UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WAYCOOL3D, INC.
(Name of Small Business Issuer in its Charter)
New Jersey 22-3720629
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State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
306 Demers Avenue
East Grand Forks, Minnesota 56721
(218)773-3297
(Address and telephone number of principal executive offices)
306 Demers Avenue
East Grand Forks, Minnesota 56721
(Address of principal place of business or intended principal place of business)
Bradly Kerr
President and Chairman of the Board
Waycool3D.com, Inc.
306 Demers Avenue
East Grand Forks, Minnesota 56721
(218) 773-3297
(Name, address and telephone number of agent for service)
Copies of communications to:
Anslow & Jaclin, LLP
4400 Route 9, 2nd Floor
Freehold, New Jersey
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, 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 of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF AMOUNT TO BE REGISTERED PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
Common Stock (2) 800,000 $400,000 $36.80
Par value $.0001 per share
Common Stock (3) 1,880,000 $940,000 $86.48
Par value $.0001 per share
(1) Estimated solely for the purpose of computing the amount of the registration
fee in accordance with Rule 457(c).
(2) Represents shares being sold to the public at $.50 per share.
(3) Represents shares owned by 4 of our security holders which are not part of
this offering but can be sold at a price of $.50 per share until our shares are
quoted on the OTC Bulletin Board and thereafter at prevailing market prices or
privately negotiated prices.
The information in this prospectus is not complete and may be changed. The
selling security holders may not sell these securities until the registration
statement filed with the securities and exchange commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Preliminary prospectus subject to completion dated May , 2002
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
securities act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.
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WAYCOOL3D, INC.
800,000 shares of Common Stock
Offering Price: $.50 per share ($400,000)
1,880,000 shares of our common stock are being registered
by selling security holders at a price of $.50 per
share until our shares are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or privately negotiated prices.
We are offering 800,000 shares of our common stock, par value $.0001, through
our officers, directors and employees at the offering price of $.50 per common
share. We are also registering 1,880,000 shares of our common stock held by 4 of
our security holders, known as the selling security holders which shares are
being registered for resale pursuant to this registration statement.
Prior to this offering, there has been no public market for our common stock and
there is no assurance that such a public market will develop or be sustained
after the completion of the offering. The initial public offering price of our
common stock has been determined by negotiation by us and bears no relation to
our earnings, assets, book value, net worth, or any other recognized criteria of
value.
The securities offered in this prospectus involve a high degree of risk. You
should carefully consider the factors described under the heading "risk factors"
beginning on page 3.
Neither the securities and exchange commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2002
PRICE TO PUBLIC UNDERWRITING DISCOUNTS PROCEEDS TO
AND COMMISSIONS COMPANY
Per Share $ .50 $ 0 $.50
Total Maximum $ 400,000 $ 0 $400,000
Currently, we have not established an underwriting arrangement for the sale of
these shares. All funds that are received by us in the offering are available
for immediate use. The shares are being offered on a best efforts basis by our
officers, directors and employees. There is no minimum number of shares that
must be sold before we can utilize the proceeds of the offering. Funds will not
be placed in an escrow or similar account until a minimum amount has been
raised.
Currently, our stock is not trading on any public market. It is our intention to
have a market maker apply for trading on our behalf on the Over the Counter
Bulletin Board ("OTC BB") following the effectiveness of this registration
statement.
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PROSPECTUS SUMMARY
Please note that throughout this prospectus, the words "we", "our" "us" or
"WayCool" refers to Waycool3d, Inc. and not to the selling security holders.
About Us
Through our wholly owned subsidiary, Waycool3d.com, Inc., we use cutting-edge 3D
technology in the development, manufacturing and production of 3D hardware,
software, videos, lighting fixtures and home/office decor products for
commercial and consumer use. We also provide video to our customers for our 3D
video projectors in DVD format or by transmitting 3D signals to our customers
via the Internet.
We focus on five complementary areas:
1. Research and Development;
2. Manufacture and Distribution of 3D products;
3. Production of 3D video content;
4. Internet Broadcasting; and
5. Sales and Promotion.
These divisions, with the exception of Internet Broadcasting, are staffed and
fully functioning. Research and Development is strongly tied to manufacturing,
production of 3D video and sales and promotion. We see collaboration as the key
to launching a successful 3D product line. This tight collaboration allows us to
be flexible and respond quickly to the changing marketplace. While we continue
to produce 3D video projectors and the patented 3D Video Wall, we are also
introducing a host of other new and exciting 3D products, from lighting fixtures
to floor projectors to conference tables and jewelry boxes. We also produce the
specially formatted still and video content for all of these products.
How We Are Organized
We were incorporated in the State of New Jersey on April 6, 2000 under the name
of Segway VII Corp. We filed a Certificate of Amendment on April 23, 2002
changing our name to Waycool3D, Inc. On April 18,2002, we entered into a Stock
Purchase Agreement and Share Exchange with Waycool3d.com, Inc., a Nevada
corporation in which our shareholders transferred a total of 9,000,000 shares of
our common stock to the shareholders of Waycool3d.com, Inc. Pursuant to the
Agreement, Waycool3d.com, Inc. became our wholly owned subsidiary and the
officers and directors of Waycool3d.com, Inc. became our officers and directors.
At the same time, our sole officer and director resigned. Our total authorized
common stock is 100,000,000 shares, $0.0001 par value. Our total authorized
preferred stock is 20,000,000 shares, $0.0001 par value. We currently have
10,000,000 common shares outstanding and no preferred shares outstanding.
Waycool3d.com, Inc. was incorporated in the State of Nevada on May 22, 2000. Its
total authorized common stock is 50,000,000 shares, $0.001 par value. 26,240,000
common shares are outstanding.
Where You Can Find Us
Our principal executive offices are located at 306 Demers Avenue, East Grand
Forks, Minnesota 56721; and our telephone number is (218)773-3297.
Securities Offered by us
The maximum amount of shares offered by us is 800,000 shares of our common stock
at $.50 per share, or $400,000. We will begin to sell shares on the date listed
on the cover of this prospectus.
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Minimum Subscription
The minimum subscription in this offering is $1,000 or 2,000 shares.
Additional Shares Being Offered
Our selling security holders that we have identified in this prospectus are
offering an additional 1,880,000 of our shares at a price of $.50 per share
until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. We will not receive any
of the proceeds from any sales of shares by our selling security holders. These
shares will be available to be sold immediately after this registration
statement becomes effective.
Each of the selling security holders may offer and sell from time to time shares
of our common stock directly or through broker-dealers or underwriters who may
act solely as agents, or who may acquire shares as principals.
Concurrent offerings
The selling security holder offering will run concurrently with the primary
offering. 1,880,000 shares of our common stock owned by the selling security
holders, will be registered by the registration statement of which this
prospectus is a part. In the event that the selling security holders sell some
or all of their shares, which could occur while we are still selling shares
directly to investors in this offering, trading prices for the shares could fall
below the offering price of the shares.
Application to OTC Electronic Bulletin Board
It is our intention to seek a market maker to apply for trading on the Over the
Counter Electronic Bulletin Board, also known as the OTCBB, following the
effectiveness of this registration statement.
SUMMARY FINANCIAL DATA
The following table sets forth our summary historical financial information for
the years ended December 31, 2001 and 2000 for us and for our subsidiary,
Waycool3D.com, Inc. The summary historical financial data should be read in
conjunction with our financial statements, notes "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this prospectus. The financial statements for us for the years ended December
31, 2001 and 2000 have been audited by Gately & Associates, LLC, our independent
certified public accountant. The financial statements for Waycool3d.com, Inc.,
our wholly owned subsidiary, for the years ended December 31, 2001 and 2000 have
been audited by Brady, Martz & Associates, P.C., independent certified public
accountants.
WAYCOOL3D,INC. a New Jersey corporation
Year Ended Year Ended
December 31, December 31,
2001 2000
STATEMENT OF OPERATIONS
Revenues $ 0 $ 0
Net Income(loss) $ (943) $ (797)
Net Income(loss)per share $Less than ($0.01) $Less than ($0.01)
Number of Shares used in
calculation of net income 5,000,000 5,000,000
(loss) per share
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Year Ended Year Ended
December 31, December 31,
2001 2000
BALANCE SHEET DATA
Working Capital $ 10 $ 3
Total Assets $ 10 $ 3
Total Shareholder's Equity $(915) $ (172)
WAYCOOL3D.COM, INC., a Nevada corporation
Year Ended Year Ended
December 31, December 31,
2001 2000
STATEMENT OF OPERATIONS
Revenues $ 250 $ 0
Net Income(loss) $(342,824) $ (35,516)
Net Income(loss)per share $ (0.01) $ (0.02)
Number of Shares used in
calculation of net income 26,240,000 2,100,000
(loss) per share
Year Ended Year Ended
December 31, December 31,
2001 2000
BALANCE SHEET DATA
Working Capital $ 43,935 $ 564
Total Assets $ 495,799 $ 2,528
Total Shareholder's Equity $(310,238) $ 2,528
RISK FACTORS
You should carefully consider the following risk factors and other information
in this prospectus before deciding to purchase shares of our common stock. Your
investment in our common stock is highly speculative and involves a high degree
of risk. You should not invest in our common stock unless you can afford to lose
your entire investment and you are not dependent on the funds you are investing.
We will require additional funds to achieve our current business strategy and
our inability to obtain additional financing could have a negative adverse
effect on our ability to maintain business operations
Even with the proceeds from this offering, we may need to raise additional funds
through public or private debt or sale of equity to achieve our current business
strategy. This financing may not be available when needed. Even if this
financing is available, it may be on terms that we deem unacceptable or are
materially adverse to your interests with respect to dilution of book value,
dividend preferences, liquidation preferences, or other terms. Our inability to
obtain financing would have a material adverse effect on our ability to
implement our growth strategy, and as a result, could require us to diminish or
possibly cease our operations.
We depend upon our key employees to generate revenues and if we lose the
services of these employees we will be unable to provide the services to our
clients
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Our success depends to a significant degree upon the services of our officers
and key employees, specifically Bradly Kerr, Peter M. Zavoral and John T.
Zavoral. We further believe that our future success will depend in large part
upon our ability to attract and retain additional highly skilled technical,
managerial, sales and marketing personnel. There can be no assurance that we
will succeed in such efforts among intense competition for talents within our
industry. Failure to attract and retain such personnel could prevent us from
providing services to our clients and to operate our business.
We have a limited operating history that you can use to evaluate us and the
likelihood of our success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered by a small
developing company
We have only generated limited revenues to date. We have no significant assets
or financial resources. We have been engaged solely in start-up activities and
have not commenced material operations in our core business of developing,
manufacturing and producing 3D hardware, software, videos, lighting fixtures and
home/office decor products for commercial and consumer use. The likelihood of
our success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered by a small developing company
starting a new business enterprise and the highly competitive environment in
which we will operate. To address these risks, we must, among other things,
respond to competitive developments; continue to attract, retain and motivate
qualified persons, research and develop new technology; and commercialize
services incorporating such technologies.
There can be no assurance we will be successful in addressing these risks or any
other risks. We have not been in business long enough to make a reasonable
judgment as to our future performance. There can be no assurance that we will be
able to successfully implement our business plan, generate sufficient revenue to
meet our expenses, operate profitably or be commercially successful. Since we
have a limited operating history and there is no track record for this in the
marketplace, we cannot assure you that our business will be profitable or that
we will ever generate sufficient revenues to meet our expenses and support our
anticipated activities. Even if we do achieve profitability, we may be unable to
sustain or increase profitability on a quarterly or annual basis in the future.
We expect to have quarter to quarter fluctuations in revenues, expenses, losses
and cash flow, some of which could be significant. Results of operations will
depend upon numerous factors, some of which are beyond our control, including:
o regulatory actions;
o market acceptance of our products and services;
o new product and service introductions; and
o competition.
As we have such a limited history of operation, you will be unable to assess our
future operating performance or our future financial results or condition by
comparing these criteria against our past or present equivalents.
If we are unable to generate significant revenues from our operations, we may be
unable to provide the products to our current customers and to expand our
distribution network
If we are unable to generate significant revenues from our products, we will not
be able to achieve profitability or continue operations. If we are unable to
generate significant revenues, we could be forced to delay, scale back or
eliminate certain product development programs. In addition, such inability to
generate revenues could have a material adverse effect on our business,
operating results, or financial condition to such extent that we are forced to
restructure, file for bankruptcy, sell assets or cease operations, any of which
could put your investment at significant risk.
Because we are a development stage company which is marketing our product, our
business has a high risk of failure
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We are a development stage company that is attempting to sell a new brand of
products. Our business condition raises substantial doubt as to our continuance
as a going concern. To date, we have completed only part of our business plan
and we can provide no assurance that we will be able to sell enough of our
products in order to achieve profitability. It is not possible at this time for
us to predict with assurance the potential success of our business.
The existence of recurring losses from operations may make it more difficult for
us to raise additional debt or equity financing needed to run our business.
The OTC Bulletin Board will eventually be phased out due to the new proposed
Bulletin Board Exchange which will be introduced in 2003 and will require us to
meet qualitative listing standards or be quoted on the Pink Sheets
After this offering is completed, we will apply to the OTC Bulletin Board for a
quotation of our shares of common stock. In 2003, the NASD has proposed a new
market, the Bulletin Board Exchange, or BBX, which will eventually take the
place of the OTC Bulletin Board. The BBX will have qualitative listing
standards, but no minimum share price, income or asset requirements. The BBX's
new system will bring increased speed and reliability to trade executions and
improve the overall transparency of the marketplace. If we fail to meet the
qualitative standards of the BBX by the time the OTC Bulletin Board is phased
out, we will have to have our shares quoted on the Pink Sheets.
