UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
RESERVENET INCORPORATED
-----------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 7948 94-3381088
- ---------------------- ------- ---------------
(STATE OR JURISDICTION PRIMARY I.R.S. EMPLOYER
OF INCORPORATION) SIC NUMBER IDENTIFICATION NO.
3701 Sacramento St. #323, San Francisco, CA 94118 415.752.2578
- ------------------------------------------------- ------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (TELEPHONE)
Daniel A. Regidor
3701 Sacramento St. #323, San Francisco, CA 94118 415.752.2578
- ------------------------------------------------- ------------
(NAME & ADDRESS OF AGENT FOR SERVICE) (TELEPHONE)
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed Proposed
Class of Dollar Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Unit Price (1) Fee
- ----------- ---------- --------- --------- ------------
Common $50,000 $0.10 $50,000 $13.19
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
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.
PROSPECTUS
RESERVENET INC.
500,000 SHARES
COMMON STOCK
The selling shareholders, as named in this prospectus, are offering all of the
shares of common stock being offered through this prospectus. See the section
entitled "Selling Shareholders". The shares were acquired by the twenty-five
(25) non-affiliated private selling shareholders directly from the Company in a
private offering that was exempt from registration under the U.S. Securities
laws. See section entitled "Description of Securities".
Our common stock is presently not traded on any market or securities exchange.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. SEE SECTION ENTITLED "RISK FACTORS" ON PAGE 6.
Neither the Securities 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: August 22, 2001
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TABLE OF CONTENTS
ITEM Page
- ---- ----
Summary............................................................ 3
Offering........................................................... 4
Risk Factors....................................................... 4
Forward Looking Statements......................................... 8
Use of Proceeds.................................................... 8
Determination of Offering Price.................................... 8
Dilution........................................................... 8
Dividend Policy.................................................... 8
Selling Shareholders............................................... 9
Plan of Distribution...............................................10
Legal Proceedings..................................................11
Directors, Officers, Promoters and Control Person..................11
Security Ownership of Certain Beneficial Owners and
Management......................................................13
Description of Securities..........................................14
Interests of Named Experts and Counsel.............................14
Securities Act Indemnification Disclosure..........................15
Organization within the Last Five Years............................15
Description of Business............................................15
Plan of Operation..................................................15
Description of Property............................................22
Certain Relationships and Related Transactions.....................23
Market for Common Equity and Related Stockholder
Matters.........................................................23
Executive Compensation.............................................23
Financial Statements...............................................24
Changes in or Disagreements with Accountants
Disclosure......................................................24
Indemnification of Officers and Directors..........................31
Other Expenses of Offering and Distribution........................31
Recent Sales of Unregistered Securities............................31
List of Exhibits...................................................32
Undertakings.......................................................32
Signatures.........................................................33
SUMMARY
ReserveNet, Inc. was incorporated in Delaware on November 22, 2000 for the
purpose of developing a web-based reservation management system for the
restaurant industry.
We have received our funding to date through the sale of common stock to our
founder and by way of a private offering of shares to investors. On December 12,
2000 our founder, Daniel Regidor acquired 140,000 shares at a price of $0.025
per share for total proceeds of $3,500. Subsequently, the Company undertook a
private offering, from the period of approximately February 15, 2001 until May
20, 2001, in which we offered and sold 25,000 common shares at $1.00 per share
to non-affiliated private investors and thereby raised an additional $25,000. On
May 28, 2001, the Company undertook a 20 for 1 forward stock split. On the same
date, the Founder cancelled 50% of his holdings to bolster the Company's
attractiveness to potential outside investors as well as increase the relative
equity percentage for the existing shareholders.
3
Please note that unless otherwise noted, the numbers of shares as set forth
herein, used in calculations, etc. will be made reference to in the post 20 to 1
forward split that was approved on May 28, 2001.
From inception until the date of this filing we have had no material operating
activities.
OFFERING
Securities Being Offered: Up to 500,000 shares of common stock are being
registered for the sale by the Selling Shareholders. The Company will be
receiving no proceeds from the sale of the shares being registered herein.
Securities Issued and to be Issued: 1,900,000 shares of common stock were issued
and outstanding as of the date of this prospectus.
Use of Proceeds: We will not receive any proceeds from the sale of the shares
of common stock by the Selling Shareholders.
Offering Period: This offering will conclude when all of the 500,000 common
shares being registered hereby are either sold, are no longer needing to be
registered, or the company decides to terminate this registration.
