promote their services more effectively than we do.
Moreover, barriers to entry, particularly in the strategic consulting and
systems integration markets, are low. We therefore expect additional competitors
to enter these markets.
Intellectual Property Infringement Claims Against Us, Even Without Merit,
Could Cost A Significant Amount Of Money To Defend And May Divert
Management's Attention.
As the number of e-business applications in our target market
increases and the functionality of these applications overlap, we may become
subject to infringement claims. We cannot be certain that our services, the
solutions that we deliver or the software used in our solutions do not or will
not infringe valid patents, copyrights or other intellectual property rights
held by third parties. If there is infringement, we could be liable for
substantial damages. Any infringement claims, even if without merit, can be
time consuming and expensive to defend. They may divert management's attention
and resources and could cause service implementation delays. They also could
require us to enter into costly royalty or licensing agreements.
We Lack Effective Methods For Protecting Our Proprietary Information.
We have no software registered copyrights or patents or patent
applications pending. We do not have any proprietary applications software. We
rely or intend to rely on a combination of copyright and trademark laws, trade
secrets, software security measures, license agreements and nondisclosure
agreements to protect our proprietary information. It may be possible for
unauthorized third parties to copy aspects of, or otherwise obtain and use, our
proprietary information without authorization. We employ confidentiality
agreements with our employees and license agreements with our customers, but
these agreements may not provide meaningful protection of our proprietary
information in the event of any unauthorized use or disclosure of such
information.
Changes In Regulations And Legislation May Increase Our Liability, Our
Expenses And Competition For Our Services.
Recently enacted federal, state and local legislation aimed at
limiting the use of the Internet to transmit certain content and materials could
result in significant potential liability to Internet service providers for
information disseminated through their systems. The adoption or strict
enforcement of these or any other future laws or regulations could increase our
cost of doing business. The application of existing laws governing issues such
as property ownership, libel and personal privacy to the Internet is uncertain.
Any new legislation or regulation or the clarification of the application of
existing laws and regulations to the Internet could have an adverse effect on
our business and prospects. Changes in the regulatory environment relating to
the Internet connectivity industry, including regulatory changes which directly
or indirectly affect telecommunication costs, could increase the likelihood or
scope of competition from local and regional telephone companies or others.
Our Business May Suffer If Growth In The Use Of The Internet Declines.
Our business is dependent upon continued growth in the use of the
Internet by our clients, prospective clients and their customers and suppliers.
If the number of users on the Internet does not increase and commerce over the
Internet does not become more accepted and widespread, demand for our services
may decrease and, as a result, our revenues would decline. Factors that may
affect Internet usage or electronic commerce adoption include:
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. Actual or perceived lack of security of information;
. Lack of access and ease of use;
. Congestion of Internet traffic;
. Inconsistent quality of service;
. Increases in access costs to the Internet;
. Excessive governmental regulation;
. Uncertainty regarding intellectual property ownership;
. Reluctance to adopt new business methods; and
. Costs associated with the obsolescence of existing infrastructure.
We May Incur Expenses Or Suffer A Loss Of Business If Our Network Fails.
Our success will depend in part upon our ability to support a complex
network infrastructure and avoid damage from fires, earthquakes, floods, power
losses, telecommunications failures and similar events. The occurrence of a
natural disaster or other unanticipated problems at our network operations
center could cause interruptions in our services. Any damage or failure that
causes interruptions in our operations could have a material adverse effect on
our business, financial condition or results of operations.
We May Incur Liability Related To Our Network Technology Or The Information
Or Content On Our Network.
We may face liability under federal, state, provincial or foreign laws
for defamation, copyright, trademark or patent infringement, negligence,
obscenity or other claims related to the information or data on our network or
the technology used in our network. This potential liability may require us to
expend substantial resources or discontinue some of our services. Although we
carry general liability insurance, our insurance may not cover or fully
indemnify us for all liability that we may incur. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on our business, financial condition or results
of operations.
The Findings Of An Inquiry Into The Trading Of Our Common Stock, by the
NASD Regulation, Inc., Which Commenced In January 1999 Could Adversely
Impact The Company's Reputation And The Price Of The Company's Common
Stock.
In January 1999, NASD Regulation, Inc. commenced an inquiry into the
trading of our Common Stock, and requested that we provide the NASD Regulation,
Inc. with information to assist them in the inquiry. The Company has cooperated
fully with NASD Regulation, Inc. The NASD Regulation, Inc.'s inquiry could
adversely impact our reputation and the price of the Company's Common Stock. We
can neither predict the results of the NASD Regulation, Inc.'s inquiry nor its
impact on the Company and the market price of our Common Stock.
Investors Will Have Difficult in Enforcing Civil Liabilities.
We are located in, and our officers and directors are residents of,
Canada and all of our assets are located in Canada. Accordingly, it may be
difficult for investors to effect service of process within the United States
upon non-resident officers and directors, or to enforce against them judgments
obtained in the United States courts predicated upon the civil liability
provision of the Securities Act or state securities laws. We have been advised
by our Canadian legal counsel, Gardiner Roberts of Toronto, Ontario, that there
is doubt as to the enforceability in Canada against the us or against any of our
director, controlling persons, officers or the experts named herein, who are not
residents of the United States, in original actions or in actions for
enforcement of judgments of U.S. courts, of liabilities predicated solely upon
U.S. federal securities laws. If investors have questions with regard to these
issues, they should seek the advice of their individual counsel. We have also
been informed by our Canadian legal counsel, Gardiner Roberts that, pursuant to
the Currency Act (Canada), a judgment by a court in any Province of Canada may
only be awarded in Canadian currency. Pursuant to the provision of the
11
Courts of Justice Act (Ontario), however, a court in the Province of Ontario
shall give effect to the manner of conversion to Canadian currency of an amount
in a foreign currency, where such manner of conversion is provided for in an
obligation enforceable in Ontario.
Investors May Not be Able to Secure Foreign Enforcement of Civil
Liabilities Based on Securities Claims Against Our Management.
All of our officers and our director are residents of Canada.
Consequently, it may be difficult for United States investors to effect service
of process within the United States upon those directors or officers who are
not residents of the United States, or to realize in the United States upon
judgments of United States courts predicated upon civil liabilities under the
United States Securities Exchange Act of 1934, as amended. A judgment of a
U.S. court predicated solely upon such civil liabilities would probably be
enforceable in Canada by a Canadian court if the U.S. court in which the
judgment was obtained had jurisdiction, as determined by the Canadian court, in
the matter. There is substantial doubt whether an original action could be
brought successfully in Canada against any of such persons or our Canadian
subsidiary predicated solely upon such civil liabilities.
RISKS RELATED TO THIS OFFERING
Our Shares Of Common Stock Represent A Highly Speculative Investment.
We have been operating at a loss since our formation, and you cannot
assume that our plans will either materialize or prove successful. There is no
assurance that our operations will become profitable. In the event our plans are
unsuccessful, you may lose all or a substantial part of your investment.
Our Stock Price Could Be Volatile, Which Could Result In Substantial Losses
For Investors Purchasing Shares In This Offering
The trading price of our Common Stock is likely to be volatile. The
stock market in general, and the market for technology and Internet-related
companies in particular, has
12
experienced extreme volatility. This volatility has often been unrelated to the
operating performance of particular companies. In addition, trading in Common
Stock on the Electronic Bulletin Board is also volatile and episodic. We cannot
be sure that an active public market for our Common Stock will develop or
continue. Prices for our Common Stock will be determined in the marketplace and
may be influenced by many factors, including variations in our financial
results, changes in earnings estimates by industry research analysts, investors'
perceptions of us and general economic, industry and market conditions.
Management May Invest Or Spend The Proceeds Of This Offering In Ways With
Which You May Disagree.
Our management will retain broad discretion to allocate the proceeds
of this offering. Management's failure to apply these funds effectively could
have an adverse effect on our ability to implement our strategy.
Our Stock Price Could Be Adversely Affected By Shares Becoming Available
For Sale.
Sales of a substantial number of shares of our Common Stock in the
public market after this offering could depress the market price of our Common
Stock and could impair our ability to raise capital through the sale of
additional equity securities.
13
Issuance Of Preferred Stock May Adversely Affect Holders Of Our Common
Stock.
Our Sole Director has the authority, without any further vote or
action by our shareholders, to issue up to 10,000 shares of preferred stock. The
issuance of preferred stock by our Board could adversely affect the rights of
the holders of our Common Stock. An issuance of preferred stock could result in
a class of outstanding securities that would have preferences with respect to
voting rights and dividends and in liquidation over the Common Stock, and could,
upon conversion or otherwise, have all of the rights of our Common Stock. Our
Sole Director's authority to issue preferred stock could discourage potential
takeover attempts and could delay or prevent a change in control through merger,
tender offer, proxy contest or otherwise by making these attempts more difficult
or more costly to achieve.
As Sole Director, Mr. Conrad will not have the benefit of other
directors' views and input. Mr. Bronson Conrad is presently our sole director,
which means that Mr. Conrad alone has the authority to approve all transactions
by us that require director approval. As sole director, Mr. Conrad will not
have the benefit of views or experience of other directors which may adversely
affect his ability to make informed decisions on our behalf.
We Presently Depend On One Supplier To Provide Us With Internet Access
Through Leased Telecommunications Lines, But We Have Not Entered Into An
Interconnect Agreement With This Supplier.
If this supplier increases the rates it charges us, it could
materially adversely affect our operating margins. If our relationship with this
supplier terminates or if we otherwise fail to obtain continuing access to
telecommunications networks on a cost-effective and continuous basis, we could
be required to significantly curtail or cease our operations. Our operations
require our points-of-presence and third-party telecommunications networks to
operate on a continuous basis. Any service interruptions or equipment failures
with our points-of-presence or third-party telecommunications networks would
diminish subscriber confidence and adversely affect our business operations and
reputation.
14
Our Common Stock May Be Difficult To Resell And You May Not Be Able To
Resell Shares For More Than You Paid
Before 1996, there was no established public trading market for our
Common Stock and the active public market for our Common Stock may not be
sustained. Trading in our Common Stock is episodic. You may not be able to
resell your shares at or above the price you pay for them due to a number of
factors, including:
. actual or anticipated fluctuations in our operating results;
15
. changes in expectations as to our future financial performance or
changes in financial estimates of securities analysts;
. announcements of technological innovations by our existing or
future competitors;
. conditions and trends in the Internet services and technology
industries;
. departures of key personnel;
. the operating and stock price performance of other comparable
companies; and
. general market conditions.
The stock market in general, and the stocks of Internet companies in
particular, have recently experienced extreme price and volume fluctuations that
are often unrelated or disproportionate to operating performance. These broad
market and industry fluctuations may adversely affect the price of our Common
Stock. After periods of volatility in the price of a company's stock,
securities class action litigation has often been filed. Such litigation may be
filed against us. Such litigation could result in substantial costs and divert
management's attention and resources. Any adverse rulings in such litigation
could subject us to significant liabilities.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
substantial risks and uncertainties. In some cases you can identify these
statements by forward-looking words such as," "believe," "could," "estimate,"
"expect," "intend," "may," "should," "will," and "would" or similar words. You
should read statements that contain these words carefully because they discuss
our future expectations, contain projections of our future results of operations
or of our financial position or state other "forward-looking" information. We
believe that it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are not able to
accurately predict or control. The factors listed above in the section captioned
"Risk Factors," as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our Common Stock, you should be aware that the
occurrence of the events described in these risk factors and elsewhere in this
prospectus could have an adverse effect on our business, results of operations
and financial position.