Sales by selling security holders may sell their shares below the $.50 offering
price which may cause our stock price to fall and decrease demand in the primary
offering may decrease the value of your investment
The selling security holder offering will run concurrently with the primary
offering. 1,880,000 shares of the common stock owned by the selling security
holders will be registered by the registration statement of which this
prospectus is a part. The selling security holders may sell some or all of their
shares immediately after they are registered at the price of $.50 per share
until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices. In the event that the
selling security holders sell some or all of their shares, trading prices for
the shares could fall below the offering price of the shares.
In addition, sales of substantial amounts of our common stock in the public
market after this offering is completed could decrease the prevailing market
price of our common stock. Sales of substantial amounts of common stock in the
public market, or the perception that sales could occur, could decrease the
prevailing market price for the common stock and could impair our ability to
raise capital through a public offering of equity securities.
Control by our officers, directors and principal shareholders could prevent a
change of control and may affect the market price of our common stock
Our current officers, directors and principal shareholders currently own 74.22%
of our issued and outstanding common stock and if the full amount of shares are
sold in this offering will own 68.72% of our issued and outstanding common
stock. Accordingly, for as long as these shareholders continue to own more than
50% of our common stock, they will be able to elect our entire board of
directors, control all matters that require a stockholder vote (such as mergers,
acquisitions and other business combinations) and exercise a significant amount
of influence over our management and operations. This concentration of ownership
could have the effect of preventing us from undergoing a change of control in
the future and might affect the market price of our common stock.
Investors that disagree with decisions made by our Board of Directors, will lack
the ability to change the composition of our board of directors and therefore
may lose their investment based on decisions made by our board of directors
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Since the investors will own less than 10% of our outstanding shares and since
the shareholders elect directors, if investors disagree with decisions made by
the Board of Directors, the investors will lack the ability to change the
composition of our board of directors. Therefore, the shareholders will have to
rely on our current Board of Directors and may lose their investment if the
Board of Directors does not make prudent business decisions.
Future sales of shares by our principal shareholders could adversely affect the
market price of our common stock
There are 10,000,000 shares of our common stock outstanding, of which 7,422,046
shares (or 74.22%) are held beneficially by our principal shareholders. These
shareholders will be able to sell these shares in the public markets from time
to time, subject to certain limitations on the timing, amount and method of such
sales imposed by SEC regulations. If these shareholders were to sell a large
number of shares, the market price of our common stock could decline
significantly. Moreover, the perception in the public markets that such sales by
our principal shareholders might occur could also adversely affect the market
price of our common stock.
Any acquisitions by us may disrupt our present business operations if we can not
integrate the acquisitions into our business
We may seek to acquire other businesses, and we may be unable to identify,
acquire, successfully integrate or profitably manage any business without
substantial expense, delay or other operational or financial problems. We are
unable to predict whether or when any prospective acquisitions will occur or the
likelihood of a material transaction being completed on favorable terms and
conditions. In addition, acquisitions of other companies commonly involve
certain risks, including, among others:
* the difficulty of assimilating the acquired operations and personnel;
* the potential disruption of our ongoing business and diversion of resources
and management time; * the possible inability of management to maintain uniform
standards, controls, procedures and policies;
* the risks of entering markets in which we have little or no direct prior
experience; and
* the potential impairment of relationships with employees or customers as a
result of changes in management.
These risks may result in our failure to successfully integrate such
acquisitions into our business and may cause us to have problems servicing our
present clients. This failure may cause us to lose current business and
significantly reduce our revenue stream. In addition, we may be unable to
achieve the financial, operational and other benefits we anticipate from any
acquisition. We may be unable to manage these companies profitably or
successfully integrate their operations with our own. It is possible that these
failed business ventures may cause us to cease or severely decrease operations
due to the costs of operating such business.
Failure to develop and maintain our professional reputation may result in a loss
of business as well as a failure to secure new customers and hire qualified
employees
Our ability to obtain secure new customers depends heavily on our overall
reputation as well as the individual reputations of our key employees. We intend
to obtain new business from referrals by our customers. Therefore, the failure
to satisfy our present customers, could seriously impair our ability to secure
new business. As a service provider, we rely on the quality of our product and
service to maintain our business and attract new customers. Any factor that
diminishes our reputation or the reputations of any of our personnel could make
it difficult for us to compete for new customers and qualified employees, which
would result in a significant loss of business. Failure to obtain contracts
through effective marketing programs and failure to secure funding for marketing
could result in lower than anticipated revenues.
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We have not secured intellectual property protection for all of our products and
services and therefore we may be liable for possible infringement violations
We have one patent granted for the video wall and are in the process of filing
for a patent on our 3D Video Monitor Attachment. We have no other patents,
copyrights or other intellectual property protection for our products although
we have applied to register WAYCOOL3D.COM as our trademark. We will continue to
apply to file additional design and utility patent applications as we develop
and market our new products to maintain and protect our products. There is no
assurance that we will receive patent, copyright and/or trademark protection on
our name and products in the future. There is no assurance that our products do
not infringe the rights of others, and there is no assurance that any
intellectual property rights can be secured or enforced to protect our
proprietary rights. Any infringement of an intellectual right by us will have an
adverse affect on our operations.
Intense Competition from other companies could negatively impact our business
At this time, we do not know of any other companies which compete in our
specific market place. However, there is no assurance that one or more
competitors will not develop products or services that are more effective or
better accepted than those that we seek to commercialize. The market place for
our services are fragmented and we face different sources of competition in
providing our various services. We may be unable to compete successfully with
competitors or with any new competitors. We may compete with larger companies
which have significantly greater personnel, financial, managerial, technical and
marketing resources than we do. This competition from companies with greater
resources and reputations may result in our failure to maintain our existing
customers as well as failure to generate new business.
In addition, we may face competition based on price. If our potential
competitors lower rates as they relate to their products, then it may not be
possible for us to sell our products at economically viable prices. Increased
competition could result in:
o Lower than projected fees from our products;
o Lower profit margins on our products; and
o Our inability to produce additional products in a timely fashion.
Any one of these results could adversely affect our business, financial
condition and results of operations. In addition, our potential competitors may
develop competing products and services that achieve greater market acceptance.
It is also possible that new competitors may emerge and acquire significant
market share. Our inability to achieve sales and revenue due to competition will
have a negative effect on our business, financial condition and results of
operations.
You may not be able to liquidate your investment since there is no assurance
that a public market will develop for our common stock or that our common stock
will ever be approved for trading on a recognized exchange
There is no established public trading market for our securities. After this
document is declared effective by the Securities and Exchange Commission, we
intend to seek a market maker to apply for a listing on the OTC BB in the United
States. Our shares are not and have not been listed or quoted on any exchange or
quotation system. We cannot assure you that a market maker will agree to file
the necessary documents with the National Association of Securities Dealers,
which operates the OTC BB, nor can there be any assurance that such an
application for quotation will be approved or that a regular trading market will
develop or that if developed, will be sustained. In the absence of a trading
market, you may be unable to liquidate your investment, which will result in the
loss of your investment.
If a market for our common stock does develop, our stock price may be volatile
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There is currently no market for our common stock and there is no assurance that
a market will develop. If a market develops, we anticipate that the market price
of our common stock will be subject to wide fluctuations in response to several
factors including:
o Our ability to generate revenues from the sale of our product;
o Increased competition from competitors who offer similar products; and
o Our financial condition and results of our operations.
The offering price of the shares of our common stock was arbitrarily determined
and therefore should not be used as an indicator of the future market price of
our shares
Since our shares are not listed or quoted on any exchange or quotation system,
the offering price of $.50 for the shares of common stock was arbitrarily
determined. The facts considered in determining the offering price were our
financial condition and prospects, our limited operating history and the general
condition of the securities market. The offering price is not an indication of,
and is not based upon, our actual value. The offering price bears no
relationship to our book value, assets or earnings or any other recognized
criteria of value. The offering price should not be regarded as an indicator of
the future market price of our shares of common stock.
"Penny Stock" rules may make buying or selling our common stock difficult
Trading in our securities is subject to the "penny stock" rules. The SEC has
adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer who recommends
our securities to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for
the purchaser and receive the purchaser's written agreement to execute the
transaction. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with trading
in the penny stock market. In addition, broker-dealers must disclose commissions
payable to both the broker- dealer and the registered representative and current
quotations for the securities they offer. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in our securities, which could severely limit their market price
and liquidity of our securities. Broker-dealers who sell penny stocks to certain
types of investors are required to comply with the Commission's regulations
concerning the transfer of penny stocks. These regulations require broker-
dealers to:
- - Make a suitability determination prior to selling a penny stock to the
purchaser;
- - Receive the purchaser's written consent to the transaction; and
- - Provide certain written disclosures to the purchaser.
These requirements may restrict the ability of broker-dealers to sell our shares
of common stock and may affect your ability to resell your shares of our common
stock.
We do not expect to pay dividends and investors should not buy our common stock
expecting to receive dividends
We have not paid any dividends on our common stock in the past, and do not
anticipate that we will declare or pay any dividends in the foreseeable future.
Consequently, you will only realize an economic gain on your investment in our
common stock if the price appreciates. You should not purchase our common stock
expecting to receive cash dividends.
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this prospectus under "Risk Factors," Plan of
Operation," "Business," and elsewhere are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve known and
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unknown risks, uncertainties and other factors which may cause our or our
industry's actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors include, among
others, the factors set forth above under "Risk Factors."
In some cases, you can identify forward-looking statements by the words
"believe," "expect," "anticipate," "intend" and "plan" and similar expressions
or the negative of these terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance or achievements. We caution you not to place undue
reliance on these forward-looking statements.
USE OF PROCEEDS
We estimate that we will receive gross proceeds of $400,000 from the sale of the
800,000 shares of our common stock as the maximum amount of shares in this
offering assuming an initial public offering price of $.50 per share. The net
proceeds, after expenses of $50,000 payable by us in connection with this
offering are estimated to be approximately $350,000. We cannot predict with
certainty how the proceeds of this offering will be used, we currently intend to
use them as follows:
Gross Proceeds
--------------
$100,000 $200,000 $ 400,000
-------- ---------- ----------
Dollar Amount Percentage Dollar Amount Percentage Dollar Amount Percentage
------------- ---------- ------------- ---------- ------------- ----------
Offering expenses $ 50,000 50.00% $ 50,000 25.00% $ 50,000 12.50%
Working capital $ 25,000 25.00% $ 85,000 42.50% $200,000 50.00%
Acquisitions $ 20,000 20.00% $ 50,000 25.00% $100,000 25.00%
General corporate $ 5,000 5.00% $ 15,000 7.5% $ 50,000 12.50%
Purposes
Gross Proceeds $100,000 100% $200,000 100% $400,000 100%
Net Proceeds $ 50,000 $150,000 $350,000
The cost, timing and amount of funds we need cannot be precisely determined at
this time and will be based on numerous factors. Our board of directors has
broad discretion in determining how the proceeds of this offering will be
applied.
The foregoing represents our current best estimate of our use of the net
proceeds derived from the exercise of the options to purchase the shares of our
common stock, if any, based upon our present plans, the state of our business
operations and current conditions in the industry in which we operate. We
reserve the right to change the use of the net proceeds
12
if unanticipated developments in our business, business opportunities, or
changes in economic, regulatory or competitive conditions, make shifts in the
allocations of proceeds necessary or desirable.
LACK OF MARKET FOR OUR COMMON STOCK
There is no established public trading market for our shares of common stock. We
intend to seek a market maker to apply for a listing on the OTC BB in the United
States. Our shares are not and have not been listed or quoted on any exchange or
quotation system.
DETERMINATION OF OFFERING PRICE
Since our shares of common stock are not listed or quoted on any exchange or
quotation system, the offering price of the shares of our common stock was
arbitrarily determined. The facts considered in determining the offering price
were our financial condition and prospects, our limited operating history and
the general condition of the securities market. The offering price is not an
indication of and is not based upon our actual value. The offering price bears
no relationship to our book value, assets or earnings or any other recognized
criteria of value. The offering price should not be regarded as an indicator of
the future market price of our securities.
DIVIDENDS
To date, we have not declared or paid any dividends on our common stock. We
currently do not anticipate paying any cash dividends in the foreseeable future
on our common stock. Although we intend to retain our earnings, if any, to
finance the development and growth of our business, our board of directors will
have the discretion to declare and pay dividends in the future. Payment of
dividends in the future will depend upon our earnings, capital requirements, and
other factors, which our board of directors may deem relevant.
PENNY STOCK CONSIDERATIONS
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system). Penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The
broker-dealer must also make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These requirements may have the effect of
reducing the level of trading activity, if any, in the secondary market for a
security that becomes subject to the penny stock rules.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read in conjunction
with our financial statements and notes thereto appearing in this prospectus.
13
The following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. Our actual results may differ significantly
from the results, expectations and plans discussed in these forward-looking
statements.
During the past year we have spent considerable time and capital resources
defining and developing our strategic plan operating in the development of our
products.
Our operations have been devoted primarily to developing a product line. We
intend to grow through sales of product, development of a distributorship
network and further research and development. Because of uncertainties
surrounding our development, we anticipate incurring development stage losses in
the foreseeable future. Our ability to achieve our business objectives is
contingent upon our success in raising additional capital until adequate
revenues are realized from operations.
Development stage expenses during the year ended December 31, 2001 and December
31, 2000 were $343,583 and $35,516 respectively. The expenses incurred were
primarily due to various consulting, managerial, advertising and payroll
expenses in connection with our development of our product. On-going increases
to development stage expenses are anticipated.