RISK FACTORS
Investors in ReserveNet should be particularly aware of the inherent risks
associated with the Company's business plan. These risks include:
WE ARE IN THE DEVELOPMENT STAGE OF OUR BUSINESS AND HAVE NO OPERATING HISTORY,
NO MATERIAL CURRENT OPERATIONS, NO SIGNIFICANT ASSETS, AND NO PROFITS. AT THIS
STAGE OF OUR BUSINESS PLAN, OUR SHAREHOLDERS ARE ACCEPTING A HIGH PROBABILITY OF
LOSING THEIR ENTIRE INVESTMENT.
Our plan may not prove successful and there is a very real risk that an investor
could lose some, if not all, of their investment. It is also possible that the
company could remain as a start-up company with no material operations,
revenues, or profits. There can be no assurance that the Company will be
successful or that past experiences of the officers and directors will result in
a similar success for ReserveNet.
OUR BUSINESS STRATEGY REQUIRES US TO RAISE FUNDS OF $1,500,000 THROUGH A SERIES
OF PRIVATE PLACEMENTS IN SUBSEQUENT OFFERINGS. WITHOUT FUNDING, WE COULD REMAIN
AS A START-UP COMPANY WITH NO MATERIAL OPERATIONS, REVENUES, OR PROFITS.
Should the Company be unable to raise an additional $1.5 million in subsequent
financing, debt, or some combination thereof, the Company may not be able to
progress its business plan. In that event, the Company would likely fail. Even
if the Company were to successfully raise its next round of financing,
subsequent financing rounds may likely be needed to further develop the
Company's product and underlying business. Should the Company be unsuccessful in
raising these additional funds, the Company would face a significant probability
of failure. Even if the Company were to successfully raise sufficient investment
capital, the Company still faces substantial risks and uncertainties in
developing its business and establishing itself as a going concern
4
OUR COMPETITORS ARE WELL-ESTABLISHED AND HAVE SUBSTANTIALLY GREATER FINANCIAL,
MARKETING, PERSONNEL AND OTHER RESOURCES THAN WE DO. SHOULD WE BE UNABLE TO
ACHIEVE ENOUGH CUSTOMER MARKET SHARE IN OUR INDUSTRY, WE MAY EXPERIENCE LESS
REVENUE THAN ANTICIPATED AND A SIGNIFICANT REDUCTION IN OUR PROFIT.
Many existing companies are already directly and indirectly established within
the market that the Company plans to enter. The Company's primary competitors,
at present, are ISeatz.com and OpenTable.com. The Company will also compete with
restaurants that offer the ability to make reservations from their proprietary
Web sites.
The Company may encounter further competition from web-based restaurant guides,
entertainment guides, regional and national media sites, online service
providers, and any other sites that seek to build relationships with food
service businesses and consumers by managing the reservation process. These
potential competitors could take action that may build brand recognition more
quickly, offer a superior service, and/or erect barriers to entry of the
marketplace making it more difficult for ReserveNet to establish itself as a
going concern.
Many providers of Web services enter into distribution arrangements, co-branding
arrangements, content arrangements, and other strategic partnering arrangements
with ISPs, OSPs, providers of Web browsers, operators of high traffic Web sites
and other businesses in an attempt to increase traffic and page views, thereby
making their Web sites more attractive to Web advertisers while increasing the
likelihood of incidental web traffic being directed to their services. To the
extent that direct competitors or other Web site operators are able to enter
into successful strategic relationships, these competitors and Web sites could
experience increases in traffic and page views, while the Company's traffic and
page views could remain constant or decline, which could have the effect of
making these Websites appear more attractive to advertisers and/or reduce the
number of reservations being made via the Company's site. Such market effects
could have a material adverse effect on the Company's business, results of
operations, and financial condition.
Many of the Company's competitors, as well as a number of potential new
competitors, have longer operating histories in the Web market, greater name
recognition, larger customer bases and significantly greater financial,
technical and marketing resources than the Company. Such competitors may be able
to undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, distribution
partners, advertisers and content providers.
5
The Company's competitors may develop Web based reservation services that are
equal to or superior to those of the Company or that achieve greater market
acceptance than the Company's offerings. While we hope to differentiate our
proprietary reservation system by incorporating technology that's currently not
available on competing web-based reservation systems, the Company may not
attract sufficient investment capital to fully develop such a system.