16
USE OF PROCEEDS
We will not receive any proceeds when selling stockholders sell shares
of Common Stock under this prospectus. We have received proceeds from the sale
of the convertible debentures and may receive proceeds from the exercise of the
warrants, which if required will be added to working capital.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Market Information Market for Common Equity and Related Stockholder
Matters.
Since 1997, our Common Stock has traded on the Over-the-Counter
Electronic Bulletin Board maintained by the National Association of Securities
Dealers on a limited and sporadic basis under the symbol "WWDI". Before that
date, there was no established public trading market for our Common Stock.
There is no assurance that the Common Stock will continue to be quoted or that
there will be any liquidity for our Common Stock. Trading in our Common Stock
is episodic. The following table sets forth the range of high and low bid
quotations for our Common Stock on the Over-the-Counter Electronic Bulletin
Board for each quarter of 1997, 1998 and 1999 and the first quarter of 2000.
- ------------------------------------------------------------------------------
Year/Quarter Low Bid $ High Bid $
- ------------------------------------------------------------------------------
1st Qtr. 1997 .16 .38
- ------------------------------------------------------------------------------
2nd Qtr. 1997 .16 .38
- ------------------------------------------------------------------------------
3rd Qtr. 1997 .13 .91
- ------------------------------------------------------------------------------
4th Qtr. 1997 .09 .25
- ------------------------------------------------------------------------------
1st Qtr. 1998 1.50 7.00
- ------------------------------------------------------------------------------
2nd Qtr. 1998 7.25 9.25
- ------------------------------------------------------------------------------
3rd Qtr. 1998 4.38 7.03
- ------------------------------------------------------------------------------
4th Qtr. 1998 6.63 8.25
- ------------------------------------------------------------------------------
1st Qtr. 1999 6.00 7.50
- ------------------------------------------------------------------------------
2nd Qtr. 1999 4.63 5.50
- ------------------------------------------------------------------------------
3rd Qtr. 1999 2.50 3.88
- ------------------------------------------------------------------------------
4th Qtr. 1999 3.00 3.13
- ------------------------------------------------------------------------------
The high and low information was obtained from Track Data, a fee-based
provider of financial information.
In January 1999, NASD Regulation, Inc. commenced an inquiry with
respect to trading in our Common Stock and has requested information from us.
We have fully cooperated with NASD Regulation, Inc. in providing such
information and responding to its inquiries.
17
Dividends
Since inception, we have not paid or declared any cash dividends on
our Common Stock. Our Sole Director does not currently intend to pay any cash
dividends on our Common Stock in the future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We are a Delaware corporation and incorporated in 1995. In 1998, we
acquired all of the Common Stock of WorldWide Online Corp., an Internet Service
provider located in Toronto, Ontario and organized under the laws of the
Province of Ontario.
We are a full service provider of e-business solutions that allow
growing enterprises to capitalize on the power of the Internet to reach and
support customers and markets. Our five divisions consist of e-Business
Consulting, Internet solutions, Providing Internet Service and Customer Support
and Application Hosting. From our inception in 1992 through 1998, our operating
activities primarily consisted of providing Internet access to individuals and
small business in our capacity as an Internet Service Provider (ISP). Prior to
1998, we derived no or limited revenues from application hosting, e-Business
consulting or Internet Solution services. We believe, however, that application
hosting e-Business Consulting and Internet Solutions Services will account for a
significantly greater portion of our total revenues in the future.
Historically, we have offered our services to clients primarily under
time and materials contracts. For these projects, we recognize revenues based
on the number of hours worked by consultants at a rate per hour agreed upon with
our clients. We have also performed some services under fixed-fee contracts.
We recognize revenues from fixed-fee contracts on a percentage of completion
method based on project hours worked.
We expect that the portion of our revenues attributable to fixed-fee
contracts will increase for 1999 and in the future.
Due to our use of fixed-fee contracts, our operating results may be
affected adversely by inaccurate estimates of costs required to complete
projects. Therefore, we employ a series of project review processes designed to
help provide accurate project cost and completion estimates, including a
detailed review at the end of each specified reporting period to determine
project percentage of completion to date.
We generally derive our initial pricing for a contract from our
internal cost and fixed-fee pricing model. This model helps our professionals
estimate pricing based on the scope of work and materials required. The model
also takes into account project complexity and technical risks.
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We seek to mitigate our risks under fixed-fee contracts by providing
fixed-fee quotes for discrete phases of each project. Using this approach, we
are able to price more accurately the next phase of the engagement by virtue of
having greater knowledge of the client's needs and the project's complexity. We
reflect any losses on projects in process in the period in which they become
known.
We typically receive an advance payment from our strategy consulting
services clients upon contract signing, with additional payments required upon
our attainment of project milestones. Deferred revenues consist principally of
these advance payments. We recognize those payments upon performance of
services.
We price our application hosting contracts on a fixed-fee basis. We
recognize revenues from these contracts as services are completed each month.
In addition, we charge our application hosting clients a one time set-up fee,
which we recognize when set-up is complete. Pricing varies for each client
based on the prospective application to be hosted. Factors which determine
pricing generally include telecommunications bandwidth required, physical space
requirements in our leased hosting facilities and the technological complexity
of supporting the hosted application.
To date, we have depended upon a few clients for the majority of our
revenues. This dependence on a small number of clients is primarily
attributable to the relatively limited range of services that we offered from
1995-1998. We expect our reliance on a small number of clients to decrease due
to our addition of application hosting capabilities and the continued growth of
our e-Business Consulting and Internet Solutions Services.
We believe that we have achieved a number of important accomplishments
since making the strategic decision in 1998 to expand our service offerings.
These accomplishments include:
. application hosting
. increased hiring
. e-Business Solutions
. increased customer support
We hope to build on these accomplishments to become the leading full
service provider of business-to-business e-business solutions that enable
growing enterprises to increase their revenues and market share. We are seeking
to increase revenues in the near term by continuing to:
. Increase our sales and marketing efforts;
. Expand our professional staff; and
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. Add to our existing application hosting infrastructure to
increase our capacity to provide application hosting
services.
We will need to make significant expenditures in connection with all
of these activities. In particular, expanding our application hosting capacity
involves capital expenditures for equipment and software as well as costs for
leasing facilities to house that equipment. These capital expenditures will
result in significant depreciation and amortization expenses.
Our expense items include project personnel costs, sales and marketing
expenses and general and administrative expenses:
. Project personnel costs consist of payroll and payroll-
related expenses for personnel dedicated to client
assignments;
. Sales and marketing expenses consist primarily of salaries
(including sales commissions), consulting fees, trade show
expenses, advertising and the cost of marketing literature;
and
. General and administrative expenses consist primarily of
administrative salaries, salaries, fees for professional
services, and other operating costs, such as rent.
Our revenues in the past were generated by the Company in its capacity
as an Internet Service Provider providing strategy and systems integration
solutions services. We developed and began implementation of our current
strategy to become a leading full service provider of Internet solutions for
businesses in late 1998. We began recognizing revenues from these services in
the first quarter of 1999. Because we are increasing our marketing and sales
strategy initiatives and are adding to our application hosting infrastructure,
we expect our revenue streams to increase.
Results of Operations
Year Ended December 31, 1999 as compared to Year Ended December 31, 1998
The Company had net sales from online services of $495,000 for the year
ended December 31, 1999 as compared to $338,000 for the year ended December 31,
1998. The increase of $157,000 (46%) is attributed to the change in business mix
from internet connection service to web page design maintenance and e business
consulting.
Cost of sales for on-line services increased during the year ended
December 31, 1999 to $279,000 from $222,000 for the year ended December 31,
1998. The increase of $57,000 (26%) is attributed to an increase in personnel
costs due to the increased sales.
Cost of sales for aircraft leasing increased to $151,000 for the year
ended December 31, 1999 from $66,000 for the year ended December 31, 1998. The
net increase of $85,000 (129%) is attributable to the start of leasing
operations. However, the company recorded no depreciation on the aircraft during
1999 due to its sale.
Selling general and administrative expenses remained approximately the
same at $417,000 for 1999 and 1998 as the company only had an increase in those
costs related to sales.
Year Ended December 31, 1999 as Compared to December 31, 1997
The Company had net sales of $338,000 for the year ended December 31, 1998
as compared to $332,000 for the year ended December 31, 1997. The increase of
$6,000 (1.8%) is attributable to increased internet usage by customers. There
were no sales from aircraft leasing.
Cost of sales of online services increased to $222,000 for the year ended
December 31, 1998 from $196,000 for the year ended December 31, 1997 the
increase of $26,000 (13%) is attributable to higher personnel costs.
Costs of sales for aircraft leasing during 1998 was $66,000. Although the
company had no related sales the company recorded $38,000 in depreciation
expense and incurred $28,000 in maintenance and repair expense on the newly
acquired aircraft.
Selling general and administrative expenses increased to $417,000 from
$ for the year ended December 31, 1998 as compared to 1997, an increase of
$248,000 (46%). The net increase is attributable to goodwill of $78,000,
aircraft depreciation and maintenance of $70,000, $40,000 in expenses related to
the NASD inquiry and increased marketing costs of $60,000.
The Company had a net loss for the year ended December 31, 1998 of
$443,000 as compared to a net loss of $204,000 for the year ended December 31,
1997, an increase of $239,000 (117%). The increased loss is attributable to the
aforementioned increases in expenses.
Liquidity and Capital Resources
December 31, 1999 to December 31, 1998
At December 31, 1999 the Company had cash of $217,000 as compared to
$58,000 at December 31, 1998. During 1999, the Company completed stock sales
for $265,000, a debenture financing of $250,000 and sold the aircraft in the
aircraft leasing business for $680,000.
During the year ended December 31, 1999 Worldwide used cash of $740,000 to
reduce outstanding debt and $215,000 for operations.
December 31, 1998 to December 31, 1997
At December 31, 1998, the Company had cash of $58,000 as compared to cash
of $14,000 at December 31, 1997. During 1998, the Company completed equity
sales whereby it received net proceeds of approximately $1,000,000. The Company
used $240,000 of the proceeds as part of the purchase price of 761395 Alberta
Ltd an aircraft leasing company. The balance of the proceeds have been used to
reduce debt by $376,000 and for working capital $384,000.
Worldwide believes that its cash, cash flow from operations together with
the expected net proceeds from this offering will be sufficient to fund its
capital expenditures and working capital requirements for at least the next 12
months.
Worldwide may require additional capital in the future for new business
activities related to its current and planned businesses, or in the event it
decides to make additional acquisitions or enter into joint ventures and
strategic alliances. Sources of additional capital may include cash flow from
operations, public or private equity and debt financings, bank debt and vendor
financings. However, we cannot assure you that Worldwide will be successful in
producing sufficient cash flow or raising debt or equity capital to meet its
strategic business objectives or that such funds, if available, will be
available on a timely basis and on terms that are acceptable to Worldwide. If
Worldwide is unable to obtain such capital, it may have to delay or curtail
business operations. In addition, Worldwide may increase the number of
consulting projects it takes on, which in turn may accelerate Worldwide's need
for additional capital.