Liquidity and Capital Resources
For the year ended December 31, 2001, we incurred a net loss of $342,824. Our
accumulated deficit since date of inception is $378,340. Such accumulated losses
have resulted primarily from costs incurred in the development of our product,
salary and various professional fees.
We continue to experience cash flow shortages, and anticipate this continuing
through the foreseeable future. We believe that additional funding beyond this
offering will be necessary in order for us to continue as a going concern.
However, at this time we can not quantify the amount of additional funding that
will be necessary. We will investigate several forms of private debt and/or
equity financing in the future, although there can be no assurances that we will
be successful in procuring such financing or that it will be available on terms
acceptable to us.
At this time, we are unable to quantify our funding need because it depends on a
large number of factors, including the need to hire additional personnel,
consultant costs, additional office space, marketing costs, and legal fees
associated with the formation of strategic alliances. The amount of funding for
these needs is dependent on how well our product is received, the demand for our
services and costs associated with marketing our product. Given our limited
history, these factors remain unknown at this time.
12-Month Plan of Operation
The following is our budget and forecasted income and expenses for the next
twelve months. Now that we have some products fully developed and ready for
market, we will increase our sales efforts by continuing advertising campaigns,
distributorship agreements and further research and development. We are well
into negotiations in several areas which should come to fruition within the next
6 to 12 months. Though there is no guarantee that we will be successful, we are
concentrating our efforts on setting up distributorships with reputable and
successful businesses. We will require the additional funding from this offering
to meet production costs, research and development, patenting and general
operating costs until our revenues increase.
Second Quarter 2002- First Quarter 2003
Sales:
Gross Sales $ 8,033,960
Less: Returns & Allowances --
-----------
14
Net Sales $ 8,033,960
-----------
Cost of Goods Sold:
Direct Expenses: $ 3,737,750
-----------
Indirect Expenses:
Rent $ 3,600
Utilities 33,500
Office Supplies 7,750
Indirect Supplies 6,000
Maintenance Payroll 33,500
Management Payroll 54,000
Worker's Compensation 6,000
Benefits 57,600
Payroll Taxes 57,600
Insurance 18,000
-----------
Total Indirect Expenses $ 277,500
-----------
Total Cost of Goods $ 4,015,300
-----------
Gross Profit $ 4,018,660
-----------
Operating Expenses:
Sales Expenses:
Salaries and Benefits $ 300,000
Sales Commissions (20%) 1,606,792
Advertising 180,000
Web Site Marketing 60,000
Office Supplies 6,000
Office Rent 30,000
Office Utilities 6,000
-----------
Total Sales Expenses $ 2,188,792
-----------
Development Expenses
Patents $ 144,000
Copyrights 24,000
Research & Development 30,000
Payroll 90,000
-----------
Total Dev. Expenses $ 288,000
-----------
General Expenses
Insurance $ 18,000
Office Supplies 6,000
Telephone/Internet 6,000
Utilities 6,000
Office Equipment 1,200
Dues & Subscriptions 3,000
Travel Expenses 60,000
Legal Costs 30,000
Accounting Fees 30,000
Depreciation 24,000
Vehicle Insurance 6,000
Gas & Maintenance 6,000
Vehicle Repair 6,000
Web Site Dev. & Maint. 18,000
Interest Expense 43,100
-----------
Total General Expenses $ 263,303
-----------
Total Expenses $ 2,740,085
-----------
15
Income before income taxes $ 1,278,565
Income Taxes 508,066
-----------
Net Income (Loss) $ 770,499
-----------
ABOUT US
We were incorporated in the State of New Jersey on April 6, 2000 under the name
of Segway VII Corp. We filed a Certificate of Amendment on April 23, 2002
changing our name to Waycool3d, Inc. On April 18,2002, we entered into a Stock
Purchase Agreement and Share Exchange with Waycool3d.com, Inc., a Nevada
corporation in which our shareholders transferred a total of 9,000,000 shares of
our common stock to the shareholders of Waycool3d.com, Inc. Pursuant to the
Agreement, Waycool3d.com, Inc. became our wholly owned subsidiary and the
officers and directors of Waycool3d.com, Inc. became our officers and directors.
At the same time, our sole officer and director resigned. Waycool3d.com, Inc.
was incorporated in the State of Nevada on May 22, 2000. Through our wholly
owned subsidiary, Waycool3d.com, Inc., we use cutting-edge 3D technology in the
development, manufacturing and production of 3D hardware, software, videos,
lighting fixtures and home/office decor products for commercial and consumer
use. We also provide video to our customers for our 3D video projectors in DVD
format or by transmitting 3D signals to our customers via the Internet. Our 3D
technology produces the effect of an image floating in midair without the use of
special glasses (as in the movie/theater industry). Our 3D effect is visible
with the naked eye.
We focus on five complementary areas:
1. Research and development;
2. Manufacture and distribution of 3D products;
3. Production of 3D video content;
4. Internet broadcasting; and
5. Sales and promotion.
These divisions, with the exception of Internet broadcasting, are staffed and
fully functioning. Research and development is strongly tied to manufacturing,
production of 3D video and sales and promotion. We see collaboration as the key
to launching a successful 3D product line. This tight collaboration allows us to
be flexible and respond quickly to the changing marketplace. While we continue
to produce 3D video projectors and the patented 3D Video Wall, we are also
introducing a host of other new and exciting 3D products, from lighting fixtures
to floor projectors to conference tables and jewelry boxes. We also produce the
specially formatted still and video content for all of these products.
Our principal executive offices are located at 306 Demers Avenue, East Grand
Forks, Minnesota 56721; and our telephone number is (218)773-3297.
DESCRIPTION OF BUSINESS
We are a development stage company, with 5 years of technology development
experience and one patent (for the Video Wall) being brought to us by our
founders. The Video Wall product has international sales and a billion dollar
quarterly revenue potential, through the sales of equipment and Internet/video
services.
Currently, we are producing video flooring and various video projectors (from
video cubes to walls to the crystal ball and double view kiosks). Because of the
breadth of the potential market for 3D related products, there is an array of
other commercial and consumer 3D products that are currently under development,
such as a line of 3D lighting fixtures, a computer monitor attachment, a credit
card advertising tool and a jewelry box.
We derive revenues from the following sources:
16
1. Sales of our commercial 3D products, including 3D image projectors, video
wall and lighting fixtures;
2. Sales of consumer products, such as 3D office and home lighting fixtures,
conference tables and 3D computer monitor attachments; and
3. Production of still image and video content for all of the above-mentioned
products; and
4. Sales by our distributorships. We are actively seeking distributors of our 3D
products and currently signed an agreement with a firm in Quebec, Canada to be
distributors of our products.
Our mission is to position ourselves as the leader in the distribution of high
quality 3D projection technology and technology-based 3D goods and to expand our
3D service to the Internet.
We will manufacture 3Dimensional video image projectors, provide video
advertising content to fit the informational needs of our clients and provide a
major broadcasting hub for the Internet community. This medium is appropriate
for the location-based entertainment industry, for independent businesses, for
the professional training market and home entertainment market. We will also
manufacture and produce unique and innovative products for home and office use.
We will accomplish this by producing high quality hardware, hiring experienced
personnel, and maintaining a determination to create a unique and enjoyable 3D
experience for our customers. Clients will soon discover that working with us is
a unique and professional way to develop new informational applications that are
appropriate for any industry.
The following sets forth our primary objectives at this time:
1. Research, development, manufacture, and distribution of high-tech 3D products
for commercial and in-home consumer applications, to include video image
projector systems, home and office lighting, home decor and entertainment
products (such as 3-D handheld video games, 3D TV and 3D computers);
2. Produce and distribute 3D video content for our 3D projectors, including
Internet broadcasting;
3. Obtain advertisements as a revenue base for 3D Internet programming;
4. Tap existing media sources and expand to new markets to gain a larger market
share.
5. Earn profits from the sale of 3D imaging products and advertising sponsorship
of commercial events, such as sports telecasts.
Our short term goals include (1) designing, manufacturing, and distributing 3D
machines to a broadening user market; (2) establishing ourself as an innovative
company of 3- Dimensional imaging projecting systems and 3D video production;
and (3) bringing the unique aesthetic and entertainment qualities of 3D
technology into every home and business through affordable, unique and practical
products (such as lighting fixtures, home decor, 3D video games and 3D picture
frames).
One of our long-term goals is to set up the only transmitting source of 3D
programming available on the Internet. We will provide Internet programming
domestically and internationally, with a monthly user fee generating revenue
from worldwide users.
17
Management Overview
As we grow, we will have several levels of management. The organizational
structure will be horizontal with a clear sense of the hierarchy of
communication. Much of what appears as management levels is simply a
representation of the need for information transfer for decision making
processes in different segments of the company rather than for purposes of
dictating rules from upper management.
Our philosophy is that management serves its function best when it acts as an
objective observer, offering its opinions while listening to the people actually
performing the work. As a method of facilitating the efficient management needed
to have a very quality- conscious company operating with a Just In Time
inventory system, focus groups, quality control teams, and informal
staff-management meetings will be used to achieve a high level of comfort
between all employees from the top of the corporation to the bottom.
Our management objectives are to bring together a talented and visionary team of
design, development, production, and technical support specialists who work
together for our success; establish a strong sales network; and maintain an
Internet site that is effective and efficient.
Product/Service and Competition
We offer unique products for advertising and novelty use in commercial, office
and home arenas. There are a few other companies with similar 3D video image
projectors throughout the world. Most of the kiosks used at trade and craft
shows, malls and similar locations use video projectors with two-dimensional
formats, so the market is wide open to the introduction of the unique
attention--getting 3D format that we offer. We are developing lighter, more
portable units which will further increase sales appeal.
No other company offers a similar product to our patented 3D Video Wall. The
unique attention--getting qualities of our products are especially evident when
combining the 3D advertising with 2D broadcasting that our 3D Video Wall offers.
We anticipate that sports arenas and sports bars will be a great niche for this
product.
There is, to our knowledge, no company in existence that supplies the 3D
products and services that we are currently developing, such as the video floor
projector, video tables and lighting fixtures. So there is virtually no
competition of the same products. We are working for our products to replace the
traditional 2-dimensional offerings of the advertising, signage, computer,
electronic gaming and interior design industries. Our products will compete with
other more traditional items in these areas. There is no guarantee that our 3D
products will be accepted by these industries and end consumers.
We believe that the following sets forth steps that had to have been undertaken
or still must be undertaken for us to be successful:
We have located and obtained a site in East Grand Forks, Minnesota to adequately
house our entire design, development, production, technical support and sales
operation.
We have established an attractive Internet site to attract interest in 3D
viewing and the purchase of our growing line of 3D products. Our site undergoes
regular maintenance and development and new products will be posted as soon as
the patents which are pending are approved.
We have established a strong company team adept at design, development,
production, and technical support (both hardware and software) and a support
team to efficiently handle the volume of sales. We have a strong core of 7--8
employees and we are expanding as we believe is necessary. Our entire team is
committed, extremely talented and has developed a strong rapport.
18
We have established an animation division, enabling us to produce footage
affordably and to expand the production division to accommodate the increase in
products and sales. We currently have assembled the necessary hardware and
software. Our team members are mastering the new equipment and producing the
images and video content for our products. We will expand this division as
required to keep up with demand.
We have begun targeting major cities and markets for person-to-person sales. We
have been making contacts all over the United States through cold-calling and
mass mailings. These are attracting quite a bit of interest in our products. We
then need to target international sites for foreign market sales.
We have begun to develop and will need to maintain an excellent customer service
department to ensure a satisfied and ever-expanding customer base. Our
salespersons, office manager and general manager work to cover this area
currently. A separate department will be added when necessary.
All of these steps as well as the steps to be undertaken in the future, have
been done while keeping overhead to a minimum until the first product generates
revenue. Our team is very cost-conscious and committed to making us succeed.
Market Analysis
The following sets forth our strategies for the sale of our products:
1. The marketing and sales of our 3D products:
* 3D lighting fixtures (ceiling models, wall-mounted, free-standing,
indoor and outdoor),
* 3D tables (conference tables, bar/restaurant tables),
* 3D computer monitor attachments,
* 3D Video Imaging Projectors (various sizes and housings),
* 3D Video Wall (patented), * 3D video game system, * 3D credit card
advertising tool,
* 3D floor unit, * 3D golf unit,
* 3D crystal ball kiosk
* 3D double view kiosk
* 3D casino games: 3D blackjack, 3D slot machines and 3D video poker,
* 3D mirrored picture frame;
2. Production and sale of specially formatted still images and video content for
our 3D products, including on-going technical support;
3. Marketing and sales of software to create specially formatted web sites to
view in 3D with the computer monitor attachment;
4. Internet broadcasting of sporting events, special programming and on-line
shopping;
5. Establishing a worldwide network of distributorships and independent sales
representatives to sell our products;
6. Cultivating relationships with computer software and hardware companies to
enhance the development and marketing of our 3D technology.
The potential for growth is tremendous, both for sales of the machines and for a
large volume of video production and Internet business; 3D advertising is
eye-catching and immediately draws attention to the product. Additionally,
viewing broadcasts in 3D is a unique experience, which will attract viewers
around the world.
19
Distributors to large chain stores are interested in new home consumer products.
The innovative, practical, 3D home decor, lighting and entertainment products
are catching the attention of these distributors. We already have
distributors/Independent Sales Representatives in the following states:
California, New Mexico, New York, Washington and Wisconsin. We have also
established a distributor in Quebec, Canada and have interested parties in
Australia.