Additionally, the Company may not be able to implement such technology quickly
enough due to capital constraints and/or engineering resources. The ability of
the Company to capitalize on a first-mover advantage may be inhibited, in light
of our competitors having significantly broader resources to offer a superior
product in the marketplace.
The Web in general, and the Company specifically, also must compete with
traditional advertising media such as print, radio and television for a share of
advertisers' total advertising budgets. To the extent that the Web is not
perceived as an effective advertising medium, advertisers may be reluctant to
devote any portion of their advertising budget to Web-based advertising on the
Company's web-site. The above factors including any other unforeseen
circumstances may have a material adverse effect on the Company's business,
results of operations, and financial condition.
THE CURRENT OFFICERS, DANIEL REGIDOR AND RICK COLLINS, ARE THE SOLE OFFICERS AND
DIRECTORS OF THE COMPANY, AND AT THE SAME TIME, THEY ARE INVOLVED IN OTHER
BUSINESS ACTIVITIES. AT PRESENT, THEY ARE ABLE TO CONTRIBUTE NOT MORE THAN
10-15% OF THEIR AVAILABLE TIME TO THE COMPANY.
RESERVENET'S NEEDS FOR THEIR TIME AND SERVICES COULD CONFLICT WITH THEIR OTHER
BUSINESS ACTIVITIES. THIS POSSIBLE CONFLICT OF INTEREST COULD RESULT IN THEIR
INABILITY TO PROPERLY MANAGE RESERVENET'S AFFAIRS, RESULTING IN RESERVENET
REMAINING A START-UP COMPANY WITH NO MATERIAL OPERATIONS, REVENUES, OR PROFITS.
The Company's needs for the officers and directors time and services could
conflict with their other business activities. This could result in their
inability to effectively and properly manage the company's business affairs
possibly resulting in a lack of business success for the company.
We have not formulated a plan to resolve any possible conflicts that may arise.
While ReserveNet and its officers and directors have not formally adopted a plan
to resolve any potential or actual conflicts of interest that exist or that may
arise, they have verbally agreed to limit their roles in all other business
activities to roles of passive investors and devote full time services to
ReserveNet after we raise additional capital of $1,500,000 and are able to
provide officers' salaries per our business plan.
THERE IS NO CURRENT PUBLIC MARKET FOR RESERVENET'S SECURITIES. WE HAVE NO
CURRENT PUBLIC OFFERING AND NO PROPOSED PUBLIC OFFERING OF OUR EQUITY. AS OUR
STOCK IS NOT PUBLICLY TRADED, INVESTORS SHOULD BE AWARE THEY PROBABLY WILL BE
UNABLE TO SELL THEIR SHARES AND THEIR INVESTMENT IN OUR SECURITIES IS NOT
LIQUID.
We plan to file, sometime in the future, for trading on the OTC Electronic
Bulletin Board, which is sponsored by the National Association of Securities
Dealers ("NASD"). While this could create liquidity for our shareholders through
public trading by securities dealers, we do not know when we will be able to
file for trading, or if we will ever be cleared for trading, and there is no
guarantee of trading volume or trading price levels sufficient for investors to
sell their stock, recover their investment in our stock, or profit from the sale
of their stock.
6
IF THE COMPANY BECOMES LISTED FOR TRADING ON THE OTC ELECTRONIC BULLETIN BOARD
THE TRADING IN THE COMPANY'S SHARES MAY BE REGULATED BY SECURITIES AND EXCHANGE
COMMISSION RULE 15G-9 WHICH ESTABLISHED THE DEFINITION OF A "PENNY STOCK."
The Securities and Exchange Commission Rule 15g-9 establishes the definition of
a "penny stock", for the purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks are suitable for
that person and the person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in summary, (i) sets forth the basis on which the broker or
dealer made the suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to the transaction.
The effective result of this Rule 15g-9, is that if the share price is below
$5.00 there will be less purchasers qualified by their brokers to purchase
shares of the company, and therefore a less liquid market for the securities.
AS TECHNOLOGY REGARDING THE INTERNET AND THE COMMUNICATIONS INDUSTRY ADVANCES,
THE COMPANY'S PRODUCTS MAY BECOME OBSOLETE. THE COMPANY MAY NOT HAVE SUFFICIENT
CAPITAL TO FUND RESEARCH AND DEVELOPMENT TO MAINTAIN A COMPETITIVE TECHNOLOGICAL
ADVANTAGE. THE COMPANY MAY EXPERIENCE A DETERIORATION IN ITS CAPITAL RESERVES AS
A RESULT OF ITS INVESTMENT IN RESEARCH AND DEVELOPMENT.