20
MARKET RISK
To date, we have not utilized derivative financial instruments or
derivative commodity instruments. We do not expect to employ these or other
strategies to hedge market risk in the foreseeable future.
BUSINESS OF ISSUER
Industry/Market Overview
We were incorporated in Delaware in April 9, 1995. In February 1998,
we acquired all of the outstanding equity securities of WorldWide Online Corp.,
an Internet service provider located in Toronto and a company organized under
the laws of the Province of Ontario. Through this subsidiary, we provide
individuals and businesses an array of e-business solutions and services that
enable enterprises to capitalize on the power of the Internet to reach and
support customers and markets.
We have specifically tailored our service offerings for small or
growing enterprises seeking rapid delivery of cost-effective, high value-added,
comprehensive solutions for their e-business initiatives. Our services consist
of (i) e-Business Consulting, (ii) Internet Solutions, (iii) Application
Hosting, (iv) Providing Internet Service and (v) Customer Support. By offering
a seamless integration of these services, we believe that we are a full service
provider of e-business solutions for small or growing enterprises. We enable
our clients to overcome the obstacle described above by combining high quality
cost effective e-business services with application hosting and Internet access
to deliver sophisticated e-business solutions and services that otherwise might
be unavailable to them.
From our inception in 1995 through 1998, our operating activities
primarily consisted of providing Internet access to individuals and small and
growing enterprises. Since 1998, however, the focus of our business and the
significant portion of our revenues has been derived from our e-Business
Consulting, Internet Solutions, Application Hosting and Customer Support
services.
Our services enable us to develop, build and maintain e-commerce
websites for our clients, and create revenue-generating programs for our clients
that attract consumers to their respective sites. In addition, we complement
these offerings with a call center and related services that provide customer
service and support.
Businesses today are using the Internet to create new revenue
opportunities by enhancing their interactions with new and existing customers.
Businesses are also using the Internet to increase efficiency in their
operations through improved communications, both internally and with suppliers
and other business partners. This emerging business use of the Internet
encompasses both business-to-business and business-to-consumer communications
and transactions.
21
The projected growth of these markets over the next five years is
dramatic, particularly in business-to-business e-commerce. Forrester Research,
an independent research firm, projects that the market for business-to-business
e-commerce will grow from $43 billion in 1998 to $1.3 trillion in 2003. In
comparison, Forrester Research projects that the market for business-to-consumer
e-commerce will grow from $8 billion to $108 billion over the same period. In
order to capitalize fully on the new opportunities presented by the Internet,
businesses demand Internet-based applications that process transactions and
deliver information far more effectively than static web pages.
The extensive reach of the Internet can enable growing enterprises to
compete effectively with larger competitors. However, growing enterprises face
significant challenges in their efforts to capitalize on the opportunities that
the Internet offers, including:
. The need to develop a comprehensive strategic understanding
of how Internet technologies can help a growing enterprise
create an e-business;
. The need to implement and stay abreast of new and rapidly
changing technologies, frequently without the benefit of a
substantial internal information technology staff;
. Significant integration and interoperability issues caused by
the patchwork of legacy systems that businesses often
implemented without a focused information technology
strategy;
. Greater budgetary constraints than large enterprises, making
purchase price, total cost of ownership and technological
obsolescence key issues; and
. The need to maintain significant technological infrastructure
and to support e-business applications.
We believe that the needs of small and growing enterprises will make
them a significant factor in the overall market for Internet services.
International Data Corporation, an independent research firm, defines Internet
services as the consulting, design, systems integration, support, management and
outsourcing services associated with the development, deployment and management
of Internet sites. International Data Corporation expects the market for these
services, which includes both growing and all other enterprises, to grow at a
five year compounded annual growth rate of 59% from $7.8 billion in 1998 to
$78.5 billion in 2003.
Large companies which provide services to assist businesses in using
information technology, including the Internet, have primarily focused their
service offerings on large enterprises, such as Fortune 500 companies, while
largely ignored small or growing enterprises and their unique needs. These
traditional service providers generally operate by deploying large numbers of
personnel to the client's site to conduct lengthy studies before proposing a
solution. We believe that this approach does not yield effective solutions
within the time and budgetary constraints of growing enterprises.
22
Small or growing enterprises need to get to market very quickly and
often face significant obstacles in capitalizing on the opportunities that the
Internet provides because of the technological complexity, cost of
implementation and support and scarcity of qualified professionals.
Accordingly, they increasingly demand a single source provider of strategy,
systems integration, hosting and support that is focused on their specific
needs.
The Worldwide Data Solution
We have specifically tailored our service offerings for small or
growing enterprises seeking rapid delivery of cost-effective, high value-added,
comprehensive solutions for their e-business initiatives. Our services consist
of (i) e-Business Consulting, (ii) Internet Solutions, (iii) Application
Hosting, (iv) Providing Internet Service and (v) Customer Support. By offering
a seamless integration of these services, we believe that we are a full service
provider of e-business solutions for small or growing enterprises. We enable
our clients to overcome the obstacles described above by combining high-quality
cost-effective e-business services with application hosting and Internet access
to deliver sophisticated e-business solutions and services that otherwise might
be unavailable to them.
From our inception in 1995 through 1998, our operating activities
primarily consisted of providing Internet access to individuals and small and
medium size businesses. Since 1998, however, the focus of our business and the
significant portion of our revenues has been derived from our e-Business
Consulting, Internet Solutions, Application Hosting and Customer Support
services.
Our services enable us to develop, build and maintain e-commerce
websites for our clients, and create revenue-generating programs for our clients
that attract consumers to their respective sites. In addition, we complement
these offerings with a call center and related services that provide customer
service and support.
Target Market
Our plan is to focus our service offerings on the needs of small and
growing enterprise. We believe that these businesses are becoming increasingly
reliant on the Internet access to significantly enhance communications with
other offices, employees, customers and suppliers. We also believe that the
Internet enables such businesses to reduce operating costs, access valuable
information and reach new markets. As a result, we believe that small and
growing enterprises increasingly are utilizing the Internet for crucial business
needs such as sales, customer service and project coordination. Internet use by
small and growing enterprises is expected to grow substantially from its current
low level. Small and medium sized business customers are also increasingly
seeking a variety of advanced products and services to take full advantage of
the Internet and allow them to compete with larger corporations cost-
effectively.
23
PRINCIPAL SERVICES
e-Business Consulting
We advise our customers on the use of e-business solutions to reach
and support customers and markets. The goal of these solutions is typically the
achievement of a qualifiable, sustainable competitive advantage within a short
time frame. Our strategy services include analyzing the client's market,
business processes and existing technology infrastructure, evaluating both
packaged and custom alternative solutions and formulating recommendations for a
solution or strategy. We provide a road map that our client can implement
immediately, as opposed to the type of high-level, higher cost advice that
requires additional strategy planning prior to being implementable.
Internet Solutions
We develop and implement e-business applications for high transaction
volume revenue generation activities. We both develop custom applications and
tailor packaged applications. We design our e-business applications to be
flexible and easily scalable. Clients require flexibility so that they can
easily integrate our solutions with their existing systems, upgrade solutions
for technological changes and respond to developments in how business is
conducted on the Internet. Scalability is critical to our clients because they
often experience very significant increases in transaction volumes within a
short time period.
Application Hosting
We host a variety of custom and package applications, including
customer relationship management applications, database applications, corporate
websites and complex transaction intensive e-business applications. Our
application hosting service enables clients to rent applications through payment
of a monthly service fee instead of incurring a large one-time, initial
investment. Our application hosting operations team provides active monitoring
and application level support for Internet-based applications 15 hours a day,
Monday through Friday and 8 hours a day on Saturdays and Sundays. These support
capabilities often reduce the client's need for a large information technology
staff.
Our application hosting infrastructure which is located in Toronto,
Ontario is designed to provide our clients with a fast response time,
reliability, scalability and security. We currently provide application hosting
services to approximately 100 small to medium-sized companies.
Internet Service Provider
We provide subscribers with direct access to the Internet. As of
December 1999, we had approximately 2000 subscribers. Our business model is to
create high user density in greater Toronto, Ontario. Although our Internet
Service Provider division is no longer the division from which we derive
substantial revenue or the division for which we devote substantial resources,
it complements our Internet Solutions and e-Business Consulting divisions. Our
most popular service package provides unlimited dial-up Internet access to
individuals and
24
businesses for $25.00 and $50.00 a month, respectively. We also offer value-
added services for additional fees, including multiple e-mail boxes,
personalized e-mail addresses and personal web-sites. We provide subscribers
with a full range of services including dedicated high speed access (such
as T-1, xDSL, ATM and ISDN service), web hosting, server co-location and domain
name registration and hosting.
Customer Support
Outstanding service and customer care are crucial to subscriber
acquisition, cost containment and customer retention in our industry. Our goal
is to attain customer satisfaction by providing superior systems and network
performance along with high quality service and technical support. Our Customer
Support department, which is open 15 hours-a-day, Monday through Friday and 8
hours-a-day on Saturday and Sunday, is structured to provide prompt, effective
and friendly support. We plan to implement 24 hour/7 days a week customer
support in the first quarter of 2000. All customer support representatives have
on-line capabilities to provide customer and technical support and order entry
to provide solutions for both in-house products as well as clients' web-based
applications.
Sales and Marketing
We offer our products and services through resellers and indirect
sales channels. We do not employ a direct sales force to target customers, and
we currently have no plans to hire a direct sales force. We use reseller and
referral programs and enter into joint marketing agreements to market and
distribute our services. Resellers are persons or entities not directly
employed or affiliated with us who agree to market and sell our products. Our
reseller program offers resellers services-in-kind or commissions for each new
customer they bring to us. We have established reseller arrangements with
several Internet-related companies. Referral partners will receive a fee or
some other form of compensation for referring customers or customer leads to us.
Our referral partners will include organizations such as local computer
companies, information technology consultants, web page designers, advertising
agencies or other entities that do not generally sell Internet services
directly.
In addition, we have in the past periodically used direct mail and
newspaper and billboard advertising to market our services and products.
Clients
We focus our marketing and sales activities on small and growing
enterprises. The use and functionality of our services are applicable to a
variety of industries. Therefore, we provide our services to a number of types
of businesses. Our clients include, but are not limited to, high technology
firms, insurance brokers, traditional product/services firms, law firms and a
municipality.
25
Patents, Trademarks and Servicemarks
We do not currently hold patents, copyright marks or servicemarks on
any of our products, however, we may apply for such intellectual property right
protections if future conditions indicate that this would be in our best
interests.
Competition
The market for Internet access and related services is extremely
competitive. We face a high level of competition in all of our service areas.
Our competitors include consulting companies, Internet professional service
firms, systems integration firms, application hosting firms, application hosting
firms and Internet service providers. Barriers to entry in most of our service
areas are low. Therefore, we expect additional competitors to develop.