Industry Analysis
Our commercial products market is an ever-growing market. Advertisers, trade
shows and retail establishments are always looking for a new and better way to
grab the attention of consumers. They currently are limited to one- or
two-dimensional viewing venues. We have already found enthusiasm for our 3D
video projectors and video walls. The advertiser and retailers using our 3D
projectors are finding out that when a consumer looks at a product or service
advertised in 3D, they remember it. 3D viewing is an exceptional experience and
advertising is a very competitive market, so we forecast that the demand for our
3D machines will grow steadily. And since all of our 3D video projectors in the
field need to have new videos produced on a monthly, bi-annual or annual basis,
video production will provide us with an on-going source of income.
Target Market
Our target market for our 3D projectors, Video Wall and corresponding 3D video
content will be establishments involved with advertising. This includes
advertising agencies who wish to sell advertising bits, trade show participants
who want to increase traffic to their displays, retailers who wish to draw
customers into their establishments or highlight specific products within their
stores, and also entertainment, event and sports entities who wish to promote
their star figures and main events.
Our 3D still and video bar tables will be a great new venue for bars, lounges
and restaurants. A still image or specially formatted 3D video are projected out
of the middle of the table for a unique, clean and always present advertising.
This is especially effective for lower-lit atmospheres. The images can easily be
changed with changing promotions.
Our home and office consumer products (3D lighting fixtures, 3D computer
components, 3D picture frames and 3D conference or end/coffee tables and
handheld video games) will draw a wide variety of customers. People of most
ages, genders and income levels can enjoy the novelty of our 3D products. We
will keep the prices affordable for most income groups and since the content of
the 3D image can vary tremendously, we have the ability to come up with the
perfect image for nearly everyone.
Office buildings will be able to use the lighting to create a desired atmosphere
or to use it to draw attention to certain areas or advertise their logo,
products or services. Since our 3D lighting products can be used with basic
lighting fixtures, businesses can easily and affordably enjoy the special
atmosphere of 3D lighting. Our 3D Conference Table is perfect for displaying
still or moving images to boost company morale and to spark product interest in
customers.
Market Segmentation
The marketing and advertising industry as well as retail, service and
entertainment industries will be our main customers for our commercial
applications. Some of these are listed below with their North American Industry
Classification System (NAICS) codes.
3D Video Image Projectors, 3D Video Wall (patented) and Video Wall Projectors,
3D Crystal Ball Kiosk, 3D Double View Kiosk
20
Classification NAICS
- -------------- -----
Advertising and Related Services 5418
Advertising Agencies, Advertising Consulting Services 541810
Display Advertising 541850
Department Stores 4521, 542110
Promoters of Performing Arts, Sport & Similar Events (with facilities) 71130
Promoters of Performing Arts, Sport & Similar Events (without facilities)711320
Sports Teams and Clubs 711211
Convention and Trade Show Organizers 561920
Public Relations Agencies 541820
Media Representatives 541840
Posters & Billboards 2759-0802
Shopping News 2741-0502
3D Conference Table, 3D Bar Table
Classification NAICS
Bar Furniture 5021-0101
Cafeteria Furniture 5021-0102
Children's Furniture 5999-1805
Dining Room Furniture 5021-0201
Office Furniture 5021-02
Decorative Home Furnishings 5023-0500
Misc. Home Furnishing 5719-99
3D Video Floor
Classification NAICS
Decorative Home Furnishings 5023-0500
Misc. Home Furnishing 5719-99
Bar Furniture 5021-0101
Cafeteria Furniture 5021-0102
The target customers for our consumer applications will be a wide variety of
wholesale distributors and retail establishments. Some are listed below with
their NAICS code.
3D Video Attachment, 3D Video Monitor, 3D Computer, 3D Video Game
Classification NAICS
- -------------- -----
Radio, Television and Other Electronics Stores 443112
Computer and Computer Peripheral Equipment & Software Wholesalers 421430
Computer and Software Stores 443120
Video Games 7993-0302
Department Stores 4521
Gift, Novelty and Souvenir Stores 453220
Home Furnishing Stores 4422
Furniture and Related Product Manufacturing 337
Furniture Stores 5021
Children's Furniture 5999-1805
Decorative Home Furnishings 5023-0500
Misc. Home Furnishing 5719-99
Other Building Material Dealers 444190
Electrical Apparatus and Equipment, Wiring Supplies,
and Construction Material Wholesalers 421610
Office Furniture 5021-02
21
3D Picture Frame
Classification NAICS
- -------------- -----
Photographer, Still or Video 7221-9903
Video and Audio Equipment 5099-05
Children's Furniture 5999-1805
Decorative Home Furnishings 5023-0500
Mirrors and Pictures 5023-0503
Pictures and Mirrors 5719-06
Misc. Home Furnishing 5719-99
Art Copy Publishing & Printing 2741-0101
Calendar & Card Printing 2754-03
Commercial Printing 2711-0101
Posters & Billboards 2759-0802
3D Golf Unit
Classification NAICS
- -------------- -----
Sporting Goods Stores 5941
Public Golf Courses 7992
Amusement & Recreation Services 7999
3D Casino Games, 3D Blackjack, 3D Slot Machines and 3D Video Poker
Classification NAICS
- -------------- -----
Coin-Operated Amusement Devices, Gambling Machines 7993
Amusement & Recreation Services 7999
Gambling Establishments 7999-1302
Products and Services
We are currently producing a series of 3D video image projection products. These
products are revolutionizing the way consumers watch video productions by
allowing the dimension of 3D viewing. Our current customers of our 3D Video
Image Projectors use them for advertising and attracting customers. We supply
the video projectors and also create, shoot, edit, and animate videos to meet
the specific needs of these clients. This video is delivered in DVD format or
broadcast directly to the customer via the Internet.
We are also well on our way to break into the home and office decor industries
with our unique 3D lighting, table and decorative products. We have a 3D table
which can be adapted for coffee or end tables for the living room or for
conference rooms. Our 3D lighting products are available for use outdoors,
indoors, commercially or at home. The lighting fixtures can be stand alone,
wall-mounted or ceiling-mounted. We are also developing a line of 3D computer
monitors, computers and video games for home consumers. Our goal is to provide a
new 3D viewing experience (without the aid of special eyewear) with a software
package that allows end-consumers to create their own 3D images.
The current market already produces some videos whose 3D effect requires the use
of special optical wear. There are also some novelty items that are called 3D,
but we are virtually one of the few, if not the only, company producing
equipment that actually has projected 3D images 6--8 inches in front of the
projector, giving a 3D effect that is visible with the naked eye. There are few
other products on the market today that compare to our 3D table video image
projectors or lighting fixtures. And likewise, we currently create the special
videos that are displayed with our projectors.
Images are specially formatted by our video and imaging department. Images in
most products can be still or moving video with sound. Still image units are
designed for consumers to easily change the video images. Holiday and seasonal
images will be sold as
22
sets for some of the units. Changing the specially formatted video in the units
with DVD's is as simple as changing the DVD. Businesses can order new videos as
their advertising needs change.
Commercial Applications
The following commercial applications can also work by automatic live feed, such
as with a video camera focused against a black background. It is to be noted
that when people see a 3D image, they are almost guaranteed to remember it.
VIP-103, Video Image Projector 2000-103(lens 15" x 15")
This projector is run off a computer that is Internet ready. Our video channel
is fed over the Internet, allowing us to add, change or modify videos as they
are playing. This unit provides a viewing area of 60 to 70 degrees. It sends out
3D image projections approximately 2 feet from the lens. The Video Image
Projector 2000-103 works with a specially formatted disc with a normal VCR or
DVD. The estimated retail price for this projector will be around $4,000.
Additional costs for video production and options such as a base or sound
system. This unit is designed as an advertising tool to promote businesses. This
is also an excellent media over which to sell advertising, like a high tech
billboard.
VIP-104, Video Image Projector 2000-104 (lens 21" X 21")
The 2000-104 model is a larger, clearer version of the Video Image Projector
2000-103. This unit also sends out 3D image projections approximately 2 feet
from the lens. It has a larger viewing area of 80--90 degrees. This unit also
works with specially formatted discs with a normal DVD player and delivers
audio. It is used as an advertising tool to promote businesses. This version
will be priced around $6,000. Additional costs for video production and options
such as a base or sound system.
Video Image Projector 2000-105 (lens Video Image Projectors)
The VIP 103 and VIP 104 are being phased out in favor of lighter, more
economical models and forms of 3D projectors. The same concepts and lenses will
be used in lighter housing. The costs will vary depending on whether the units
hold still images or have moving video. There is also the availability of more
compact, even lighter versions at an extra cost. These units are light and easy
to handle and make a great tool to take to trade shows.
VIP-105, Video Image Projector, Wall-Mounted & Double-Lensed
The VIP-105 unit consists of 2 lenses, projecting images from both sides of the
unit, which is attached to the wall. It is designed for wider viewing of still
and moving video advertisements. The price for a still image projector is $700
and up; the price for a moving video projector is $5000 and up.
3D Mirrored & Framed Video Image Projectors.
This video image projector can be mounted in the wall and has a mirrored front.
Specially formatted video can display images and formatting along with sound.
This is great for advertising and other specialty displays. The cost will run
around $2,500 to $3,000.
Video Wall, U.S. Patented.
This is a video wall that combines multiple projector units into one wall. There
is a flat video that is shown over the entire wall while various still or moving
images are projected out from each cube. The retail price will run $675 per cube
(with still image) and $1,675 to $3,175 (depending whether designed to be
stationary or portable) per cube for moving video. Additional costs for the
following options are: $15,489 for the controller computer, $10,139 for the
Matrix switcher and $2,500 for the (flat) projector.
23
3D Video Floor (in process of applying for a patent)
The 3D Video Floor is made up of cubes, as in the Video Wall, with similar
pricing. The floor can be portable and free standing or it can be dropped into
an existing floor. If free-standing, there are additional costs for the flooring
material, which is built to suit the customer. Price is dependent on the type of
flooring requested and the size of the unit.
3D Video Table
3D video images are projected out of the middle or corners of various size and
styles of tables to deliver eye-catching advertisements, company logos and much
more. These tables are suited for board rooms, conference rooms, bars, casinos,
restaurants and lounges. The price of these tables with motion video is $1,650
and up.
3D Crystal Ball Kiosk (in process of applying for a patent)
This 3D projector is mounted in a pillar-type casing, with an angled top. It
projects moving images into a perceived "crystal ball", bubble-like effect. The
range of vision is increased with the bubble effect. This is our best unit and
it can be sold or leased by distributors for advertising purposes. The price we
will sell this unit for is around $3,000.
3D Double View Kiosk
This unit is a combination of the 3D crystal ball concept and the VIP
projectors. It has two projectors, one stacked on the other (and removable for 2
separate projectors). The units can be still or motion, though we expect that
most consumers will want at least one view to be motion. This is great for point
of purchase displays, advertising and information displays. The cost with both
projectors with motion video will be around $5,430.
3D Casino Games: 3D Blackjack, 3D Slot Machines and 3D Video Poker (US Patent
Pending)
These units will combine the traditional gambling games with 3D effects. The
actual game, along with promotional advertising, will be projected in mid-air.
The prices are yet to be determined.
Consumer Applications
3D Computer Monitor/Video Monitor Attachment (in process of applying for a
patent)
This lens attaches onto the front of a conventional computer monitor, in a
similar fashion to some of the anti-glare or magnifying lenses currently on the
market. It is used in conjunction with specially formatted 3D software (which we
plan to market with this unit) that allows the end user to create images that
will appear 3D with the use of this special attachment. The attachment will also
be used with specially formatted web sites to achieve a 3D effect. The expected
retail price is $100.
3D Video Game Monitor
The 3D Gaming Monitor is used with video games with specially formatted software
to bring a new and exciting third dimension to video games. Regular video game
equipment plugs right into this monitor. We are working with video game software
companies to produce their games in the special format for use with this
monitor. The retail price will be around $1,000.
24
3D Marketing Credit Card Marketing Gimmick
These cards are held up to a web site with writing that cannot be discerned
without the card. This will replace the monthly distribution of a card that has
writing on it that can only be read when held up to a special device. This will
greatly reduce advertising costs as the cards can be reused over and over. The
advertiser only needs to change the specially formatted text/graphic on the web
site with changing promotions. These cards will be sold at $1.25 each.
Consumer Applications (Lighting)
Decorative 3D Desk Lamp
3D Overhead House Lamp
3D Wall Lamp
These novelty lamps project 3D images 4-8 inches into midair. These fixed images
may be of anything from polar bears to race cars. We can also market seasonal
and theme images as sets for use in these lamps. The suggested retail price will
be about $100 and up.
Decorative Child's Lamp
This lamp resembles the decorative desk lamp except that it is not as elaborate
and is made of less expensive materials. The 3D projected images will be of a
variety of children's themes. We intend to license popular cartoon characters
for use in these units. We also intend to use generic characters for economy
versions. We will sell two versions of this lamp, one that will hold one image
and one that can hold multiple images. The retail price will be about $75.
Office Overhead Lights
These florescent lights fit into standard office lighting fixtures and when
turned on produce beautiful displays of any object imaginable. They will be
great for displaying company logos and products. Units that have 2 lenses sell
for $1,700 for still images and $3,200 for video. Units with 2 images and 2
extra panels for light will sell for $2,000 for still images and $3,600 for
motion video.
3D Picture Frame Box
This picture frame box unit projects images 6--8 inches or more, depending on
the size of the unit, in front of the unit. The frame uses specially formatted
slide pictures so the consumer will be able to change the picture displayed.
Retail price will be around $500.