This potential drain on the Company's capital may inhibit its on-going
operations should it be forced to scale down expenses in order to enhance its
products. Even if the Company develops a superior product, our competitors may
infringe upon our design specifications. Although the Company would likely
pursue legal remedies to address these issues, the Company may not have
sufficient capital to endure a protracted legal challenge. A legal challenge
would also detract the Company's focus from building and maintaining its
business, and profitability would likely deteriorate.
A competitor may offer a product with similar technology at either below our
costs or for free. Well-capitalized companies may run a loss leader relative to
the sales of their products, in order to gain market share. This strategy
requires significant capital resources in order to fund operations at a loss.
The Company may not have enough working capital to maintain operations in order
to be competitive with such a strategy and would likely fail.
7
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this filing. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us as described in the "Risk Factors" section and elsewhere in
this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
At the present time, there is no market for the company's securities.
The Selling Shareholders may sell their common stock at prices then prevailing
or related to the then current market price or at negotiated prices. The
offering price used herein has no relationship to any established criteria of
value, such as book value or earnings per share. Additionally, because the
Company has a limited operating history and has never generated any revenues,
the price of its common stock is not based on past earnings, nor is the price of
the shares of the Company's common stock indicative of current market value for
the assets owned by the Company. No valuation or appraisal has been prepared for
the Company's business and potential business expansion.
DILUTION
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. As such, there will be no dilution to our
existing shareholders as a result of this offering.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
the business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
8
SELLING SHAREHOLDERS
The selling shareholders named herein are offering all of the 500,000 shares of
common stock offered through this prospectus. The shares include the following:
1. 25,000 shares of our common stock that the selling shareholders acquired
from the Company in an offering pursuant to Rule 504 of Regulation D that
was completed on May 20, 2001; and
2. 475,000 shares of our common stock that the selling shareholders received
pursuant to a 20 for 1 forward stock split executed May 28, 2001.
The following table provides as of July 31, 2001, information regarding the
beneficial ownership of our common stock held by each of the selling
shareholders, including:
1. The identity of the beneficial holder of any entity that owns the shares
2. The number of shares owned by each prior to this offering;
3. The percentage owned by each prior to this offering;
4. The total number of shares that are to be offered for each;
5. The total number of shares that will be owned by each upon completion of
the offering; and
6. The percentage owned by each upon completion of the offering.
The named parties in the table that follows are the beneficial owners and have
the sole voting and investment power over all shares or rights to the shares
reported. In addition, the table assumes that the selling shareholders do not
sell shares of common stock not being offered through this prospectus and do not
purchase additional shares of common stock. The column reporting the percentage
owned upon completion assumes that all shares offered are sold, and is
calculated based on 1,900,000 shares outstanding on July 31, 2001.
Shares Percentage Total Total Percentage
Name of Owned Prior Owned Prior of Shares Shares Owned
Selling to This to This Offered After After
Shareholder Offering Offering For Sale Offering Offering
- --------------- ---------- --------- -------- -------- ----------
Debbie Andresen 20,000 1.1% 20,000 -0- 0.0%
Donna Bautista 20,000 1.1% 20,000 -0- 0.0%
Mark Brown 20,000 1.1% 20,000 -0- 0.0%
Daniel Burke 20,000 1.1% 20,000 -0- 0.0%
Karen Cusi 20,000 1.1% 20,000 -0- 0.0%
Doug Diehl 20,000 1.1% 20,000 -0- 0.0%
Riccardo Dona 20,000 1.1% 20,000 -0- 0.0%
Marco Erb 20,000 1.1% 20,000 -0- 0.0%
Steven George 20,000 1.1% 20,000 -0- 0.0%
9
Tiffany Gilroy 20,000 1.1% 20,000 -0- 0.0%
Holly Hoffar 20,000 1.1% 20,000 -0- 0.0%
Kent Karras 20,000 1.1% 20,000 -0- 0.0%
Persia Kaveh 20,000 1.1% 20,000 -0- 0.0%
Jason Lande 20,000 1.1% 20,000 -0- 0.0%
Alex Oddo 20,000 1.1% 20,000 -0- 0.0%
Andrew Parker 20,000 1.1% 20,000 -0- 0.0%
Kevin Quan 20,000 1.1% 20,000 -0- 0.0%
Shana Sachs 20,000 1.1% 20,000 -0- 0.0%
Michael Sarullo 20,000 1.1% 20,000 -0- 0.0%
Brad Smith 20,000 1.1% 20,000 -0- 0.0%
Bob Stojanovic 20,000 1.1% 20,000 -0- 0.0%
Evelyn Taylor 20,000 1.1% 20,000 -0- 0.0%
Kamalesh Thakker 20,000 1.1% 20,000 -0- 0.0%
Anjali Thakur 20,000 1.1% 20,000 -0- 0.0%
Heidi Verse 20,000 1.1% 20,000 -0- 0.0%
Totals 500,000 26.3% 500,000 -0- 0.0%
None of the selling shareholders:
1. Has had a material relationship with ReserveNet Inc. other than as
a shareholder as noted above at any time within the past three years;