We also believe that new competitors will continue to enter the
Internet access market. These new competitors may also include large computer
hardware and software companies, media and telecommunications entities and
companies that provide direct service to residential customers, including cable
television operators, wireless communication companies, local and long-distance
telephone companies and electric utility companies.
Almost all of our competitors are larger than us and have
substantially greater financial, technical, and operating resources than we do.
We cannot assure you of our survival in this intensely competitive environment.
We will need to distinguish ourselves by our technical knowledge, our
responsiveness to our target customers, our ability to market and sell
customized combinations of services within our markets and our capacity to offer
diverse Internet services.
Employees
We employ fifteen full-time individuals and have retained two
independent contractors on a temporary project-by-project basis. We are not a
party to any collective bargaining agreements, and we have never experienced a
work stoppage. We consider our relations with our employees to be good. We
believe that our success will in large part depend upon our ability to recruit
and retain qualified professionals with a high degree of information technology
skills and experience needed to provide our sophisticated services.
Description of Property
We do not own any real property and lease all of our facilities. We
are located at 36 Toronto Street, Suite 250, Toronto, Ontario M5C 2C5. The
premises measures approximately 3,200 square feet and is used for our general
office and administrative purposes and is the location from which we provide
customer support and application hosting services to our clients. The initial
term of the lease commenced in September 1995 and expires on August 31, 2000.
We believe that the above referenced property is acceptable for our current
operating needs.
Legal Proceedings
We are not currently involved in any pending legal proceeding and we
are not aware of any material legal proceeding threatened against us. The
trading of our Common Stock
26
is the subject of an inquiry by NASD Regulation which we have described
elsewhere in this Prospectus.
MANAGEMENT
The following table sets forth the name, age and position of our Sole
Director and executive officers:
Name Age Position
Bronson B. Conrad 55 President, Secretary, Treasurer and
Sole Director
Romeo Colacitti 38 Chief Executive Officer
Business Experience
BRONSON B. CONRAD. Since our incorporation in 1995, Mr. Conrad has
served as our President, Secretary and Treasurer and our Sole Director. Mr.
Conrad was the co-founder of, and from 1988 to 1994, served as the Chairman of
the Board of Directors of All-Quotes, Inc., a provider of electronically
distributed financial information. Mr. Conrad served as All-Quotes' Treasurer
and Secretary from 1993 to 1994. From 1988 through 1993, Mr. Conrad served as
the President of All-Quotes. He was the co-founder of National Hav-Info Ltd.
("Hav-Info"), a former electronic distributor of financial information in
Canada, and from March 1985 until October 1988 he was the Chief Executive
Officer and Chairman of the Board of Hav-Info.
ROMEO COLACITTI. Since July of 1999, Mr. Colacitti has served as our
Chief Executive Officer. From April 1998 to the present, Mr. Colacitti has
served as the President of our wholly-owned subsidiary World Wide Online. From
October 1995 to March 1998, Mr. Colacitti served as the Vice President and
General Manager of World Wide Online. Prior to joining World Wide Online in
October of 1995, Mr. Colacitti served as a business executive with Bell Canada.
EXECUTIVE COMPENSATION
The following table sets forth the annual and other compensation of
our Chief Executive Officer. No other executive officer of our Company had a
total salary and bonus, which exceeded US$ 100,000 for the reported period.
27
SUMMARY COMPENSATION TABLE
Annual Compensation
Name Other Stock
Principal Position Year Salary Compensation Option
Romeo Colacitti 1998 CDN$ 80,000 N/A N/A
Chief Executive Officer 1999 CDN$100,000 N/A N/A
Compensation of the Company's Sole Director
The Company's Sole Director does not receive a salary or fees for
serving as a director, nor does he receive any compensation for being on
committees. We may decide to compensate our Sole Director in the future.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Romeo Colacitti, our Chief Executive Officer, is the brother-in-law of
Bronson B. Conrad, our President, Secretary, Treasurer and Sole Director.
On December 31, 1999, our Company loaned US$177,685 to AmCan Mining
Limited, a British Columbia, for which Bronson B. Conrad, our President,
Secretary, Treasurer and Sole Director, serves as Chairman and Chief Executive
Officer. The loan is evidenced by a promissory note. The note is payable on
demand and bears interest at a rate of 10% per annum. The note is personally
guaranteed by Mr. Bronson B. Conrad.
On February 27, 1998, our Company, Bridgewater Capital Corp. and
Bronson B. Conrad, our President, Secretary, Treasurer and Sole Director,
(Conrad, together with Bridgewater, the "WWOC Shareholders") entered into a
Share Exchange Agreement whereby we exchanged 1,500,000 shares of our Common
Stock with the WWOC Shareholders for an aggregate of 1,500,000 shares of Common
Stock of WWOC in the amounts and proportions as set forth below:
No. of Worldwide Data, Inc.
Seller No. of WWOC Shares Exchanged Shares Received
- ------ ---------------------------- ---------------
Conrad 1 1
Bridgewater 1,500,000 1,500,000
In November 1998, in order to partially finance the purchase of all of
the issued and outstanding Common Stock of 761395 Alberta Ltd. (the "761395
Alberta Common Stock"), an Alberta corporation which is wholly-owned by Bronson
B. Conrad and which had as its sole asset, an aircraft, we sold pursuant to a
Stock Purchase Agreement dated November 17, 1998 between us and CBC Holdings,
Inc., a Bahamian corporation, 240,000 shares of our Common Stock to CBC
Holdings, Inc. for $1.00 per share.
In a related transaction, also in November, 1998, we purchased all of
the issued and outstanding shares of the 761315 Alberta Common Stock pursuant to
a certain Stock Purchase Agreement dated November 17, 1998, between Bronson B.
Conrad, 761395 Alberta Ltd. and our Company, whereby we purchased the 761395
Alberta Common Stock for a
28
purchase price of US$627,000. To effect payment of the purchase price, we (i)
delivered US$240,000 of the purchase price to Bronson B. Conrad immediately
following the execution of the Stock Purchase Agreement; (ii) executed and
delivered to Mr. Conrad a promissory note in the principal amount of
US$189,631.58 and (iii) assumed a certain $350,000 CDN Promissory Note from
761395 Alberta Ltd. and Bronson B. Conrad payable to Textron Financial
Corporation (Canada), an Ontario corporation.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the our Company consists of 10,000,000
shares of Common Stock, $0.001 par value and 10,000 shares of Preferred Stock,
$0.01 par value.
Common Stock
Holders of our Common Stock are entitled to one vote per share held of
record on all matters requiring a vote of shareholders, including the election
of directors. There is no right to cumulative voting in the election of
directors, accordingly, holders of more than fifty percent (50%) of our Common
Stock, if any, who vote for elections of directors can elect one hundred percent
(100%) of our directors if they so choose. Subject to the prior rights of
holders of our Preferred Stock and any contractual restrictions against the
payment of dividends, the holders of our Common Stock are entitled to receive
dividends on a pro-rata basis when, if and as declared by our Board of Directors
out of funds legally available therefore. Upon liquidation or dissolution, each
outstanding share of our Common Stock will be entitled to share equally in the
assets of the Company legally available for distribution to shareholders after
the payment of all debts, liabilities, and other obligations, including the
preferences of any outstanding share of Preferred Stock. Shares of our Common
Stock are not redeemable, have no conversion rights and carry no preemptive or
other rights to subscribe to or purchase additional shares in the event of a
subsequent offering. All outstanding shares of Common Stock are duly authorized
and validly issued, fully paid and non-assessable and free of preemptive rights.
The transfer agent for our Common Stock is American Stock Transfer &
Trust Company.
Preferred Stock
In addition, our Certificate of Incorporation provides that we may,
without further action by our stockholders, issue shares of Preferred Stock in
one or more series. Our Sole Director is authorized to established from time to
time the number of shares to be included in any such series and to fix the
relative rights and preferences of the shares of any such series, including
without limitation dividend rights, dividend rate, voting rights, redemption
rights and terms, liquidation preferences and sinking fund provisions. Our Sole
Director may authorize and issue Preferred Stock with voting or conversion
rights that could adversely affect the voting power or other rights of the
holders of our Common Stock. In addition, the issuance of Preferred Stock could
have the effect of delaying or preventing a change in control of the company.
No shares of our Preferred Stock have been issued.
29
Warrants
Our Class B Warrants entitle the holder to purchase one share of our
Common Stock at a price of $1.50 at any time between April 15, 1999 and April 5,
2001. The warrants may be exercised upon surrender of the Warrant Certificate
during the exercise period to us, together with a duly completed Notice of
Exercise and full payment of an amount equal to the purchase price times the
number of Warrants to be exercised. The Class B Warrant holders do not have the
rights or privileges of holders of our Common Stock.
The warrant issued to Generation Capital Associates on September 30,
1999, entitles the holder to purchase 25,000 shares of our Common Stock
exercisable at $2.50 for five years until September 30, 2004. The Generation
warrant has a value of $250.00 ($0.01 per warrant). The Generation warrant
holder does not have the rights or privileges of holders of our Common Stock.
Debentures
We have issued convertible debentures in the aggregate principal
amount of $250,000 for $250,000. The price at which the convertible debentures
are converted shall be the average closing bid price of the Company's Common
Stock quoted by Nasdaq level III for five day trading period ending on the date
prior to the date set forth on the conversion notice relating to such
convertible debentures times 60% (the "Multiplier"). The Multiplier is subject
to being decreased in the event the Company does not register the shares
underlying the convertible debentures under the Securities Act. Holders of the
debentures do not have the rights or privileges of holders of our Common Stock.
The convertible debentures mature on September 30, 2000 and the unconverted
principal balance and any accrued and unpaid interest shall be due and payable
on such date. The maturity date of the convertible debentures automatically
extends for up to eighteen one-month periods, unless the purchaser or any
subsequent holder notifies us in writing not less than 10 days prior to any
expiration that the convertible debentures will not be extended.
PRINCIPAL STOCKHOLDERS AND SELLING STOCKHOLDERS
The following table sets forth information as of March 13, 2000 with
respect to the Principal Shareholders and Selling Stockholders and the
respective shares of Common Stock beneficially owned by each Principal
Shareholder and Selling Stockholder after conversion of the Convertible
Subordinated Notes, and assuming the exercise in full of the warrants issued in
connection with the Convertible Subordinated Notes that may be offered pursuant
to this Prospectus. Because the Selling Stockholders may offer all or some
portion of the shares of Common Stock being offered pursuant to this Prospectus,
no estimate can be given as to the amount of the Common Stock that will be held
by the Stockholder upon termination of any such sales.
30
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Beneficially Owned Price to Number of Shares Shares Owned Assuming
Director, Executive Officers, 5% Sale (1) Offered (2) all Sold(1)
Stockholders and Selling Securityholder
----------------------------------- --------------------------------
Number Percent Number Percent
- ------------------------------------------------------------------------------------------------------------------------------------
Bronson B. Conrad 120,000 3.1% --- 120,000 3.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Romeo Colacitti 135,000 3.5% --- 135,000 3.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Bridgewater Capital Corp. 225,000 5.9% --- 225,000 5.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Bournemouth Capital Corp. 225,000 5.9% --- 225,000 5.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Finnish Investment Limited 225,000 5.9% --- 225,000 5.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Generation Capital Associates (4) 425,000 5.0% 188,155 0
- ------------------------------------------------------------------------------------------------------------------------------------
JBS Holdings Ltd. (5) 225,000 5.6% 225,000 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Coast International (5) 225,000 5.6% 225,000 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Sunnyview International Ltd. (5) 225,000 5.6% 225,000 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
KEW Holdings Ltd. (5) 225,000 5.6% 225,000 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
A-Z Professional Consultants, Inc. 300,000 7.9% 100,000 200,000 5.3%
- ------------------------------------------------------------------------------------------------------------------------------------
_________________________
(1) All such shares were held of record with sole voting and investment power,
subject to applicable community property laws, by the named individual
and/or by his spouse, except as indicated in the following footnotes.