3D Golf Unit (in process of applying for a patent)
With the 3D golf unit, golfers can practice their swings indoors with the added
benefit of having an image of a golf ball to swing at. Pros have informed us
that when golfers practice their swing without a ball, they tend to choke up
when they are on the golf course and swinging at an actual ball. The advantage
of our unit is having a projected image of a golf ball to swing at. The image is
adjustable to the height of the golfer and to right- or left- handed users. This
unit also folds up for easy carrying and storage. The suggested retail price
will be around $500.
Video Production
Still 3D Image Production
We will produce specially formatted still images for the above applications. The
cost of the first image will be included in the price of the still image units.
These still images are interchangeable and we will produce holiday and seasonal
sets to be sold for the units. Prices will vary on the size of the image
required for the specific unit. We
25
anticipate that most still images will be special requests, such as company
logos, products or family photos. Pricing for an image that can be scanned and
easily formatted is $50. Extra charges are required if the consumer requests
special graphics or photography.
3D Video Production
We also produce the specially formatted video, including audio track. Prices
will vary depending on the length of the video and the complexity. Basic pricing
is $125 per hour for field/studio shooting, editing, voice-overs and compositing
and $250 per hour for 3D animation and special effects.
Research and Development
We will continuously stay abreast of new technology to maintain our position as
the leader in high-tech 3D technology. Product development and product upgrades
will occur continuously to suit the needs of our clients and to adapt to market
changes. The introduction of our improved models will be timed so as not to
compete with our existing lines. In this way, obsolescence will not be so rapid
as to deter purchasers from making initial investments in our 3D products. In
addition, we continually place emphasis on developing new products to complement
our existing line.
Our research and development team also has the capacity to establish an on-line
shopping network in 3D format for Internet shoppers. In addition to traditional
merchandising, this could also be an avenue for artists to market their artistic
creations. We would also target sport events, such as USAC midget races, which
may not receive media attention but are popular well-attended events.
Patents and Trademarks
We have one patent granted for the video wall and are in the process of filing
for patents for our 3D Video Monitor Attachment, 3D golf unit, 3D crystal ball
kiosk, and 3D double view kiosk. We have patent pending status for the 3D casino
games. We will continue to apply for patents and file additional design and
utility patent applications as we develop and market our new products to
maintain and protect our market opportunities. We have applied to register
WAYCOOL3D.COM/WAYCOOL3D as our trademark.
Manufacturing and Production Plan
We have secured a building for manufacturing in East Grand Forks, Minnesota,
which gives us ample space to expand as our production grows. At present, we do
not require any special machinery and the highest noise level that we will
produce is that of an air compressor. There will be no toxic smells or
environmental issues associated with the production of our 3D products.
Production Issues
Assembly and Labor
The production of our products consists of assembling already-manufactured
parts, with the exception of special housing, such as the 3D Picture Frame Box,
Mirrored Picture Frame, Video Wall & Floor. The housing is constructed of wood,
metal or plastic products which require some simple construction methods to
create.
Quality Control
In the beginning, Brad Kerr (our president and general manager), Jeff Hatcher
(our manufacturing supervisor), Kris Marcott (our engineer) and Tom Greene (our
Director of Digital Film and Video Production) will ensure product and video
quality. They will also train manufacturing and production staff in quality
control. As the company grows, we
26
will develop a quality control system. We offer a 90-day to a 1-year product
guarantee, depending on the product.
Labor Force
At the start, we will need semi-skilled assembly line-type employees. Within a
short period of time, we expect to require more highly skilled employees in
skilled fields, such as sales and marketing, e-business, computer information
systems, electrical engineering, web design, software development, electronic
technology, electronic communications and Internet design technologies. As
mentioned earlier, our area colleges and universities have excellent programs to
train potential employees.
Marketing Plan
We are actively establishing a network of distributors and independent sales
representatives for our home and commercial products throughout the United
States and Canada and with additional contacts overseas. We are also selling
directly to consumers through our sales representatives located in East Grand
Forks, Minnesota. Our sales representatives work carefully with potential
distributors and customers to ensure that the customer gets the product that is
right for his/her needs. We also follow up to see that the customer is satisfied
with our product.
Product Pricing Strategy
We employ a simple yet effective pricing strategy. Our wholesale prices are set
at three times the cost of production. The advantage of our line of products is
that 90% of the product consists of basic materials or existing electronic
components. The cost of the product is kept low because new components do not
have to be developed.
Our goal is to maximize our profit margin, our investors and wholesale
distributors while providing a high quality consumer product at a reasonable
price.
Product Positioning
Our 3D technology and products are unique to the marketplace. We will market our
3D projectors and Video Wall to advertisers as a more dynamic and effective way
to attract potential customers. We offer a 3D alternative to the 2D
informational kiosks now available.
Our 3D consumer products (3D lighting fixtures, computer monitors, 3D picture
frames, 3D gaming monitor) are also unique and will capture the attention of
consumers of novelty, home decor, business decor, computer, and video game
products. Distributors to retailers of products in these categories are already
asking for new and innovative products. We have the innovative products to
offer.
Sales and Distribution Plan
The following table indicates forecasted sales. 3D product sales of our 3D
products are expected to increase each year, as will the number of 3D formatted
images and videos, web sites, video games and other software. We strive to enter
into business partnerships which will not only boost our sales, but also boost
income for our partners by providing a new and exciting format for their
products.
As production increases, we will increase our national and international
distribution network to handle packaging, shipping, and receiving of our
commercial and consumer products.
Promotional Strategy
To market our products we have two avenues:
27
1. Local Market:
Slide in the local theater
Local newspapers
Flyers
Leagues and competition
Kiosks in heavy traffic arenas
2. National and International Market:
Magazines
TV advertisements
Internet Presence
League sports recognition
Infomercial
Direct mailing
Telemarketing
Internet
League sports
Kiosks in heavy traffic areas
We will first use Internet advertising and mass mailings to targeted businesses,
direct contact with marketing personnel, word-of-mouth and kiosk displays,
conventions/craft shows to inform our customers of our product offerings. We
will then spread our advertising efforts to the various other arenas mentioned
above.
Competition
No other company offers a similar product to our patented 3D Video Wall. The
unique qualities of our products are especially evident when combining the 3D
advertising with 2D broadcasting that our 3D Video Wall offers. We anticipate
that sports arenas and sports bars will be a great niche for this product.
There is, to our knowledge, no company in existence that supplies the 3D
products and services that we are currently developing, such as the video floor
projector, video tables and lighting fixtures. So we have virtually no direct
competition. We will then, mainly be competing with manufacturers of traditional
2D products. We will need to promote the unique qualities of our products and
the benefits of having the 3D effects in the various product industries
(lighting, flooring, gaming, electronic games, sporting goods, computer
accessories, and advertising).
EMPLOYEES AND CONSULTANTS
Our management team includes the following:
Name Position
- ---- --------
Brad Kerr President, Board of Director and General Manager
John Zavoral Secretary, Board of Director
Peter Zavoral Treasurer, Board of Director
Scott Gaddie Sales Manager
Jeffrey Hatcher Manufacturing Supervisor
Tom Greene Director of Digital Film and Video Production
(Independent Contractor)
Kris Marcott Engineer
Julie Christianson Office Manager
Marc Schreier Sales Representative
28
DESCRIPTION OF PROPERTY
Location and Facilities
In August 2001 we relocated our facilities to East Grand Forks, Minnesota, where
we now enjoy the quality of life and high level of integrity of the local
people. Our main office comprises 3,800 square feet of space in downtown East
Grand Forks. Our showroom is housed here, along with our sales office and
video/image production area. This space is leased for $2,500 per month on a
month to month basis.
We have our manufacturing and assembly area in approximately 1,300 square feet
in another building in East Grand Forks. This area is rented for $300 per month
on a month to month basis.
We have joined the city of East Grand Forks and the state of Minnesota in their
mission to keep young people in the state by providing competitive wages and a
supportive work environment in the field of high technology. We have received
interest from prospective employees, especially from young professionals who
would like to be employed in their field of expertise and stay in this area.
Since August 2001, we have hired several individuals from the local area.
The area colleges and universities provide not only newly emerging talent, but
also great opportunities to forge mutually beneficial relationships in research
and design of our cutting-edge 3D technologies. We will be able to recruit
talent at different levels of training and abilities, from those possessing
4-year degrees to those with 1-year diplomas.
The East Grand Forks, Minnesota area has access to satisfactory means of
transportation for the delivery of parts and the shipment of our products. Among
the available transporters are UPS, Federal Express Ground, and Midwest Motor
Express. During a recent Chamber of Commerce meeting (where we were recognized
as an up and coming new business), a local business representative discussed how
the local infrastructure expanded to meet the growing needs of his company. We
are confident that as we grow, our needs will continue to be met.
REPORTS TO SECURITIES HOLDERS
You may read and copy any report, proxy statement or other information we will
file with the Commission at the Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices at 75 Park
Place, Room 1400, New York, New York 10007 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. You may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. In addition, we will file electronic versions of these documents
on the Commission's Electronic Data Gathering Analysis and Retrieval, or EDGAR,
System. The Commission maintains a web site at http://www.sec.gov that contains
reports, proxy statements and other information filed with the Commission.
We have filed a registration statement on Form SB-2 with the Commission to
register shares of our common stock to be sold by us and certain selling
security holders. This prospectus is part of that registration statement and, as
permitted by the Commission'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 Commission, and on the Commission's
web site, as described above. You should note that statements contained in this
prospectus that refer to the contents of any contract or other document are not
necessarily complete. Such statements are qualified by reference to the copy of
such contract or other document filed as an exhibit to the registration
statement.
29
LEGAL PROCEEDINGS
There have never been any civil, administrative or criminal proceedings
concluded, pending or on appeal against our officers, directors or us.
MANAGEMENT
Directors and Executive Officers
The following sets forth the age and position held of our board of directors and
executive officers as of the date of this prospectus:
NAME AGE POSITIONS HELD
- -------------------------------------------------------------------------------
Bradly Kerr 47 Chairman and President
John Zavoral 41 Secretary and Director
Peter Zavoral 50 Treasurer and Director
Bradly Kerr has been our President and Chairman of our Board of Directors since
April 2002, when we entered into the Stock Purchase Agreement and Share Exchange
with our subsidiary, Waycool3D.com, Inc. He has been President of our
subsidiary, Waycool3D.com, Inc., since February, 2002 and prior to that time he
was General Manager of Waycool3D.com, Inc. since August, 2001. Mr. Kerr was
Director of Athletics at Jamestown College, Jamestown North Dakota for several
years. During this time he developed goals and objectives, athletic
scholarships, a corporate sponsorship program, enhancement of the Booster Club,
new athletic programs (golf, soccer, women's hockey) and developed facility
expansion (athletic training facility, soccer complex, and a football stadium).
He was a representative for Jamestown College to internal and external
constituencies to gain support (Chamber of Commerce, City Planning Commission,
Municipal Airport, Promotion and Tourism, City Council, Public Schools, North
Dakota State Hospital, Parks and Recreation, and Medical Clinic). Mr. Kerr also
fulfilled duties of Budgeting, fund raising, staffing and Tournament Director (4
National Tournaments, 12 Regional Tournaments, and 12 Conference Tournaments).
Prior to Jamestown College, Mr. Kerr taught and coached for 11 years at the
University of North Dakota.
During Mr. Kerr's athletic director/coaching/teaching career, he received the
following distinctions: NDCAC Administrator of the Year, Great Plains Region
Administrator of the Year, Finalist for National Administrator of the Year, NCAA
Rookie Coach of the Year, and NCC Coach of the Year. He received his Bachelor of
Science degree from the University of North Dakota in 1978 and he received his
Master of Education in 1985 from the University of North Dakota.
John Zavoral has been our Secretary since April 2002, when we entered into the
Stock Purchase Agreement and Share Exchange with our subsidiary, Waycool3D.com,
Inc. He has been Secretary of our subsidiary, Waycool3D.com, Inc. since May
2000. Mr. Zavoral has 25 years of business experience and has been actively
involved in the major decision-making and hiring of our management team. Since
high school, John has worked as part of the management team at R.J. Zavoral &
Sons, Inc. where he has served as the Secretary and Director of such company.
Mr. Zavoral is part owner and manager of R.J Zavoral and, as such, supervises
over 50 employees in their operations to build and grade roads, prepare sites,
and underground construction. The business has grown under his management from 5
employees to over 70 employees with similar growth in income. Some of the
projects that Mr. Zavoral oversees at R.J. Zavoral & Sons, Inc. are state
highways, federal dike projects, emergency services for Army Corp. of Engineers
(flood protection) and Arnold Palmer Golf Course development.
Peter Zavoral has been our Treasurer since April, 2002, when we entered into the
Stock Purchase Agreement and Share Exchange with our subsidiary, Waycool3D.com,
Inc. He has been
30
Treasurer of our subsidiary, Waycool3D.com, Inc. since May 2000. He is presently
the President of R.J. Zavoral & Sons, Inc. and has been part of their management
team for 23 years. In addition, since 1991 he has been President of Clay
Products, Inc. where he supervises 7 employees. Clay Products, Inc. is a clay
material and aggregate supplier.
Mr. Peter Zavoral received his Administrative Arts Degree from Assumption
College in 1973. He is actively involved in our community. He serves in the
following capacities: Trustee at Sacred Heart Church, East Grand Forks,
Minnesota; Member, Finance Committee at Sacred Heart Church, East Grand Forks,
Minnesota; Altru Health Services Board Member since 1976, Grand Forks, North
Dakota; Huntsville Township Planning & Zoning Board; Board Member, Community
Foundation of Grand Forks, North Dakota; and a Member of the Board of Directors
of the Diocese of Crookston, Minnesota.