or
2. Has ever been an officer or director of ReserveNet Inc.
PLAN OF DISTRIBUTION
The selling shareholders have not informed us of how they plan to sell their
shares. However, they may sell some or all of their common stock in one or more
transactions, including block transactions:
1. on such public markets or exchanges as the common stock may from time
to time be trading;
2. in privately negotiated transactions;
3. through the writing of options on the common stock;
4. in short sales; or
5. in any combination of these methods of distribution.
The sales price to the public may be:
1. the market price prevailing at the time of sale;
2. a price related to such prevailing market price; or
3. such other price as the selling shareholders determine from time to
time.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
10
The selling shareholders may also sell their shares directly to market makers
acting as principals or brokers or dealers, who may act as agent or acquire the
common stock as a principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with the selling
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so acting as
agent for the selling shareholders, to purchase, as principal, any unsold shares
at the price required to fulfill the respective broker's or dealer's commitment
to the selling shareholders. Brokers or dealers who acquire shares as principals
may thereafter resell such shares from time to time in transactions in a market
or on an exchange, in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices, and in connection with
such re-sales may pay or receive commissions to or from the purchasers of such
shares. These transactions may involve cross and block transactions that may
involve sales to and through other brokers or dealers. If applicable, the
selling shareholders also may have distributed, or may distribute, shares to one
or more of their partners who are unaffiliated with us. Such partners may, in
turn, distribute such shares as described above. We can provide no assurance
that all or any of the common stock offered will be sold by the selling
shareholders.
We are bearing all costs relating to the registration of the common stock. Any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock, however, will be borne by the selling shareholders or
other party selling the common stock.
The selling shareholders must comply with the requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934 in the offer and sale of their
common stock. In particular, during times that the selling shareholders may be
deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable law and may,
among other things:
1. not engage in any stabilization activities in connection with our common
stock;
2. furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be
required by such broker or dealer; and
3. not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Securities Exchange Act.
LEGAL PROCEEDINGS
ReserveNet is not currently involved in any legal proceedings and is not aware
of any pending or potential legal actions.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The directors and officers of ReserveNet, all of those whose one year terms will
expire 12/31/01, or at such a time as their successors shall be elected and
qualified are as follows:
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Date First Term
Name & Address Age Position Elected Expires
- -------------- --- -------- ------- -------
Daniel Regidor 38 CEO 10/31/00 12/31/01
3701 Sacramento St. #323
San Francisco, CA
Rick Collins 37 VP-Mktg 12/15/00 12/31/01
2912 Octavia St.
San Francisco, CA
Each of the foregoing persons may be deemed a "promoter" of the company, as that
term is defined in the rules and regulations promulgated under the Securities
and Exchange Act of 1933.
Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and qualified. Officers are appointed
to serve until the meeting of the board of directors following the next annual
meeting of stockholders and until their successors have been elected and
qualified.
There are no familial or other relationships between any of the officers,
directors, or shareholders that are required to be reported.
No executive officer or director of the corporation has been the subject of any
Order, Judgment, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry, or as an affiliated person, director or
employee of an investment company, bank, savings and loan association, or
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.
No executive officer or director of the corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding that is currently pending.
No executive officer or director of the corporation is the subject of any
pending legal proceedings.
Resumes
Daniel Regidor - President, Board Member, Founder
Daniel is responsible for financial and administrative affairs, including the
overall development of ReserveNet's concept. He formerly was the CFO of
MyOwnEmpire Inc., which was acquired by CreateLabs Inc. in August 2000.