(2) For each selling stockholder, the number of shares beneficially owned
includes shares issuable upon exercise of warrants and the convertible
debentures which shares are being registered hereunder.
(3) Excludes 150,000 shares held by the BC Trust which are beneficially owned
by Bronson B. Conrad, our President, Secretary, Treasurer and Sole
Director. Mr. Conrad holds the shares for the benefit of certain of our
employees. The BC Trust is not a formal trust, and, consequently, there is
no elected trustee.
(4) Includes 400,000 shares of our Common Stock held in escrow for the benefit
of Generation Capital Associates and 25,000 shares of our Common Stock
underlying warrants to purchase our Common Stock held by Generation. In
connection with a financing transaction which closed on September 30, 1999,
the Company issued to Generation convertible debentures in the aggregate
principal amount of $250,000 for $250,000. The debentures are convertible
into our Common Stock at any time after September 30, 1999. Pursuant to
the terms of the transaction, we issued 400,000 shares of our Common Stock,
which represent the shares underlying the convertible
(5) Represents shares underlying our Class B Warrants. The warrants entitle the
holder to purchase one share of our Common Stock at a price of $1.50 per
share at any time between April 15, 1999 and April 5, 2001.
31
debentures to an escrow agent. The debenture shares held by the escrow
agent represent the shares that Generation is entitled to under the
convertible debentures' conversion provisions. The price at which the
convertible debentures are converted shall be the average closing bid price
of our Common Stock quoted by Nasdaq level III for a five-day trading
period ending on the date prior to the date set forth on Generation's
conversion notice times (x) 60% (the "Multiplier"). The Multiplier is
subject to being decreased in the event we do not register the debenture
shares under the Securities Act. In connection with the above referenced
financing transaction, we issued Generation 25,000 cashless exercise
warrants to purchase 25,000 shares of our Common Stock exercisable at $2.50
for five years until September 30, 2004. The Generation warrant has a value
of $250.00 ($0.01 per warrant). The shares are issuable upon the exercise
of the Generation warrant. Although 400,000 of such shares are held in
escrow for the benefit of Generation in connection with a convertible
debenture financing transaction which closed on September 30, 1999, and
such 425,000 shares held in escrow for the benefit of Generation represent
approximately 11.2% of our issued and outstanding Common Stock, the terms
of the convertible debentures provide that in no event shall the holder(s)
of the convertible debentures and/or the Generation warrants be permitted
to convert any debenture or exercise the Generation warrant to the extent
that such conversion or exercise would cause any such holder to be the
beneficial owner of more than 5% of our then outstanding Common Stock as
determined in accordance with Section 13(d) of the Securities and Exchange
Act of 1934. Accordingly, the number of shares of Common Stock set forth in
the table for Generation exceeds the number of shares of our Common Stock
that Generation could own beneficially at any given time through its
ownership of the convertible debentures and warrants. In that regard,
the beneficial ownership of Generation set forth in the table is not
determined in accordance with Rule 13d-3 under the Securities and Exchange
Act of 1934.
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the shares
offered hereby. The shares of Common Stock may be sold from time to time to
purchasers directly by the Selling Stockholders. Alternatively, the Selling
Stockholders may from time to time offer the Securities through brokers, dealers
or agents who may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the
Securities for whom they may act as agent. The Selling Stockholders and any such
brokers, dealers or agents who participate in the distribution of the Securities
may be deemed to be "underwriters," and any profits on the sale of the
Securities by them and any discounts, commissions or concessions received by any
such brokers, dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act. To the extent the Selling Stockholders may
be deemed to be underwriters, the Selling Stockholders may be subject to certain
statutory liabilities, including, but not limited to, under Sections 11, 12 and
17 of the Securities Act and Rule 10b-5 under the Exchange Act.
The Securities offered hereby may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The Securities may be sold by one or more of the following methods, without
limitation: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (d) an exchange
distribution in accordance with the rules of such exchange; (e) face-to-face
transactions between sellers and purchasers without a broker-dealer; (f) through
the writing of options; and (g) other. At any time a particular offer of the
Securities is made, a revised Prospectus or Prospectus Supplement, if required,
will be distributed which will set forth the aggregate amount and type of
Securities being offered and the terms of the offering, including the name or
names of any underwriters, dealers or agents, any discounts, commissions,
concessions and other items
32
constituting compensation from the Selling Stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. Such
Prospectus Supplement and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part, will be filed with
the Commission to reflect the disclosure of additional information with respect
to the distribution of the Securities. In addition, the Securities covered by
this Prospectus may be sold in private transactions or under Rule 144 rather
than pursuant to this Prospectus.
To the best of our knowledge, there are currently no plans,
arrangement or understandings between any Selling Stockholders and any broker,
dealer, agent or underwriter regarding the sale of the Securities by the Selling
Stockholders. There is no assurance that any Selling Stockholder will sell any
or all of the Securities offered by it hereunder or that any such Selling
Stockholder will not transfer, devise or gift such Securities by other means not
described herein.
The Selling Stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M which may limit the timing of purchases and sales of any of the Securities by
the Selling Stockholders and any other such person. Furthermore, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the Securities to engage in market-making activities with
respect to the particular Securities being distributed for a period of up to
five business days prior to the commencement of such distribution. All of the
foregoing may affect the marketability of the Securities and the ability of any
person or entity to engage in market-making activities with respect to the
Securities.
We have agreed to pay substantially all of the expenses incidental to
the registration, offering and sale of the Securities to the public other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed
upon for the Company by Heller Ehrman White & McAuliffe LLP.
EXPERTS
The audited balance sheets of the Company as at December 31, 1999 and
1998 and the audited Statements of Operations, Statements of Stockholders'
Equity and Statements of Cash Flows for the years ended December 31, 1999 and
1998 have been included herein and in the Registration Statement in reliance
upon the report, appearing elsewhere herein, of Kempisty & Company Certified
Public Accountants, P.C., independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
33
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus, in connection with the offer made by this Prospectus, and, if
given or made, such information or representations must not be relied upon as
having been authorized by the corporation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the corporation
since the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not authorized to do so or to anyone to whom it is unlawful to make such offer
or solicitation in such jurisdiction.
TABLE OF CONTENTS
-----------------
Page
----
Available Information..................................................... 2
Prospectus Summary........................................................ 3
The Company............................................................... 3
Summary Consolidated Financial Data....................................... 4
The Offering.............................................................. 4
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 17
Price Range of Common Stock............................................... 17
Dividend Policy........................................................... 18
Management's Discussion and Analysis of Financial Condition and
Results of Operations..................................................... 18
Business.................................................................. 21
Management................................................................ 27
Certain Relationships and Related Transactions............................ 28
Description of Capital Stock.............................................. 29
Directors, Executive Officers, 5% Stockholders and Selling Stockholders... 30
Plan of Distribution...................................................... 32
Legal Matters............................................................. 33
Experts................................................................... 33
Index to Consolidated Financial Statements................................ F-1
WORLDWIDE DATA, INC.
1,188,155 SHARES OF COMMON STOCK
PROSPECTUS
----------
March 21, 2000
WORLDWIDE DATA, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999
INDEX
-----
PAGE
----
INDEPENDENT AUDITORS' REPORT F2
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1999 AND 1998 F3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE TWO YEARS ENDED
DECEMBER 31, 1999 AND 1998 F4
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY F5
CONSOLIDATED STATEMENTS CASH FLOWS FOR THE TWO YEARS ENDED
DECEMBER 31, 1999 AND 1998 F6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F7-F16
F1
KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
- -------------------------------------------------------------------------------
15 MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038 - TEL (212) 406-7272 -
FAX (212) 513-1930
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Worldwide Data, Inc.
We have audited the consolidated balance sheets of Worldwide Data, Inc. as of
December 31, 1999 and 1998 and the related consolidated statements of
operations, shareholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our 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 Worldwide Data, Inc. as of
December 31, 1999 and 1998 and the results of its' operations and cash flows for
the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 conditions
exist which raise substantial doubt about the Company's ability to continue as a
going concern unless it is able to generate sufficient cash flows to meet its
obligations and sustain its operations. Management's plan regarding these
matters is also described in Note 12. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Kempisty & Company
Certified Public Accountants PC
New York, New York
March 2, 2000
F2
WORLDWIDE DATA, INC.
Consolidated Balance Sheets
December 31, December 31,
1999 1998
---- ----
ASSETS
------
CURRENT ASSETS:
Cash $ 216,993 $ 58,374
Accounts receivable (net of allowances of bad debts
of $10,368 for 1999) 47,065 43,524
Prepaid expenses 9,412 8,191
-------------- ---------------
TOTAL CURRENT ASSETS 273,470 110,089
PROPERTY AND EQUIPMENT (net of accumulated
depreciation of $130,899 and $136,869 in 1999 and 1998) 81,753 433,685
GOODWILL (net of accumulated amortization of $168,639
and $78,157 in 1999 and 1998) 751,209 1,022,039
OTHER ASSETS:
Organization expense 1,380 2,761
Deposit receivable 7,327 6,889
Loan and receivables from affiliates 177,685 123,570
-------------- ---------------
TOTAL ASSETS $ 1,292,824 $ 1,699,033
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Debenture payable $ 250,000 $ -
Accounts payable and accrued expenses 139,355 109,454
Accrued interest payable 2,002 3,345
Current portion of long-term debt (Note 8) 34,563 71,518
Short-term loan from officer (Note 7) - 189,631
Deferred income 4,404 8,123
-------------- ---------------
TOTAL CURRENT LIABILITIES 430,324 382,071
PAYABLE TO OFFICER (NOTE 3) 55,185 344,336
LONG TERM DEBT (NOTE 8) - 191,802
COMMITMENTS AND CONTINGENCIES (NOTE 6)
SHAREHOLDERS' EQUITY
Common stock $.001 par value 10,000,000 shares
authorized; 3,487,500 and 2,822,500 shares issued and
outstanding at 12/31/99 and 12/31/98 respectively (Note 11) 3,088 2,823
Preferred stock $.01 par value 10,000 shares authorized;
issued and outstanding, none -
Additional paid-in capital 2,532,260 2,267,525
Deficit (1,740,372) (1,491,569)
Translation adjustment 12,339 2,045
-------------- ---------------
TOTAL SHAREHOLDERS' EQUITY $ 807,315 $ 780,824
-------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,292,824 $ 1,699,033
============== ===============
See Notes to Financial Statements
F3
WORLDWIDE DATA, INC.