In addition to R.J. Zavoral & Sons, Inc. and Clay Products, Inc., John and Peter
Zavoral are involved in these partnerships: Deacons Greens Development, LLP,
Grand Forks, North Dakota (this is a housing development with about 128 acres
surrounding an Arnold Palmer signature golf course) and the River City Speedway
(the goal of the speedway is to bring the Nascar(R) image to Grand Forks).
BOARD COMMITTEES
Our board of directors has established no committees.
EXECUTIVE COMPENSATION
Compensation of Directors
Our directors will not receive compensation for services on our board of
directors or any board committees, but directors may be reimbursed for certain
expenses in connection with attendance at our board and committee meetings.
Executive Compensation
Bradly Kerr, our President and General Manager, receives an annual income of
$44,640. He will also receive employee benefits once a benefit package is
developed and adopted by our Board.
Stock Option Plans
We have not adopted any stock option plans as of the filing of this registration
statement. The following table sets forth information with respect to stock
options granted to our named executive officers during fiscal year 2001:
OPTION GRANTS IN FISCAL 2001
(INDIVIDUAL GRANTS) (1)
NUMBER OF % OF TOTAL OPTIONS
SECURITIES UNDERLYING GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION
NAME OPTIONS GRANTED FISCAL PRICE DATE
2001
----
None
No executive officer held options during the 2001 fiscal year. The following
table sets forth information as to the number of shares of common stock
underlying unexercised stock
31
options and the value of unexercised in-the-money stock options projected at the
2001 fiscal year end:
None
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of May 7, 2002 regarding
ownership of our common stock (i) by each person known by us to be a beneficial
owner of more than 5% of our outstanding common stock, (ii) by each of our
directors, (iii) by certain related stockholders and (iv) by all of our
executive officers and directors as a group. All persons named have sole voting
and investment power with respect to such shares, subject to community property
laws, and except as otherwise noted. As of May 7, 2002, there were 10,000,000
shares of our common stock outstanding. The percentage of beneficial ownership
calculation below is based upon the 10,000,000 shares that currently are
entitled to vote on all our shareholder issues.
After the Offering
Prior to Offering Maximum
Name and Address ----------------- -------
Title of Class of Beneficial Owner: Number % Number %
- -------------- ------------------- --------- ------ --------- ------
5% Stockholders
Common Stock, Hatch Family Trust 861,057 8.61% 861,057 7.97%
$.0001 Par Value 1374 West Center Street
Orem, Utah 84057
Common Stock Lani Hatch 1,750,115 17.50% 1,750,115 16.20%
$.0001 Par Value 865 East 800 North
Orem, Utah 84097
Common Stock Providence Sierra 795,505 7.96% 795,505 7.37%
$.0001 Par Value Corporation
1507-214th St, SE
Bothell, Washington 98021
Common Stock John Zavoral 1,138,850 11.39% 1,138,850 10.54%
$.0001 Par Value Route 1 Box 33B
East Grand Forks, MN 556721
Common Stock Peter Zavoral 1,137,577 11.38% 1,137,577 10.53%
$.0001 Par Value Route 1 Box 33B
East Grand Forks, MN 556721
Common Stock Westminster Holdings 2,200,000 22.00% 2,200,000 22.00%
$.0001 Par Value 75 Maiden Lane
New York, New York 10038
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Common Stock John Zavoral 1,138,850 11.39% 1,138,850 10.54%
$.0001 Par Value Route 1 Box 33B
East Grand Forks
Minnesota 556721
32
Common Stock Peter Zavoral 1,137,577 11.38% 1,137,577 10.53%
$.0001 Par Value Route 1 Box 33B
East Grand Forks
Minnesota 556721
All Directors and Officers
as a Group 2,276,427 22.76% 2,276,427 21.07%
Reflects total outstanding Shares of 10,000,000 as of May 7, 2002.
Assumes issuance and sale of 800,000 of our shares of common stock during the
offering period in addition to 10,000,000 of our shares of common stock
outstanding as of May 7, 2002, amounting to an aggregate of 10,800,000 shares of
our common stock.
DILUTION
The following table shows the percentage of equity the investors in this
offering will own compared to the percentage of equity owned by the present
shareholders and the comparative amounts paid for the shares by the investors as
compared to the total consideration paid by our present shareholders.
Dilution for $400,000 Maximum Offering
Initial public offering price per share $.50
Net tangible book value per share before offering (0.03)
Increase per share attributable to new shareholders 0.04
Pro forma net tangible book value per share after offering $0.01
------
Total dilution per share to new shareholders $0.49
=====
Shares Purchased Total Consideration
---------------- -------------------
Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ----------
Existing 10,000,000 92.59% $500 .13% $.00005
Shares
New 800,000 7.41% $400,000 99.87% $.50
Shares ------- ----- ------- ------ -------
Total 10,800,000 100.00% $400,500 100.00% $.037
SELLING SECURITY HOLDERS
Of the 2,680,000 shares of our common stock covered by this prospectus, a
maximum of 800,000 are being offered for sale by us and the remaining 1,880,000
shares are being sold by certain of our existing shareholders.
33
The following table sets forth the name of each selling security holder, the
number or shares of common stock beneficially owned by the selling security
holder as of May 7, 2002, and the number of shares being offered by each selling
security holder.
The shares of our common stock being offered by this prospectus are being
registered to permit public secondary trading, and the selling security holders
may offer all or part of the shares for resale from time to time. However, the
selling security holders are under no obligation to sell all or any portion of
the shares of our common stock immediately under this prospectus. Because the
selling security holders may sell all or a portion of their shares of our common
stock, no estimate can be given as to the number of shares of common stock that
will be held by any selling security holder upon termination of any offering
made under this prospectus; accordingly, the following table assumes the sale of
all shares of common stock by the selling security holders immediately following
the date of this prospectus.
Number of Shares Owned Number of Shares Being Registered
Westminster Holdings Ltd. 2,200,000 880,000
Richard I. Anslow 400,000 400,000
Gregg E. Jaclin 100,500 100,500
Henry Val 499,500 499,500
PLAN OF DISTRIBUTION
Distribution of Our Shares
We are offering 800,000 of our shares of common stock at $.50 per share on a
"best efforts" basis. There is no minimum number of shares that we must sell
before we can utilize the proceeds of the offering. We are making the offering
through our officers, directors and employees who will not be compensated for
offering the shares. Our officers and directors will not receive any commissions
or additional compensation for these efforts and will rely on the safe harbor
from broker-dealer registration set forth in Rule 3a4-1 under the Securities
Exchange Act of 1934.
In that regard, the officers, directors and employees, represent that, (1) they
are not subject to a statutory disqualification, as that term is defined in
Section 3(a)(39) of the Act, at the time of their participation; and (2) they
are not compensated in connection with their participation by the payment of
commissions or other remuneration based either directly or indirectly on
transactions in securities; and (3) they are not at the time of their
participation an associated person of a broker or dealer; and (4) they perform
at the end of the offering substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities; and (5) they are
not a broker or dealer, or an associated person of a broker or dealer, within
the preceding 12 months; and (6) they do not participate in selling an offering
of securities for any issuer more than once every 12 months other than in
reliance on paragraphs (a)(4)(i) or (a)(4)(iii) of such section, except that for
securities issued pursuant to Rule 415 under the Securities Act of 1933, the 12
months shall begin with the last sale of any security included within one Rule
415 registration.
We will, however, reimburse them for all expenses incurred by them in connection
with the offering. The shares may also be offered by participating
broker-dealers which are members of the National Association of Securities
Dealers, Inc. We may, in our discretion, pay commissions of up to 10% of the
offering price to participating broker-dealers and others who are instrumental
in the sale of shares.
34
Distribution by Selling Security Holders
The selling security holders shares may be sold or distributed from time to time
by the selling stockholders or by pledgees, donees or transferees of, or
successors in interest to, the selling stockholders, directly to one or more
purchasers (including pledgees) or through brokers, dealers or underwriters who
may act solely as agents or may acquire shares as principals, at a price of $.50
per share until our shares are quoted on the OTC Bulletin Board and thereafter
at prevailing market prices or privately negotiated prices. Any pledgees, donees
or transferees of, or successors in interest to, the selling stockholders will
be named in the prospectus as selling security holders. As of this date,
1,880,000 shares of our common stock are being registered as part of this
registration statement. These selling security holders shares will be available
to be sold immediately after this registration statement becomes effective. The
distribution of the shares may be effected in one or more of the following
methods:
o ordinary brokers transactions, which may include long or short sales,
o transactions involving cross or block trades on any securities or
market where our common stock is trading,
o purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus,
o "at the market" to or through market makers or into an existing market
for the common stock,
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents,
o through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
o any combination of the foregoing, or by any other legally available
means.
In addition, the selling security holders may enter into hedging transactions
with broker-dealers who may engage in short sales, if short sales were
permitted, of shares in the course of hedging the positions they assume with the
selling security holders. The selling security holders may also enter into
option or other transactions with broker-dealers that require the delivery by
such broker-dealers of the shares, which shares may be resold thereafter
pursuant to this prospectus.
Brokers, dealers, underwriters or agents participating in the distribution of
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling security holders and/or the purchasers of shares
for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). Any broker-dealers acting in connection
with the sale of the shares hereunder may be deemed to be underwriters within
the meaning of Section 2(11) of the Securities Act of 1933, and any commissions
received by them and any profit realized by them on the resale of shares as
principals may be deemed underwriting compensation under the Securities Act of
1933. Neither the selling stockholders nor we can presently estimate the amount
of such compensation. We know of no existing arrangements between the selling
stockholders and any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the shares.
We will not receive any proceeds from the sale of the shares of the selling
security holders pursuant to this prospectus. We have agreed to bear the
expenses of the registration of the shares.
The selling security holder offering will run concurrently with the primary
offering. All of the stock owned by the selling security holders will be
registered by the registration statement of which this prospectus is a part. The
selling security holders may sell some or all of their shares immediately after
they are registered at a price of $.50 per share until our shares are quoted on
the OTC Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices. In the event that the selling security holders sell some or
all of their shares, which could occur while we are still selling shares
directly to investors in
35
this offering, trading prices for the shares could fall below the offering price
of the shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our wholly owned subsidiary, Waycool3d.com, Inc., has an unsecured line of
credit with two shareholders in the amount of $200,000 at an interest rate of
5.75%. Payment on the line of credit was due May 1, 2002 and must be made by May
30, 2002. We are currently negotiating a 6 month extension for this loan. As of
May 7, 2002 the outstanding balance was $200,000.
Our wholly owned subsidiary, Waycool3d.com, Inc., has a note payable to John
Zavoral, who is a shareholder, in the amount of $100,000. There is no stated
interest rate on this note, it guarantees a 30% return when we receive funding.
Mr. Zavoral has agreed that such note will be paid when we receive funding.
Our wholly owned subsidiary, Waycool3d.com, Inc., also has entered into numerous
non-cash transactions by issuing stock during 2001 and 2000 for services and
fees incurred during its start up and initial development, which total $27,558
and $30,944, respectively. On December 29, 2000 Waycool3d.com, Inc. issued a
total of 712,000 to Lani Hatch, John Zavoral and Peter Zavoral. On August 8,
2001, Waycool3d.com, Inc. issued a total of 20,000,000 shares to Providence
Sierra Corp, John Zavoral, Peter Zavoral and the Hatch Family Trust. On December
12, 2001 John Zavoral received and additional 1,908,000 shares and Peter Zavoral
received an additional 1,000,000. IGE received a total of 2,100,000 shares of
Waycool3d.com, Inc. on February 18, 2002 and December 21, 2001 for consulting
services rendered. On February 18, 2002, Waycool3d.com, Inc. issued a total of
15,000,000 shares to Peter Zavoral, John Zavoral and Lani Hatch for consulting
services. This stock was issued in exchange for the rights of the United States
Patent on the Video Wall, salary of a former sales manager, and
professional/consulting fees for business consultation and services.
All of such shares were subsequently subject to a 1-3 reverse split undertaken
by Waycool3d.com, Inc. On May 1, 2002, the effective date of the Share Purchase
Agreement and Stock Exchange, all of the outstanding shares of Waycool3d.com,
Inc. were transferred to us and these shareholders as well as the other
Waycool3d.com, Inc. received shares of our common stock.
DESCRIPTION OF SECURITIES
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and by-laws, copies of which have
been incorporated by reference as exhibits to the registration statement of
which this prospectus forms a part. The following discussion is qualified in its
entirety by reference to such exhibits.
GENERAL
Our authorized capital stock consists of 100,000,000 shares of common stock, par
value $.0001 per share and 20,000,000 shares of preferred stock, par value
$.0001 per share, which may be divided into series and with the preferences,
limitations and relative rights determined by our Board of Directors.
COMMON STOCK
Holders of shares of our common stock are entitled to one vote for each share on
all matters to be voted on by the stockholders. Holders of common stock do not
have cumulative voting rights. Holders of common stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
of Directors in its discretion from funds legally available therefor. In the
event of our liquidation, dissolution or winding up, the holders of common stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. All of the outstanding shares of our common stock are fully paid
and non-
36
assessable. Holders of our common stock have no preemptive rights to purchase
our common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to our common stock.