MyOwnEmpire was a meta-internet portal whose business model pioneered the
concept of "equity for patronage" and sought to file a patent for its concept.
Daniel structured an unprecedented equity offering that proved MyOwnEmpire's
concept. CreateLabs is a venture fund whose founder has significant capital
markets and governmental ties to Hong Kong, China and Taiwan. For the past five
years, Daniel had also consulted for other developmental stage companies as a
strategic adviser.
12
Previous to his entrepreneurial ventures, Mr. Regidor held positions in asset
management as a Portfolio Manager and Analyst for Montgomery Asset Management,
First Interstate Capital and Van Kampen American Funds. Daniel earned his
Bachelor of Science in Finance from the Ohio State University in 1986. Daniel's
background brings a unique mix of experience that combines strong business
fundamentals to achieve maximum shareholder value.
Rick Collins - Board Member, Director, Vice President of Sales & Marketing
Rick Collins is currently seeking to build alliances within the internet
community to build distribution channels for ReserveNet's services once
developed. Rick Collins is concurrently building the channel sales and business
partner program for the western United States of Reef, Inc. Reef is a leading
global Internet software company that offers an open software foundation for
e-Business. Reef's partners include Cisco Systems, IBM, Sun and CommerceOne and
is funded by Goldman Sachs, Cisco Systems, 3i and Viventures.
Prior to joining Reef, Mr. Collins spent 4 years at Beyond.com, an online
software provider, where as one of the first employees, he built and managed the
software publisher relations division, created and managed the private label
program and was manager of the e-commerce division. Beyond.com became a public
company in 1998, ranking among the top ten e-commerce sites in its time with 500
employees.
As an early adopter of the Internet and recognizing the potential of the World
Wide Web, Mr. Collins founded Net Results Marketing in January 1995. Net Results
Marketing formulated strategies for companies worldwide seeking to establish a
web presence. He earned his Bachelor of Arts degree in Business Administration
from Washington State University in 1986. Mr. Collins' proven past success,
entrepreneurial sense and ongoing industry experience brings a valuable and
grass roots perspective to ReserveNet.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information on the ownership of the company's
voting securities by officers, directors and major shareholders as well as those
who own beneficially more than five percent of the company's common stock
through the most current date - August 22, 2001:
13
Name and Amount and
Address of Nature of
Title Beneficial Beneficial Percent
Of Class Owner Ownership (a) of Class
- ------- ---------- ---------- --------
Common Daniel Regidor 1,400,000 shares 73.7%
Total Shares Owned by Officers
& Directors As a Group 1,400,000 shares 73.7%
(a) Mr. Regidor originally purchased 140,000 of Founder's Stock at $0.0025 per
share for total consideration of $3,500. He subsequently cancelled 50% of his
shares to bolster the company's prospect of attracting additional investors and
simultaneously increasing the remaining shareholders' relative interest in the
Company. In doing so, Mr. Regidor received no proceeds from the company for his
cancellation of half of his original holdings.
DESCRIPTION OF SECURITIES
ReserveNet's Articles of Incorporation authorizes the issuance of 100,000,000
shares of common stock, $0.0001 par value per share. As of the date of this
offering, there are a total of 1,900,000 of the company's common shares held by
twenty six (26) shareholders. The company has no preferred stock authorized.
Holders of shares of 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 shares 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 therefore. In
the event of a liquidation, dissolution, or winding up of the company, the
holders of shares of common stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of common stock have
no preemptive or other subscription rights, and there are no conversion rights
or redemption or sinking fund provisions with respect to such shares.
You hereby referred to the company's Articles of Incorporation and ByLaws, which
are incorporated herein and provided as exhibits hereto, if you should require
more details about the company's securities.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
14
SECURITIES ACT INDEMNIFICATION DISCLOSURE
ReserveNet's By-Laws allow for the indemnification of company officers and
directors in regard to their carrying out the duties of their offices to the
extent allowable pursuant to the Corporate Statutes of Delaware, the company's
state of incorporation.
We have been advised that in the opinion of the Securities and Exchange
Commission indemnification for liabilities arising under the Securities Act is
against public policy as expressed in the Securities Act, and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or other controlling
persons in connection with the securities registered, we will, unless in the
opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
ReserveNet Incorporated was incorporated in Delaware on November 22, 2000. In
February of 2001, the company's board of directors voted to seek capital to
further development its business plan. During the period from February through
May 2001, the company received funding through the sale of common stock to
private investors.