Consolidated Statements of Operations
For the Year Ended
December 31,
1999 1998
---- ----
Sales revenues:
Online services $ 495,448 $ 338,069
Aircraft leasing 63,859 -
------------- -------------
559,307 338,069
Cost of sales:
Online services 278,508 221,920
Aircraft leasing 150,954 66,460
------------- -------------
429,462 288,380
Gross profit 129,845 49,689
Goodwill expense 104,009 78,157
Selling, general and administrative expenses 417,469 416,877
------------- -------------
521,478 495,034
Loss from operations (391,633) (445,345)
Other income and expenses
Gain from sale of aircraft 119,822 -
Interest income 23,008 2,187
------------- -------------
Income (loss) before taxes (248,803) (443,158)
Provision for income taxes - -
------------- -------------
Net income (loss) $ (248,803) $ (443,158)
============= =============
Basic and diluted income (loss) per share $ (0.08) $ (0.20)
============= =============
Basic and diluted average shares outstanding 3,026,568 2,246,308
============= =============
See Notes to Financial Statements.
F4
WORLDWIDE DATA, INC.
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Year ended December 31, 1999
Common Stock Additional
($.001) Par Value Paid-In Translation
Shares Amount Capital (Deficit) Adjustments Total
------ ------ ------- --------- ----------- -----
Balance January 1, 1998 622,500 $ 623 $ 349,877 $ (1,048,411) $ (3,564) $ (701,475)
Stock issued to acquire
Worldwide Online 1,500,000 1,500 918,348 - - 919,848
Sale of units 20,000 20 99,980 - - 100,000
Exercise of warrants 440,000 440 659,560 - - 660,000
Sale of common stock 240,000 240 239,760 - - 240,000
Net Income (Loss) - - - (443,158) - (443,158)
Translation adjustment - - - - 5,609 5,609
-------------- ------- ------------- -------------- ----------- ------------
Balance December 31, 1998 2,822,500 2,823 2,267,525 (1,491,569) 2,045 780,824
Sale of common stock 265,000 265 264,735 - - 265,000
Net Income (Loss) - - - (248,803) - (248,803)
Translation adjustment - - - - 10,294 10,294
-------------- ------- ------------- -------------- ----------- ------------
Balance December 31, 1999 3,087,500 $ 3,088 $ 2,532,260 $ (1,740,372) $ 12,339 $ 807,315
============== ======= ============= ============== =========== ============
See Notes to Financial Statements
F5
WORLDWIDE DATA, INC.
Consolidated Statements of Cash Flows
For the Year Ended
December 31,
1999 1998
---- ----
Operating Activities
- --------------------
Net (loss) $ (248,803) $ (443,158)
Adjustments to reconcile net income or (loss)
to net cash used by operating activities:
Depreciation and amortization 131,707 149,312
Bad debt expense 12,610 -
Gain on sale of aircraft (119,822) -
Changes in operating assets and liabilities (net
of acquired companies):
Accounts receivable (13,909) (38,418)
Prepaid expenses (1,221) (4,012)
Accounts payable & accrued expenses 29,901 (3,043)
Accrued interest payable (1,343) 448
Deferred income (3,719) 8,123
------------- -------------
Net cash used by operating activities (214,599) (330,748)
Investing Activities (net of acquired companies):
- -------------------------------------------------
Purchase of Alberta Ltd net of cash acquired - (239,499)
Purchase of property and equipment (28,125) (2,935)
Sale of aircraft 680,000 -
Loans to affiliates (54,115) (123,570)
------------- -------------
Net cash provided (used) by investing activities 597,760 (366,004)
Financing Activities (net of acquired companies):
- -------------------------------------------------
Sale of common stock 265,000 240,000
Sale of common stock units - 100,000
Exercise of common stock warrants - 660,000
Loan payments (260,760) (39,886)
Debenture loan 250,000 -
Paydown of officer loan and payable (478,782) (218,755)
------------- -------------
Net cash (used) provided by financing activities (224,542) 741,359
------------- -------------
Increase in cash 158,619 44,607
Cash at beginning of period 58,374 13,767
------------- -------------
Cash at end of period $ 216,993 $ 58,374
============= =============
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Interest $ 49,773 $ 28,162
============= =============
Income taxes $ - $ -
============= =============
Non-cash transactions:
On February 26, 1998 the Company issued 1,500,000 shares of common stock for the 85% of
Worldwide On-line Corp common stock it did not own (Note 5).
On November 17, 1998 the Company issued a $189,631 face value 10% demand note as
part of the consideration given to acquire 100% of 761395 Alberta Ltd. (Notes 3 and 5).
See Notes to Financial Statements.
F6
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 1- ORGANIZATION AND OPERATIONS
Worldwide Data, Inc., ("WDI") was incorporated in the State of
Delaware on February 27, 1995.
On August 16, 1995 Worldwide Online Corp. ("the Company" and "WWOL")
was incorporated in Ontario, Canada. On February 26, 1998 Worldwide
Data, Inc. exchanged 1,500,000 shares of the Company's common stock
for the 85% of Worldwide Online Corp. common stock it did not already
own. (See Note 5)
Worldwide Online creates intranets/extranets for corporations, designs
and develops corporate web sites and databases, and creates
client-specific applications.
During 1999, Worldwide Online added application hosting and e-business
consulting to its service offerings.
On November 17, 1998 WDI acquired all the outstanding shares of 761395
Alberta Ltd., a Canadian company in the aircraft leasing business.
(Note 3 and 5)
In August, 1999 761395 Alberta Ltd sold the aircraft that was used for
the leasing business and currently has no operations.
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The consolidated financial statements include the accounts of
Worldwide Data, Inc. and all of its subsidiaries. All significant
intercompany transactions and balances have been eliminated in
consolidation.
For accounting purposes, the 1998 acquisition of WWOL has been treated
as an acquisition of WDI by WWOL and as a recapitalization of WWOL.
The historical financial statements prior to February 26, 1998 are
those of WWOL giving effect to the acquisition as if the acquisition
took place on August 16, 1995.
Foreign Currency Translation
----------------------------
The Company has determined that the local currency of its Canadian
subsidiaries is the functional currency. In accordance with Statement
of Financial Accounting Standard No. 52, "Foreign Currency
Translation" ("SFAS No. 52") the assets and liabilities denominated in
foreign currency are translated into U.S. dollars at the current rate
of exchange existing at period-end and revenues and expenses are
translated at average monthly exchange rates. Related translation
adjustments are reported as a separate component of shareholders'
equity, whereas, gains or losses resulting from foreign currency
transactions are included in results of operations.
F7
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less at
acquisition to be cash equivalents.
Depreciation and Amortization
-----------------------------
The cost of furniture and equipment is depreciated over the estimated
useful lives of the related assets. The cost of leasehold improvements
is amortized over the lesser of the length of the related lease or the
estimated useful life of the assets. Depreciation is computed on a
straight line basis for financial reporting purposes and on an
accelerated basis for income tax purposes. For income tax purposes,
leasehold improvements are amortized in accordance with Internal
Revenue Service regulations.
Goodwill
--------
The goodwill recorded by the Company in connection with its
acquisitions is being amortized on a straight line basis over ten
years.
Organization Costs
------------------
Costs incurred in connection with the organization of the Company are
amortized over five years beginning with the commencement of
operations.
Income Taxes
------------
The Company previously adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", ("SFAS No.109")
which requires the asset and liability method of accounting for income
taxes. Enacted statutory tax rates are applied to temporary
differences arising from the differences in financial statement
carrying amounts and the tax basis of existing assets and liabilities.
Due to the uncertainty of the realization of income tax benefits,
(Note 9), the adoption of SFAS 109 had no effect on the financial
statements of the Company.
Net Loss per Common Share
-------------------------
Net loss per common share is based on the weighted average number of
common shares outstanding during the period presented. Fully diluted
loss per share has not been disclosed as it is anti-dilutive. The
weighted average number of common shares outstanding used in the
computation of net loss per share has been adjusted to give effect for
the 1 for 10 reverse stock split discussed in Note 11.
F8
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's 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.
Concentration of Credit Risk
----------------------------
Financial instruments which potentially subject the Company to
significant concentrations of credit risk consist principally of cash
investments at commercial banks and receivables from officers and
directors of the Company. Cash and cash equivalents are temporarily
invested in interest bearing accounts in financial institutions, and
such investments may be in excess of insurance limits.
Reverse Stock Split
-------------------
The Company's Board of Directors effected a 1 for 10 reverse stock
split of its common stock $.001 par value on February 12, 1998. All
share and per share amounts in the accompanying financial statements
have been retroactively adjusted to reflect this stock split.
Comprehensive Income
--------------------
Effective January 1, 1998 the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"). SFAS No. 130 requires an entity to report comprehensive
income and its components and increases financial reporting
disclosures. This standard has no impact on the Company's financial
position, cash flows or results of operations since the Company's
comprehensive income is the same as its reported net income for both
1999 and 1998.
Note 3- RELATED PARTY TRANSACTIONS
761395 Alberta Ltd.
-------------------
In November, 1998 the Company acquired 100% of the outstanding common
stock of 761395 Alberta Ltd. from the president of the Company for
$240,000 plus a $189,631.58 ten percent (10%) demand note. The demand
note was repaid in April, 1999. (See Notes 5 and 11)
F9
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 3- RELATED PARTY TRANSACTIONS (continued)
Payable to Officer December 31,
------------------ 1999 1998
---- ----
Bronson Conrad, President $ 55,185 $ 344,336
The payable to officer is unsecured, non-interest bearing and has no specific terms
of repayment.
Loans and receivables from affiliates December 31,
------------------------------------- 1999 1998
---- ----
Receivables $ 11,204 $ 16,110
Loans 166,481 107,460
-------------- ---------------
Total $ 177,685 $ 123,570
============== ===============
Receivables from affiliates for occupancy costs or services rendered
in the ordinary course of business represent amounts due from
companies that are controlled by the Chairman of the Board of
Directors or his family.
Loans to affiliate represents amounts due from AMCAN Minerals Limited,
a company controlled by the Chairman of the Board. The loan bears
interest at ten percent per annum and the loan repayment is guaranteed
by the Chairman.
Note 4- PROPERTY AND EQUIPMENT
Property and equipment consists of the following: December 31,
1999 1998
---- ----
Aircraft $ 0 $ 384,849
Furniture and fixtures 28,346 26,402
Computer equipment 181,435 155,255
Leasehold improvements 2,871 4,048
-------------- ---------------
212,652 570,554
Less accumulated depreciation and amortization (130,899) (136,869)
-------------- ---------------
$ 81,753 $ 433,685
============== ===============
Note 5- ACQUISITIONS
WDI owned 15% of Worldwide Online Corp until February, 1998 when it
acquired the remaining 85% of the common stock of the Company. The
combination was accounted for using the purchase method. The purchase
price for the common stock was 1,500,000 unregistered shares of the
Company's common stock, valued at $150,000. The resulting goodwill of
$919,848 is being amortized over ten (10) years. The acquisition was
recorded as a reverse merger.