Preferred Stock
Our Board of Directors is authorized to provide for the issuance of shares of
preferred stock in series and, by filing a certificate pursuant to the
applicable laws of New Jersey, to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations or restrictions without any further vote or action by the
shareholders. Any shares of preferred stock issued would have priority over the
common stock with respect to dividend or liquidation rights. Any future issuance
of preferred stock may have the effect of delaying, deferring or preventing a
change in our control without further action by the shareholders and may
adversely affect the voting and other rights of the holders of common stock. At
present, we have no plans to issue any preferred stock nor adopt any series,
preferences or other classification of preferred stock. The issuance of shares
of preferred stock, or the issuance of rights to purchase such shares, could be
used to discourage an unsolicited acquisition proposal. For instance, the
issuance of a series of preferred stock might impede a business combination by
including class voting rights that would enable the holder to block such a
transaction, or facilitate a business combination by including voting rights
that would provide a required percentage vote of the stockholders. In addition,
under certain circumstances, the issuance of preferred stock could adversely
affect the voting power of the holders of the common stock. Although our Board
of Directors is required to make any determination to issue such stock based on
its judgment as to the best interests of our stockholders, our Board of
Directors could act in a manner that would discourage an acquisition attempt or
other transaction that some, or a majority, of the stockholders might believe to
be in their best interests or in which stockholders might receive a premium for
their stock over the then market price of such stock. Our Board of Directors
does not at present intend to seek stockholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or stock exchange
rules. We have no present plans to issue any preferred stock.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
None of our directors will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such liability.
The foregoing provisions shall not eliminate or limit the liability of our
directors (i) for any breach of the director's duty of loyalty to us or our
stockholders, (ii) for acts or omissions not in good faith or, which involve
intentional misconduct or a knowing violation of law, (iii) under applicable
Sections of the New Jersey Statutes, or (iv) for any transaction from which the
director derived an improper personal benefit.
The by-laws provide for indemnification of our directors, officers, and
employees in most cases for any liability suffered by them or arising out of
their activities as our directors, officers, and employees if they were not
engaged in willful misfeasance or malfeasance in the performance of his or her
duties; provided that in the event of a settlement the indemnification will
apply only when the Board of Directors approves such settlement and
reimbursement as being for the best interests of us. The Bylaws, therefore,
limit the liability of directors to the maximum extent permitted by New Jersey
law.
Our officers and directors are accountable to us as fiduciaries, which means
they are required to exercise good faith and fairness in all dealings affecting
us. In the event that a shareholder believes our officers and/or directors have
violated their fiduciary duties to us, the shareholder may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce the shareholder's rights, including rights under
37
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management.
Shareholders who have suffered losses in connection with the purchase or sale of
their interest in us in connection with such sale or purchase, including the
misapplication by any such officer or director of the proceeds from the sale of
these securities, may be able to recover such losses from us.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of our shares of common stock being offered by this prospectus will
be passed upon for us by Anslow & Jaclin, LLP, Freehold, New Jersey. Richard I.
Anslow and Gregg E. Jaclin, principals of Anslow & Jaclin, LLP own 400,000
shares and 100,500 shares, respectively, of our common stock and are also
selling security holders in this offering.
EXPERTS
Our audited financial statements for the fiscal years ended December 31, 2001
and 2000, have been included in this prospectus in reliance upon the report
appearing elsewhere herein, of Gately & Associates, LLC, upon the authority of
said independent certified public accountant as an expert in accounting and
auditing. Our wholly owned subsidiary, Waycool3d.com, Inc.'s audited financial
statements for the fiscal years ended December 31, 2001 and 2000, have been
included in this prospectus in reliance upon the report appearing elsewhere
herein, of Brady, Martz & Associates, P.C., upon the authority of said
independent certified public accountant as an expert in accounting and auditing.
38
SEGWAY VII CORP.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
Segway VII Corp.
Financial Statements Table of Contents
FINANCIAL STATEMENTS Page #
Audit Report 1
Balance Sheet 2
Statement of Operations and Retained Deficit 3
Statement of Stockholders Equity 4
Cash Flow Statement 5
Notes to the Financial Statements 6-8
INDEPENDENT AUDITORS REPORT
TO THE BOARD OF DIRECTORS
SEGWAY VII CORP.
FREEHOLD, NJ
We have audited the accompanying balance sheet of Segway VII Corp., as of
December 31, 2001 and 2000, and the related statement of operation, equity and
cash flows for the twelve months then ended December 31, 2001 and 2000. 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 Segway VII Corp., as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the months then ended in conformity with generally accepted accounting
principles.
Gately & Associates, LLC
Certified Public Accountants
Orlando, Florida
March 19, 2002
F-1
SEGWAY VII CORP.
BALANCE SHEET
As of December 31, 2001
and December 31, 2000
ASSETS
CURRENT ASSETS December 31, 2001 December 31, 2000
Cash $ 10 $ 3
------- -------
TOTAL ASSETS $ 10 $ 3
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 925 $ 175
------- -------
TOTAL LIABILITIES 925 175
------- -------
STOCKHOLDERS' EQUITY
Common Stock - par value $0.0001;
100,000,000 shares authorized;
5,000,000 issued and outstanding 500 500
Additional paid in capital 325 125
Preferred Stock - Par value $0.0001;
20,000,000 shares authorized;
none issued and outstanding 0 0
Accumulated Deficit (1,740) (797)
------- -------
Total stockholders' equity (915) (172)
------- -------
TOTAL LIABILITIES AND EQUITY $ 10 $ 3
======= =======
The accompanying notes are an integral part of these
financial statements.
F-2
SEGWAY VII CORP.
STATEMENT OF OPERATIONS
For the twelve months ended December 31, 2001, from inception
(April 6, 2000) through December 31,
2000, and from inception (April 6, 2000) through December 31, 2001
Twelve Months From Inception to From Inception
December 31, 2001 December 31, 2000 To December 31, 2001
REVENUE Sales $ 0 $ 0 $ 0
Cost of sales 0 0 0
------------- ---------- ------------
GROSS PROFIT 0 0 0
GENERAL AND ADMINISTRATIVE EXPENSES 943 797 1,740
----------- ----------- -----------
NET LOSS (943) (797) $ (1,740)
----------- ----------- -----------
ACCUMULATED DEFICIT, BEGINNING BALANCE (797) 0
----------- -----------
ACCUMULATED DEFICIT, ENDING BALANCE $ (1,740) $ (797)
=========== ===========
NET EARNINGS PER SHARE
Basic and Diluted
Net loss per share (Less than .01)
Basic and Diluted Weighted Average
Number of Common Shares Outstanding 5,000,000
The accompanying notes are an integral part of these
financial statements.
F-3
SEGWAY VII CORP.
STATEMENT OF STOCKHOLDERS' EQUITY
From inception (April 6, 2000)through December 31, 2001
SHARES COMMON STOCK ACCUMULATED DEFICIT TOTAL
------------- ------------- ----------------- ------------
Stock issued for cash 5,000,000 $ 625 $ 625
Net loss $ (797) (797)
------------ ------------ ---------------- ------------
Total at December 31, 2000 5,000,000 625 (797) (172)
Contributed capital
by shareholders 200 200
Net loss (943) (943)
------------- ------------- --------------- ------------
Total at December 31, 2001 5,000,000 $ 874 $ (1,740) $ (915)
============= ============= =============== ============
The accompanying notes are an integral part of these
financial statements.
F-4
SEGWAY VII CORP.
STATEMENT OF CASH FLOWS
For the twelve months ended December 31, 2001, and from
inception (April 6, 2000) through December 31, 2001
CASH FLOWS FROM OPERATING ACTIVITIES December 31, 2001 From Inception
Net income (loss) $ (943) $ (1,740)
Increases (Decrease) in accrued expenses 750 925
------------- ----------
NET CASH PROVIDED OR (USED) IN OPERATIONS (193) (815)
CASH FLOWS FROM FINANCING ACTIVITIES
None 0 0
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from issuance of common stock 0 625
Proceeds from capital contributions 200 200
------------ ---------
200 825
CASH RECONCILIATION
Net increase (decrease) in cash 7 10
Beginning cash balance 3 0
----------- -----------
CASH BALANCE AT END OF YEAR 10 10
=========== ===========
The accompanying notes are an integral part of these
financial statements.
F-5
SEGWAY VII CORP.
1. Summary of significant accounting policies:
------------------------------------------
Industry - Segway VII Corp. (The Company), a Company incorporated in the state
of New Jersey as of April 6, 2000, plans to locate and negotiate with a business
entity for the combination of that target company with The Company. The
combination will normally take the form of a merger, stock-for-stock exchange or
stock- for-assets exchange. In most instances the target company will wish to
structure the business combination to be within the definition of a tax-free
reorganization under Section 351 or Section 368 of the Internal Revenue Code of
1986, as amended. No assurances can be given that The Company will be successful
in locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or domestic
private company to become a reporting ("public") company whose securities are
qualified for trading in the United States secondary market.
Results of Operations and Ongoing Entity - The Company is considered to be an
ongoing entity. The Company's shareholders fund any shortfalls in The Company's
cash flow on a day to day basis during the time period that The Company is in
the development stage.
Liquidity and Capital Resources - In addition to the stockholder funding capital
shortfalls; The Company anticipates interested investors that intend to fund the
Company's growth once a business is located.
Cash and Cash Equivalents - The Company considers cash on hand and amounts on
deposit with financial institutions which have original maturities of three
months or less to be cash and cash equivalents.
Basis of Accounting - The Company's financial statements are prepared in
accordance with generally accepted accounting principles.
Income Taxes - The Company utilizes the asset and liability method to measure
and record deferred income tax assets and liabilities. Deferred tax assets and
liabilities reflect the future income tax effects of temporary differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and are measured using enacted tax
rates that apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Deferred tax assets are
reduced by a valuation allowance when in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. At this time, The Company has set up an allowance for deferred taxes
as there is no company history to indicate the usage of deferred tax assets and
liabilities.
Fair Value of Financial Instruments - The Company's financial instruments may
include cash and cash equivalents, short-term investments, accounts receivable,
accounts payable and liabilities to banks and shareholders. The carrying amount
of long-term debt to banks approximates fair value based on interest rates that
are currently available to The Company for issuance of debt with similar terms
and remaining maturities. The carrying amounts of other financial instruments
approximate their fair value because of short-term maturities.
Concentrations of Credit Risk - Financial instruments which potentially expose
The Company to concentrations of credit risk consist principally of operating
demand deposit accounts. The Company's policy is to place its operating demand
deposit accounts with high credit quality financial institutions. At this time
The Company has no deposits that are at risk.
F-6
2. Related Party Transactions and Going Concern:
--------------------------------------------
The Company's financial statements have been presented on the basis that it is a
going concern in the development stage, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. At
this time The Company has not identified the business that it wishes to engage
in.
The Company's shareholders fund The Company's activities while The Company takes
steps to locate and negotiate with a business entity for combination; however,
there can be no assurance these activities will be successful.
3. Accounts Receivable and Customer Deposits:
-----------------------------------------
Accounts receivable and Customer deposits do not exist at this time and
therefore have no allowances accounted for or disclosures made.
4. Use of Estimates:
----------------
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenue
and expenses. Management has no reason to make estimates at this time.
5. Revenue and Cost Recognition:
----------------------------
The Company uses the accrual basis of accounting in accordance with generally
accepted accounting principles for financial statement reporting.
6. Accrued Expenses:
----------------
Accrued expenses consist of accrued legal, accounting and office costs during
this stage of the business.
7. Operating Lease Agreements:
--------------------------
The Company has no agreements at this time.
F-7
8. Stockholder's Equity:
--------------------
Common Stock includes 100,000,000 shares authorized at a par value of $0.0001,
of which 5,000,000 have been issued for the amount of $625. The shareholders
contributed an additional $200 to capital during the year 2001. The Company has
also authorized 20,000,000 shares of preferred stock at a par value of $0.0001,
none of which have been issued.
9. Required Cash Flow Disclosure for Interest and Taxes Paid:
---------------------------------------------------------
The company has paid no amounts for federal income taxes and interest.
10. Earnings Per Share:
------------------
Basic earnings per share ("EPS") is computed by dividing earnings available to
common shareholders by the weighted-average number of common shares outstanding
for the period as required by the Financial Accounting Standards Board (FASB)
under Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Shares". Diluted EPS reflects the potential dilution of securities that could
share in the earnings.
F-8
WAYCOOL3D.COM, INC
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
FINANCIAL STATEMENTS
DECEMBER 31, 2001
TOGETHER WITH INDEPENDENT AUDITOR'S REPORT
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
EAST GRAND FORKS, MINNESOTA
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-8
* * * * * * * * * * * * * * *
BRADY
MARTZ
- -----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
WayCool3D.com, Inc.
East Grand Forks, Minnesota
We have audited the balance sheet of WayCool3D.com, Inc. (A Development Stage
Company) as of December 31, 2001 and 2000, and the related statements of
operations, changes in shareholders' equity, and cash flows for the year ended
December 31, 2001 and the period from May 20, 2000 (the date of inception) to
December 31, 2000. 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 audits provide 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 WayCool3D.com, Inc. as of
December 31, 2001 and 2000, and the results of its operations, changes in
shareholders' equity, and its cash flows for the periods then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Brady Martz
BRADY, MARTZ & ASSOCIATES, P.C.
February 4, 2002
BRADY, MARTZ & ASSOCIATES, P.C.