At present, the company remains in its development stage and has not yet
commenced operations or generated any revenues.
DESCRIPTION OF BUSINESS
ReserveNet is a development stage company, the purpose of whose business plan is
to provide consumer reservation services to the restaurant industry. The Company
hopes to develop a web-based reservation system that allows consumers to place
reservations directly with restaurants through either the ReserveNet website, or
through an interactive voice response system via their mobile or other phone.
Consumers will have the ability to search an interactive database of available
restaurant reservations that can be refined to a particular geographic location
convenient to the consumer. The search could also be further refined by type of
cuisine, average price, and/or Zagat rating. Mobile consumers will have the
ability to make last-minute dining reservations by utilizing ReserveNet's
service. By dynamically obtaining the mobile phone user's geographic location
and cross-referencing this information with available reservations in the
consumer's immediate vicinity, ReserveNet's service will look to empower the
consumer through convenience.
The Company will seek to enlist restaurants to participate in its service by
offering a limited guarantee of the patron's reservation and offering valuable
consumer behavior information. By tracking consumer behavior, restaurants will
realize increased efficiencies in their menu planning, food and labor cost
management and be able to better capitalize on cross-selling opportunities.
ReserveNet will seek to establish strategic partnerships with point-of-sale
vendors to complete an integrated technological solution that increases overall
productivity and sales.
15
ReserveNet plans to establish relationships with high traffic web sites to
position the ReserveNet gateway. By linking to the merchants through existing
equipment at the client, we propose to provide an application and service that's
cost effective and generates transaction revenue. Future added value will come
from giving the merchant customer profile information by tracking consumer
purchases through their point of sale system. By adding an increased level of
interactivity to our partner web sites, we hope to generate transaction and
advertising revenue.
FORM AND YEAR OF ORGANIZATION
ReserveNet was incorporated in Delaware on November 22, 2000. From inception
until the date of this filing we have had no material operating activities or
produced any revenues.
BANKRUPTCY, RECEIVERSHIP, OR SIMILAR PROCEEDINGS
There have been no bankruptcy, receivership or similar proceedings.
ANY MATERIAL RECLASSIFICATION, MERGER, CONSOLIDATION, OR PURCHASE OR SALE OF A
SIGNIFICANT AMOUNT OF ASSETS NOT IN THE ORDINARY COURSE OF BUSINESS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS
ReserveNet.com is seeking to develop a web-based reservation interface to
provide instantaneous reservation services for the restaurant industry. The
company will generate revenue from restaurants on a per-person reservation
basis, product sales and general advertising. We have begun to explore strategic
relationships with horizontally and vertically branded web portals to capture
incidental user traffic. Generally these sites provide general media, dining and
entertainment information, but do not have real-time reservation capabilities
for restaurants. By managing the reservation process and tracking consumer
behavior information mined from the restaurant's existing point-of-sale system,
we believe the business owner will realize increased profitability through
efficient cost management and menu planning. Simultaneously, we believe that
advertisers would have the opportunity to tailor highly targeted marketing
campaigns to our users through the use of our consumer behavior information.
These targeted advertising campaigns will justify relatively higher advertising
revenue per web page. We expect that web media businesses that partner with
ReserveNet will profit under an advertising revenue sharing agreement. By
providing an interactive, proprietary means to deliver reservation services to
Internet and mobile consumers, we hope to simultaneously promote traffic on both
our domain and strategic partners' web sites. Should the Company be successful
in promoting increased web traffic, we believe that this increased market
exposure and reach should spearhead the growth of our advertising revenue
component.
16
PRODUCTS
RESERVATIONS INTERFACE
We plan to develop a prototype that interfaces with restaurants via a
synthesized telephone call made from our web servers. Web users enter
information on a standardized form or forward information for ReserveNet's use
through third party form manager applications such as Gator Inc. This
information is then relayed to restaurants through an interactive phone call
utilizing voice recognition, voice synthesis and teleprompts. We plan to work
with mobile phone engineers to obtain global positioning information from
consumers in order to deliver real-time, available reservations with restaurants
in the consumers' immediate vicinity.
On the Internet, the product will appear to the consumer as an icon on our
strategic partners' pages. Clicking on the icon leads them to a reservations
form that requires information regarding their desired reservation. The
following depicts typical responses relayed to the Internet consumer in
real-time:
1. The restaurant accommodates their reservation and sends a confirmation via
telephony response. The confirmation message appears on the reservations
page confirming name, date, time and number of people.