F10
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 5- ACQUISITIONS (continued)
In November 1998, the Company acquired 100% of 761395 Alberta
Ltd., ("Alberta Ltd") an aircraft leasing company, from the
president of the Company. (See Notes 3 and 11) The combination
was accounted for using the purchase method. The resulting
goodwill of $180,348 is being amortized over ten (10) years. In
August, 1999 Alberta Ltd sold its aircraft and currently has no
operations. As part of the aircraft sale, the Company expensed
the balance of goodwill against the profit on the sale of the
aircraft.
Note 6- COMMITMENTS AND CONTINGENCIES
Leases
------
The Company entered into a lease agreement for office space
which expires in the year 2000. Also, the Company entered into a
sublease arrangement with a related party whereby approximately
50% of the Company's rent and certain fixed expenses are
reimbursed to the Company. Rent expense for the Company for 1999
was approximately $18,000. Remaining commitments under this
lease mature as follows:
Year ending
December 31, Amount
------------ ------
2000 $ 23,775
==================
Other
-----
The Market Regulation Division of the National Association of
Securities Dealers, Inc. has commenced an inquiry regarding the
trading of the Company's stock. The Company is unable to predict
the outcome of this matter.
Note 7- SHORT-TERM BORROWINGS
Debenture Payable
-----------------
On September 30, 1999, the Company issued to Generation Capital
Associates ("GCA") convertible debentures in the aggregate
principal amount of $250,000 for $250,000. The debentures are
convertible into the Company's Common Stock at any time after
September 30, 1999. Pursuant to the terms of the transaction,
the Company issued 400,000 shares of The Company's common stock,
which represents the shares underlying the convertible
debentures ("Debenture Shares") to an escrow agent. The
Debenture Shares held by the escrow agent represent the shares
GCA is entitled to under the conversion provisions of the
convertible debentures. The price at which the convertible
debentures are converted shall be the average closing bid price
of the Company's common stock quoted by Nasdaq Level III for a
five-day trading period ending on the date prior to the date set
forth on GCA's conversion notice times (x) 60% (the
"Multiplier"). The Multiplier is subject to being decreased in
the event the Company does not register the Debenture shares
under the Act by specific dates.
F11
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 7- SHORT-TERM BORROWINGS (continued)
Short-term borrowings consisted of the following: December 31, December 31,
1999 1998
---- ----
10% Demand note payable to the president
of the Company $ - $ 189,631
Debenture payable 250,000 -
------------------ ------------------
$ 250,000 $ 189,631
================== ==================
At December 31, 1999 and 1998 the carrying value of short-term
borrowings approximated fair values.
Note 8- LONG-TERM DEBT
Long-term debt consists of the following at: December 31, December 31,
1999 1998
---- ----
12% term loan due February 10, 2003 $ - $ 198,325
Floating rate term loan due December 17, 2000 34,563 64,995
------------------ ------------------
34,563 263,320
Less current portion 34,563 71,518
------------------ ------------------
$ 0 $ 191,802
================== ==================
The 12% term loan requires monthly principal and interest
payments of $7,785.56 Cdn (approximately $5,060.00 US) to
maturity. The loan is secured by the Company's aircraft and
engines. The loan payments are currently being paid for by the
Company's President. In August, 1999 the Company sold the
aircraft and paid off the 12% term loan due February 10, 2003.
The floating rate (bank's prime plus 3%, currently 9 3/4%) term
loan requires monthly principal payments of approximately $2,708
plus interest to maturity.
At December 31, 1999 and 1998 the carrying values of long-term
borrowings approximated their fair values.
F12
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 9- INCOME TAXES
The provision (benefit) for income taxes consisted of the
following (in thousands):
Year ended December 31,
1999 1998
---- ----
Current:
Federal tax expense $ (76,000) $ (136,000)
State tax expense (25,000) (40,000)
Deferred:
Federal tax expense 76,000 136,000
State tax expense 25,000 40,000
---------------- ----------------
$ - $ -
================ ================
A reconciliation of differences between the statutory U.S. federal income tax rate and the
Company's effective tax rate follows:
Year ended December 31,
1999 1998
---- ----
Statutory federal income tax 34% 34%
State income tax-net of
federal benefit 6% 6%
Valuation allowance -40% -40%
---------------- ----------------
0% 0%
================ ================
The components of deferred tax assets and liabilities were as
follows:
December 31,
1999 1998
---- ----
Deferred tax assets:
Net operating loss carryforwards $ 541,000 $ 440,000
---------------- ----------------
Total deferred tax assets 541,000 440,000
Valuation allowance (541,000) (440,000)
---------------- ----------------
Net deferred tax assets $ - $ -
================ ================
F13
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 9- INCOME TAXES (continued)
SFAS No, 109 requires a valuation allowance to be recorded
when it is more likely than not that some or all of the
deferred tax assets will not be realized. At December 31,
1999, a valuation allowance for the full amount of the net
deferred tax asset was recorded because of continuing losses
and uncertainties as to the amount of taxable income that
would be generated in future years.
The Company recognized losses for the years ended December
31, 1999 and 1998. The amount of available additional net
operating loss carry forwards are approximately $250,000 for
1999 $350,000 for 1998, $150,000 for 1997, $500,000 for 1996
and $142,000 for 1995. The net operating loss carry forwards,
if not utilized, will expire in the years 2001 through 2019.
Note 10- FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value amounts have been
determined using available market information and appropriate
valuation methodologies. However, considerable judgement is
necessarily required in interpreting market data to develop
the estimates of fair value.
Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
December 31, 1999
Carrying Amount Fair Value
--------------- ----------
Assets:
Cash $ 216,993 $ 216,993
Accounts receivable, net 47,065 47,065
The carrying amounts of cash and accounts receivable are a
reasonable estimate of their fair market value.
F14
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 11- SHAREHOLDERS' EQUITY
Common Stock
------------
On February 12, 1998 the Company effected a one for ten reverse
stock split of its common stock and changed the par value of the
common stock from $.0001 per share to $.001 per share. All
references to number of shares, except shares authorized, and to
per share information in the consolidated financial statements
have been adjusted to reflect the stock split on a retroactive
basis.
On February 26, 1998 the Company exchanged 1,500,000 shares of
its common stock $.001 par value for 1,500,000 shares of
Worldwide Online Corp. stock on a share for share basis.
On February 27, 1998 the Company sold to unrelated third
parties, under Rule 504 of the Securities and Exchange Act of
1933, as amended, for net proceeds of $100,000, 20,000 units
consisting of one share of common stock $.001 par value,
twenty-two (22) class A warrants, each warrant to purchase one
share of the Company's common stock for $1.50 per share on or
before March 30, 1998, and forty-five (45) class B warrants,
each to purchase a share of the Company's common stock at any
time after April 5, 1999 and expiring on April 5, 2001 for one
dollar ($ 1.00) per share.
On November 17, 1998 the Company sold to an unrelated third
party, under Rule 504 of the Securities and Exchange Act of
1933, as amended, 240,000 $0.001 par value shares at one dollar
($1.00) per share, for net proceeds of $240,000. The proceeds of
this offering were used to pay for the acquisition of 761395
Alberta Ltd.
(See Notes 3 and 5)
Stock sales under Securities and Exchange Commission Rule 504 of
Regulation D:
On March 21, 1999 the Company sold 200,000 shares of $.001 par
value common stock in a private placement for net proceeds to
the Company of $200,000. Approximately $190,000 of the proceeds
was used to complete the acquisition of 761395 Alberta Ltd., a
company owned by the President of World Wide Data, Inc.
On April 6, 1999 the Company sold 65,000 shares of $.001 par
value common stock in a private placement for net proceeds of
$65,000 for working capital.
On September 30, 1999 as part of the sale of the convertible
debenture (Note 7), the Company issued 400,000 shares of common
stock to be held in escrow in the event of the exercise of the
convertible debenture. These shares while issued are not
considered outstanding.
F15
WORLDWIDE DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 11- SHAREHOLDERS' EQUITY (continued)
Warrants
In connection with the debenture financing on September 30, 1999
(Note 7) the Company issued 25,000 cashless warrants to purchase
the Company's common stock at $2.50 per share until September
30, 2004.
During 1998 all 440,000 class A warrants issued as part of the
February 27, 1998 unit sale were exercised for $660,000 net
proceeds to the Company. The 900,000 class B warrants issued as
part of the same unit sale remain outstanding as of December 31,
1999.
The per share exercise price of the outstanding warrants at
December 31, 1999 are as follows:
Shares Exercise Price Year of Expiration
------- -------------- ------------------
900,000 $1.00 2001
25,000 $2.50 2004
The following is a summary of warrant transactions: Year ended December 31,
1999 1998
---- ----
Outstanding at beginning of period 900,000 -
Issued as part of unit sale - 1,340,000
New warrants issued 25,000 -
Exercised during the period - (440,000)
------------------ ------------------
Outstanding and eligible for exercise 925,000 900,000
================== ==================
Note 12- GOING CONCERN MATTERS
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. As shown in the financial statements for the years
ended December 31, 1999 and 1998, the Company incurred losses of
$248,803 and $443,158, respectively, and has not made a profit
in any year since its inception. These factors among others may
indicate that the Company will be unable to continue as a going
concern for a reasonable period of time.
The financial statements do not include any adjustments relating
to the recoverability and classification of liabilities that
might be necessary should the Company be unable to continue as a
going concern. The Company's continuation as a going concern is
dependent upon its ability to generate sufficient cash flow to
meet its obligations on a timely basis and to obtain additional
financing or refinancing as may be required to ultimately attain
profitability. The Company is also actively pursuing additional
equity financing through stock sales (Note 11) and the exercise
of its outstanding warrants.
F16
EXPERTS
The audited balance sheets of the Company as at December 31, 1999 and 1998
and the audited Statements of Operations, Statements of Stockholders' Equity and
Statements of Cash Flows for the years ended December 31, 1999 and 1998 have
been included herein and in the Registration Statement in reliance upon the
report, appearing elsewhere herein, of Kempisty & Company Certified Public
Accountants, P.C., independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered hereby. Normal commission expenses and brokerage fees are payable
individually by the Selling Stockholders. All amounts are estimated except the
Securities and Exchange Commission registration fee.
Amount
----------
SEC registration fee............................................. $ 1,079.03
Accounting fees and expenses..................................... 20,000
Legal fees and expenses.......................................... 50,000
Printing expenses................................................ 5,000
Miscellaneous fees and expenses.................................. 300
Total............................................................ $76,379.03
==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
We are permitted to indemnify its directors and officers in accordance
with and as limited by its Certificate of Incorporation, By-laws and Delaware
and federal law.
The relevant provisions in our Certificate of Incorporation and By-
laws may have the effect of reducing the likelihood of derivative litigation
against directors and may discourage or deter stockholders or management from
bringing a lawsuit against directors for breach of their fiduciary duty, even
though such an action, if successfully, might otherwise have benefited the
Company and its stockholders. However, we believe the relevant provisions of
its By-laws and Certificate of Incorporation is necessary to attract and retain
qualified persons as directors and officers.
For liabilities against directors and officers arising under the
federal securities laws, the Securities and Exchange Commission has stated that,
in its opinion, indemnification of directors and officers for such liabilities
is against public policy and is therefore unenforceable.