401 Demers Avenue Suite 300, P.O. Box 14296
Grand Forks, ND 58208-4296 (701) 775-4685 Fax (701) 795-7498
OTHER OFFICES: Minot and Bismarck, ND
Thief River Falls, MN
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
BALANCE SHEET
December 31, 2001 and 2000
ASSETS 2001 2000
--------- ---------
CURRENT
Cash and Cash equivalents $ 15,909 $ 564
Inventory 24,918
Employee Receivable 200
Prepaid Expenses 2,908
---------
Total $ 43,935 $ 564
--------- ---------
PROPERTY AND EQUIPMENT
Equipment $ 52,378 $ 1,000
Less: Accumulated Depreciation (3,451) (36)
--------- ---------
Total $ 48,927 $ 964
--------- ---------
OTHER
Patent and Trademark, Net $ 2,937 $ 1,000
--------- ---------
TOTAL ASSETS $ 95,799 $ 2,258
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts Payable $ 36,115
Accrued Payroll 9,547
Interest Payable 2,377
Current Notes Payable 35,736
Accrued Taxes and Expenses 2,998
---------
Total $ 86,773
---------
OTHER
Related Party Notes Payable $ 180,000
---------
LONG-TERM DEBT
Notes Payable $ 139,264
---------
Total Liabilities $ 406,037
---------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value
50,000,000 shares authorized
2001-26,240,000 shares issued
2000-2,100,000 shares issued $ 26,240 $ 2,100
Paid in Excess of Par 41,862 35,944
Deficit Accumulated in Development Stage (378,340) (35,516)
--------- ---------
Total Stockholders' Equity (Deficit) $(310,238) $ 2,528
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 95,799 $ 2,528
--------- ---------
See Accompanying Notes to Financial Statements
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
For the Periods Ended December 31, 2001 and 2000
Cumulative
Total from
Inception to
2001 2000 12/31/01
--------- --------- ---------
SALES REVENUE $ 250 $ 0 $ 250
--------- --------- ---------
OPERATING EXPENSES
Advertising $ 7,265 $ 7,265
Consulting and Professional 175,250 $ 34,894 210,144
Contract Labor 14,716 14,716
Depreciation/Amortization 3,478 36 3,514
Dues and Subscriptions 1,404 1,404
Insurance 3,880 3,880
Interest Expense 3,072 3,072
Miscellaneous 525 60 585
Office Supplies 3,229 46 3,275
Payroll Taxes 4,142 4,142
Postage and Printing 11,174 11,174
Rent 14,152 14,152
Repairs and Maintenance 2,801 2,801
Research and Development 289 289
Salaries 63,710 50 63,760
Sales/Use Tax 591 591
Shipping 178 178
Shop/Production Supplies 2,326 2,326
Telephone 7,385 430 7,815
Travel and Entertainment 23,062 23,062
Utilities 954 954
--------- --------- ---------
Total Operating Expenses $ 343,583 $ 35,516 $ 379,099
--------- --------- ---------
INTEREST INCOME $ 509 $ 509
--------- --------- ---------
NET LOSS $(342,824) $ (35,516) $(378,340)
========= ========= =========
See Accompanying Notes to Financial Statements
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Periods Ended December 31, 2001 and 2000
Deficit
Accumulated in
Common Capital Development
Stock Surplus Stage Total
--------- -------- --------------- --------
2000
- ----
Balance, May 20, 2000 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock for Cash 106 5,994 6,100
Issuance of Common Stock for Services 1,994 29,950 31,944
Net Loss (35,516) (35,516)
--------- -------- ---------- --------
Balance, December 31, 2000 $ 2,100 $ 35,944 $ (35,516) $ 2,528
2001
- ----
Issuance of Common Stock for Cash 2,500 2,500
Issuance of Common Stock for Services 21,640 5,918 27,558
Net Loss (342,824) (342,824)
--------- -------- ---------- --------
Balance, December 31, 2001 $ 26,240 $ 41,862 $ (378,340) $(310,238)
========= ======== ========== ========
See Accompanying Notes to Financial Statements
WAYCOOL3D.COM, INC.
A DEVELOPMENT STAGE COMPANY
STATEMENT OF CASH FLOWS
For the Periods Ended December 31, 2001 and 2000
Cumulative
Total from
Inception to
2001 2000 12/31/01
------- ------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(342,824) $(35,516) $(378,340)
Adjustments to Reconcile Net Loss to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 3,478 36 3,514
Expenses Satisfied by Stock Issuances 27,558 30,944 58,502
Increase in Accounts Receivable (200) (200)
Increase in Prepaid Assets (2,908) (2,908)
Increase in Inventory (24,918) (24,918)
Increase in Accounts Payable 36,114 36,114
Increase in Accrued Liabilities 14,923 24,923
---------- --------- --------------
NET CASH USED BY OPERATING ACTIVITIES $(288,777) $ (4,536) $(293,313)
----------- --------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Plant and Equipment Purchases $ (51,378) $ (1,000) $ (52,378)
Additions to Intangibles (2,000) (2,000)
----------- --------- --------------
NET CASH USED BY INVESTING ACTIVITIES $ (53,378) $ (1,000) $ (54,378)
----------- --------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock $ 2,500 $ 6,100 $ 8,600
Proceeds from Notes Payable 355,000 355,000
----------- --------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 357,500 $ 6,100 $ 363,600
----------- --------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 15,345 $ 564 $ 15,909
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 564
--------- ---------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,909 $ 564 $ 15,909
--------- ---------- -------------
See Accompanying Notes to Consolidated Financial Statement
NOTES TO FINANCIAL STATEMENTS
As of December 31, 2001
NOTE 1 Summary of Significant Accounting Policies
- --------------------------------------------------
The Corporation is a development stage company and has not yet begun full
operations. When fully implemented the company will operate as a product
manufacturer and wholesaler in East Grand Forks, Minnesota. The operations will
consist primarily of manufacturing numerous types of products which project a 3D
image.
Cash and cash equivalents include deposits in local banks.
Inventories are valued at the lower of cost (first-in first-out method) or
market value. Inventory includes raw materials, work in process, and finished
goods. Inventory at December 31, 2001 is comprised entirely of raw materials.
Property and equipment are capitalized at cost, while maintenance and repairs,
which do not enhance the value or increase the basic productive capacity of the
property, are charged to expense as incurred. Depreciation is computed using the
straight-line method, over estimated useful lives of three to seven years.
The patents and trademarks, are stated at cost less accumulated amortization.
Amortization is computed using the straight-line method over 15 and 40 year
periods, respectively. Current year and accumulated amortization was $63 for
2001, there was no amortization taken in 2000.
Advertising costs are expensed as incurred.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at December 31, 2001 and revenues and expenses during the period
then ended. The actual outcome of the estimates could differ from the estimates
made in the preparation of the financial statements.
NOTE 2 Related Party Transactions
- ----------------------------------
The corporation has an unsecured line of credit with a shareholder in the amount
of $100,000. It expires on February 2, 2002, and has an interest rate at 5.75%.
As of December 31, 2001 the outstanding balance was $80,000.
The corporation also has a note payable to Lani Hatch, who is a shareholder, in
the amount of $100,000. There is no stated interest rate on this note, it
guarantees a 30% return upon WayCool receiving funding.
The corporation also has entered into numerous noncash transactions by issuing
stock during 2001 and 2000 for services and fees incurred during start up, which
total $27,558 and $30,944, respectively.
NOTE 3 Depreciation
- --------------------
Depreciation expense included in operating expenses for the years end December
31, 2001 and 2000 is $3,415 and $36, respectively.
-6-
NOTE 4 Notes Payable
- ---------------------
Notes payable at December 31, 2001 consists of the following:
Interest 2001
Rate Amount Collateral
---- ------ ----------
City of East Grand Fork 4.00% $150,000 Inventory, fixtures &
equipment
Maurice Horn 25,000 Unsecured
--------
Total $175,000
Current Position 35,736
--------
$139,264
========
The required principal payments for the next five years and thereafter are as
follows:
2002 $35,736
2003 13,120
2004 13,654
2005 14,210
2006 14,789
-------
Total $175,000
========
The note payable to Maurice Horn guarantees a 30% return, upon the corporation
receiving funding.
NOTE 5 Operating Leases
- ------------------------
WayCool3D.com, Inc. leases office space, workshop space, and a copier for its
operation. These leases are operating leases and have the following minimum
lease payments for the next two years:
2002 $38,190
2003 38,190
-------
$76,380
=======
The leases for the office space and the workshop space are on a monthly basis
and are cancelable at anytime.
NOTE 6 Income Taxes
- --------------------
The corporation has net operating loss carryforwards of $383,523 which expire
between 2020 and 2021. Income tax benefit realization is dependent on the
corporation generating sufficient tax income prior to the expiration of the loss
carryforward. Deferred tax assets of $57,528 are completely offset by a
valuation reserve due to the lack of earnings history for the corporation.
-7-
NOTE 7 Consulting Fees
- -----------------------
Consulting and professional fees incurred during the first two years of
operations were paid in connection with receiving professional advice about
formation and funding, technical expertise, and sales consulting.
************************
-8-
WAYCOOL3D, INC.
Maximum of 800,000 shares of our common stock @ $.50 per share ($400,000)
1,880,000 shares of our common stock by selling
security holders at a price of $.50 per share
until our shares are quoted on the OTC Bulletin
Board and thereafter at prevailing market prices or privately negotiated prices
PROSPECTUS
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This prospectus is not an offer to sell our
shares of common stock and is not soliciting an offer to buy shares of our
common stock in any state where the offer or sale is not permitted.
, 2002
39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
None of our directors will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a director
involving any act or omission of any such director since provisions have been
made in our Articles of Incorporation limiting such liability.
The foregoing provisions shall not eliminate or limit the liability of our
director (i) for any breach of the director's duty of loyalty to us or our
stockholders, (ii) for acts or omissions not in good faith or, which involve
intentional misconduct or a knowing violation of law, (iii) under applicable
sections of the New Jersey Statutes, or (iv) for any transaction from which the
director derived an improper personal benefit.
The by-laws provide for indemnification of our directors, officers, and
employees in most cases for any liability suffered by them or arising out of
their activities as our directors, officers, and employees if they were not
engaged in willful misfeasance or malfeasance in the performance of his or her
duties; provided that in the event of a settlement the indemnification will
apply only when our Board of Directors approves such settlement and
reimbursement as being for the best interests of us. The Bylaws, therefore,
limit the liability of directors to the maximum extent permitted by New Jersey
law.
Our officers and directors are accountable to us as fiduciaries, which means
they are required to exercise good faith and fairness in all dealings affecting
us. In the event that a shareholder believes our officers and/or directors have
violated their fiduciary duties to us, the shareholder may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce the shareholder's rights, including rights under
certain federal and state securities laws and regulations to recover damages
from and require an accounting by management.
Shareholders who have suffered losses in connection with the purchase or sale of
their interest in us in connection with such sale or purchase, including the
misapplication by any such officer or director of the proceeds from the sale of
these securities, may be able to recover such losses from us.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable.
II-1
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby. All such expenses will
be borne by us; none shall be borne by any selling security holders.
SEC Registration fee.....................................$ 125
Blue sky fees and expenses...............................$ 5,000
Transfer agent and registrar fees........................$ 2,500
Printing and engraving expenses..........................$ 5,000
Legal fees and expenses..................................$25,000
Accounting fees and expenses............................ $ 7,500
Miscellaneous............................................$ 4,875
Total....................................................$50,000
All amounts other than the SEC registration fee are estimated.
Item 26. RECENT SALES OF UNREGISTERED SECURITIES.
On April 19, 2000, we issued 4,000,000 founder's shares of our common stock at a
purchase price of $500 to Richard I. Anslow, our former sole executive officer
and sole director, pursuant to an exemption from registration provided by
Section 4(2) of the 1933 Securities Act.
On August 4, 2000, we issued 1,000,000 shares of our common stock at a purchase
price of $125 to Gregg E. Jaclin, pursuant to an exemption from registration
provided by Section 4(2) of the 1933 Securities Act.
On March 25, 2002, we authorized a 2-1 forward split of our outstanding shares
increasing the amount of shares outstanding to 10,000,000.
II-2
Item 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
EXHIBIT DESCRIPTION
3.0 Articles of Incorporation of Waycool3D, a New Jersey corporation
3.1 Articles of Amendment to the Articles of Incorporation of Waycool3D, Inc.,
a New Jersey corporation
3.2 Bylaws of Waycool3D, Inc., a New Jersey corporation
3.3 Articles of Incorporation of Waycool3D.com, Inc., a Nevada corporation
3.4 Bylaws of Waycool3D.com, Inc, a Nevada corporation
5.1 Opinion of Anslow & Jaclin LLP
10. Stock Purchase Agreement and Share exchange dated May 1, 2002 between
Segway VII Corp. and Waycool3d.com, Inc.
23.1 Consent of Gately & Associates, LLC (1)
23.2 Consent of Brady, Martz & Associates, PC
23.3 Consent of Anslow & Jaclin LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-6 of the registration statement)
(1) To be filed with amendment.
II-3
Item 28. 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 this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information
set forth in the registration statement; and
(iii)Include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(B) Undertaking Required by Regulation S-B, Item 512(e).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or controlling persons 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 Securities Act of 1933 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 that the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(C) Undertaking Required by Regulation S-B, Item 512(f)
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of East Grand Forks, State
of Minnesota, on the 8th day of May, 2002.
Waycool3D, Inc.
By: /s/ Bradly Kerr
--------------------------------------------
Bradly Kerr
President and Director
POWER OF ATTORNEY
The undersigned directors and officers of Waycool3d, Inc., hereby constitute and
appoint Bradly Kerr, with full power to act without the other and with full
power of substitution and resubstitution, our true and lawful attorneys-in-fact
with full power to execute in our name and behalf in the capacities indicated
below any and all amendments (including post-effective amendments and amendments
thereto) to this registration statement 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 and hereby ratify and
confirm each and every act and thing that such attorneys-in-fact, or any them,
or their substitutes, shall lawfully do or cause to be done by virtue thereof.
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.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Bradly Kerr President and Director May 8, 2002
- ----------------
Bradly Kerr
/s/ John Zavoral Secretary and Director May 8, 2002
- ----------------
John Zavoral
/s/ Peter Zavoral Treasurer and Director May 8, 2002
_________________
Peter Zavoral
II-5