II-1
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
We have effected various sales of unregistered securities. In issuing
unregistered shares, we relied on the exemption from registration provisions as
promulgated under Section 4(2) of the Securities Act of 1933 or Rule 504 of
Regulation D promulgated under the Securities Act for issuer transactions not
involving a public offering (as defined). Principals of each transaction were
aware and represented that they were taking the shares for investment purposes
and not with the view to distributing the same and further represented that they
were aware of the restricted nature of the securities and that the same could
not be transferred or resold absent a Registration Statement, in effect for the
same or an exemption therefrom, or otherwise sold in reliance on Rule 144.
In connection with a Financial Advisor Agreement dated January 31,
2000 between the Company and A-Z Professional Consultants, Inc. whereby the
Company retained A-Z Profesional Consultants, Inc. to provide the Company advice
with respect to possible mergers, acquisitions, strategic partnership and other
similar arrangements, the Company issued A-Z Professional Consultants, Inc.
300,000 restricted shares of the Company's Common Stock as compensation for
services to be rendered to the Company under the Agreement.
In connection with a financing transaction which closed on September
30, 1999, we issued to Generation Capital Associates convertible debentures in
the aggregate principal amount of $250,000 for $250,000. The debentures are
convertible into our Common Stock at any time after September 30, 1999.
Pursuant to the terms of the transaction, we issued 400,000 shares of our Common
Stock, which represent the shares underlying the convertible debentures to an
escrow agent. The debenture shares held by the escrow agent represent the
shares. Generation is entitled to under the convertible debentures' conversion
provisions. The price at which the convertible debentures are converted shall
be the average closing bid price of our Common Stock quoted by Nasdaq level III
for a five-day trading period ending on the date prior to the date set forth on
Generation's conversion notice times (x) 60% (the "Multiplier"). The Multiplier
is subject to being decreased in the event we do not register the debenture
shares under the Securities Act. Although 400,000 of such shares are held in
escrow for the benefit of Generation in connection with a convertible debenture
financing transaction which closed on September 30, 1999, and such 400,000
shares held in escrow for the benefit of Generation, together with the
Generation warrant, represent approximately 11.2% of our issued and outstanding
Common Stock, the terms of the convertible debentures provide that in no event
shall the holder(s) of the convertible debentures and/or the Generation warrant
be permitted to convert any debenture or exercise the Generation warrant to the
extent that such conversion or exercise would cause any such holder to be the
beneficial owner of more than 5% of the then outstanding Common Stock.
In connection with the financing transaction which closed on September
30, 1999, we issued to Generation 25,000 cashless exercise warrants to purchase
25,000 shares of our Common Stock exercisable at $2.50 for five years until
September 30, 2004. The Generation warrant has a value of $250.00 ($0.01 per
warrant). The shares of our Common Stock are issuable upon the exercise of the
Generation warrant.
II-2
Pursuant to a Purchase Agreement dated March 19, 1999, we sold
Montaque Securities International Ltd., a Bahamian corporation, 200,000 shares
of our Common Stock at a purchase price of $1.00 per share.
Pursuant to a Purchase Agreement dated April 6, 1999, we sold Montaque
Securities International Ltd., a Bahamian corporation, 65,000 shares of the our
Common Stock at a purchase price of $1.00 per share.
Pursuant to Purchase Agreement dated November 17, 1998, we sold to CBC
Holdings, Inc., a Bahamian corporation, 240,000 shares of our Common Stock at a
purchase price of $1.00 per share. We effected the transaction with CBC
Holdings, Inc. to partially finance the purchase of all of the outstanding
Common Stock of 761395 Alberta Ltd., an Alberta corporation, which is wholly
owned by Bronson B. Conrad, our President, Secretary, Treasurer and Sole
Director.
Pursuant to Purchase Agreement dated February 27, 1998, we sold to
Gold Coast International Ltd., a Bahamian corporation, 5,000 Units at a purchase
price of $5.00 per Unit. Each Unit consisted of one share of our Common Stock,
22 Class A Warrants (each to purchase one share of our Common Stock on or before
July 31, 1998 at an exercise price of $1.50) and 45 Class B Warrants (each to
purchase a share of our Common Stock at any time after April 5, 1999 but before
April 5, 2001 at an exercise price of $1.00. Gold Coast International Ltd.
exercised its Class A Warrants and purchased 110,000 shares of our Common Stock
underlying such warrants.
Pursuant to Purchase Agreement dated February 27, 1998, we sold to
Sunnyview International Ltd., a Bahamian corporation, 5,000 Units at a purchase
price of $5.00 per Unit. Each Unit consisted of one share of our Common Stock,
22 Class A Warrants (each to purchase one share of our Common Stock on or before
July 31, 1998 at an exercise price of $1.50) and 45 Class B Warrants (each to
purchase one share of our Common Stock at any time after April 5, 1999 but
before April 5, 2001 at an exercise price of $1.00. Sunnyview International
Ltd. exercised a portion of its Class A Warrants and purchased 55,000 shares of
our Common Stock underlying such warrants.
Pursuant to Purchase Agreement dated February 27, 1998, we sold to KEW
Holdings Ltd., a Bahamian corporation, 5,000 Units at a purchase price of $5.00
per Unit. Each Unit consisted of one share of our Common Stock, 22 Class A
Warrants (each to purchase one share of our Common Stock on or before July 31,
1998 at an exercise price of $1.50) and 45 Class B Warrants (each to purchase
one share of our Common Stock at any time after April 5, 1999 but before April
5, 2001 at an exercise price of $1.00. KEW Holdings Ltd. exercised its Class A
Warrants and purchased 110,000 shares of our Common Stock underlying such
warrants.
Pursuant to Purchase Agreement dated February 27, 1998, we sold to JBS
Holdings Ltd., a Bahamian corporation, 5,000 Units at a purchase price of $5.00
per Unit. Each Unit consisted of one share of our Common Stock, 22 Class A
Warrants (each to purchase one share of our Common Stock on or before July 31,
1998 at an exercise price of $1.50) and 45 Class B Warrants (each to purchase
one share of our Common Stock at any time after April 5,
II-3
1999 but before April 5, 2001 at an exercise price of $1.00. JBS Holdings Ltd..
exercised a portion of its Class A Warrants and purchased 55,000 shares of our
Common Stock underlying such warrants.
In connection with a Share Exchange Agreement dated as of February 27,
1998 by and among our Company, Bridgewater Capital Corp. and Bronson B. Conrad
(Conrad, together with Bridgewater, the "WWOC Shareholders"), we exchanged
1,500,000 shares of our Common Stock with the WWOC Shareholders for an aggregate
of 1,500,000 shares of Common Stock of WWOC in the amounts and proportions as
set forth below:
No. of Worldwide Data, Inc.
Seller No. of WWOC Shares Exchanged Shares Received
- ------ ---------------------------- ---------------
Conrad 1 1
Bridgewater 1,500,000 1,500,000
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Exhibit No. DESCRIPTION
3.1 Certificate of Incorporation of the
Company
3.2 Bylaws of the Company
4.1 Warrant Certificate issued to Gold Coast for 225,000 warrants to purchase common stock of the Company, dated
February 27, 1998
4.2 Warrant Certificate issued to Sunnyview for 225,000 warrants to purchase common stock of the Company dated
February 27, 1998
4.3 Warrant Certificate issued to Kew for 225,000 warrants to purchase common stock of the Company dated February 27,
1998
4.4 Warrant Certificate issued to JBS for 225,000 warrants to purchase common stock of the Company dated February 27,
1998
5.1 Opinion of Heller Ehrman White & McAuliffe LLP (to be filed by amendment)
10.1 Convertible Debenture of Worldwide Data, Inc.(the "Company") in the amount of $50,000 issued to Generation Capital
Associates ("GCA") dated September 30, 1999
10.2 Financing Terms Agreement by and between the Company and GCA dated September 20, 1999;
10.3 Warrant Certificate for 25,000 shares of common stock of the Company issued to GCA dated September 27, 1999
10.4 Escrow Agreement by and between the Company and GCA dated September 20, 1999
10.5 Purchase Agreement by and between the Company and Montague Securities International Ltd., dated April 6, 1999
10.6 Purchase Agreement by and between the Company and Montaque Securities International Ltd dated March 19, 1999.
10.7 Purchase Agreement by and between the Company and CBC Holdings, Inc., dated November 17, 1998
10.8 Stock Purchase Agreement by and among the Company, Bronson B. Conrad and 761395 Alberta ("Alberta") Ltd.dated
November 17, 1998
10.9 Aircraft Security Agreement by and between the Company and Alberta dated March 10, 1998
10.10 Stock Exchange Agreement by and between the Company, Bridgewater Capital Corp.and Conrad, dated February 27, 1999
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10.11 Purchase Agreement by and between the Company and Gold Coast International Ltd.("Gold Coast") dated February
27, 1998
10.12 Purchase Agreement by and between the Company and Sunnyview International Ltd.("Sunnyview") dated February 27, 1998
10.13 Purchase Agreement by and between the Company and KEW Holdings Ltd. ("Kew") dated February 27, 1998
10.14 Purchase Agreement by and between the Company and JBS Holdings Ltd., ("JBS") dated February 27, 1998
10.15 Guaranty of Bronson B. Conrad to Worldwide Data, Inc. relating to US$177,685 Promissory Note.
10.16 Advisory Agreement between the Company and A-Z Professional Consultants, Inc. dated January 31, 2000.
20.1 Promissory Note for $189,631.58 by and between the Company and Conrad dated November 17, 1998
20.2 Promissory Note for CDN $350,000 by and between 761395 Alberta Ltd, Bronson B. Conrad and Textron Financial
Corporation
20.3 Promissory Note for US$177,685 by and between Am Can Minerals Limited, Worldwide Data, Inc.
23.1 Consent of Kempisty & Company, Certified Public Accountants
23.2 Consent of Heller Ehrman White & McAullife LLP to be filed by amendment (included in the opinion filed as
Exhibit 5.1 hereto)
24.1 Power of Attorney (contained on page II-5 hereto)
27 Financial Data Schedule (b) Financial Statement Schedules
All schedules have been omitted because the information required to be set
forth in the schedules is not applicable or is shown in the financial
statements or notes to the financial statements.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this 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 (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
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that which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price, set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and (iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment that contains a form of
prospectus 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 file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end
of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-1 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Toronto, Province of Ontario, on the
11th day of February, 2000.
WORLDWIDE DATA, INC.
By: /s/ BRONSON B. CONRAD
-------------------------
President, Secretary, Treasurer and Sole Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME TITLE DATE
- ---- ----- ----
/s/ BRONSON B. CONRAD President, Secretary, Treasurer and Sole Director March 16, 2000
- --------------------- (Principal Financial Officer)
/s/ ROMEO COLACITTI Chief Executive Officer March 16, 2000
- ------------------- (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below appoints Bronson B. Conrad his true and lawful attorneys-in-fact and agent
with full power of substitution and resubstitution, for him/ and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement, including any post-effective amendments as well as
any related registration statement (or amendment thereto) filed in reliance upon
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
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NAME TITLE DATE
- ---- ----- ----
/s/ BRONSON B. CONRAD President, Secretary, Treasurer and Sole Director March 16, 2000
- --------------------- (Principal Financial Officer)
/s/ ROMEO COLACITTI Chief Executive Officer March 16, 2000
- ------------------- (Principal Executive Officer)
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