2. The restaurant can't accommodate the consumer and sends a message stating
the reasons why. The consumer then enters an alternate time, date or # of
people and the confirmation process is repeated.
The development of this product achieves the following advantages:
1. The interface allows restaurant owners the ability to draw Internet
consumers on an impulse basis from web sites that already provide content
pertaining to their restaurant.
2. Our product provides restaurant owners with an interactive, cost effective
web presence without the cost, maintenance, and positioning issues of
maintaining a unique domain.
3. Restaurant owners can attract a previously un-met demand from consumers in
other cities planning travel itineraries in the domains where their dining
establishment is located.
4. Consumers making last minute, impulse reservations via their mobile phone
would save time by dialing into our service to obtain and confirm
reservations at available restaurants within their immediate area.
We have not conducted focus group surveys within the restaurant market. Through
an analysis of several national and regional content provider web sites that
provide dining information, none offered the ability to make reservations. This
confirms our outlook on the opportunity available within this market segment.
17
The company's business plan proposes to utilize its founders' backgrounds to
develop its business plan and research specifications for the Company's
prototype. The business plan requires the Company, during the next six months,
to raise additional capital of $1,500,000 through the sale of common stock in a
private placement, debt, or some combination thereof. This capital will be used
to fund the further development of its prototype, hire technical, sales and
marketing staffs, purchase computers and fixed assets, advertising, travel
expenses, rent and other operating expenses for up to twelve months thereafter.
If the Company does not succeed in raising these funds, we will be forced to
rely on the corporation's existing cash in the bank and possibly funds
loaned by the directors and officers. Please be aware that the officers and
directors have no formal commitments or arrangements to make such an advance or
loan funds to the company. In such a restricted cash flow scenario, we would be
unable to advance our business plan, and would, instead, delay all cash
intensive activities. Without necessary cash flow, we may be dormant during the
next twelve months, or until such time as necessary funds could be raised in the
equity securities market.
DISTRIBUTION METHODS OF PRODUCTS OR SERVICES
Marketing Goals
Our marketing plan relies heavily on developing and fostering strategic
relationships with high traffic, content provider web sites that provide
information that complements or is incidental to our products. The criteria for
selecting our consortium of web partners will be that their sites generate at
least 100,000 traffic "hits" per month, per site.
Product Distribution
The company will be solely responsible for custom programming and delivery of
our product. Our strategic Internet relationships, in essence, will act as
resellers to our restaurant market.
Strategic Internet Relationships
We've approached the following Internet companies who have indicated preliminary
interest in establishing a strategic channel relationship with ReserveNet.
Big Book National yellow Pages
CitySearch National city guide
Although the following list is not comprehensive, these companies are examples
of other relationships ReserveNet will target for channel distribution:
Los Angeles Times Regional content provider
Fodor's Travel and restaurant guides
Yahoo Major Internet search engine
Chicago Tribune Regional content provider
The Gate Regional content provider
Zip2 National yellow pages
18
PLANNED NEW PRODUCT OR SERVICE
Restaurant Reservation Management Software
By integrating a telephony response system with our restaurant interface
product, we would achieve complete automation of the restaurant reservation
process. Consumers would call directly into our server to place their
reservations. Our server will host and manage reservations from both our web
site and over the telephone. With the advent of Internet telephony and voice
recognition, we expect consumers will elect to make phone calls over the
Internet versus keying information on a form within two years. Within that time
frame we'll have implemented our telephony reservation system that will also be
adapted to accept reservations via Internet telephone calls. Incorporating
VocalTec technology (to record and translate the consumer's name) and guided by
voice prompts, the consumer places a reservation through tone entries. This
enhanced product alleviates the need of data entry by the consumer.
Additionally, the restaurant owner reduces labor costs by alleviating the need
to have someone dedicated to managing their reservations book. Consumers will
also have the ability to reserve particular tables at the restaurant.
COMPETITION AND COMPETITIVE POSITION
OpenTable, Inc. is a provider of Internet-enabled customer relationship
management, marketing, yield management and real-time reservations solutions to
the foodservice industry. The company developed an electronic reservation book
that automatically builds a customer database that enables restaurants to manage
yields, communicate with diners, and conduct targeted marketing campaigns.
They've positioned distribution points for their service with hotel concierges,
travel agents, and administrative assistants through proprietary applications.
Additionally, OpenTable has established many distribution and content partners
including America Online, The New York Times, The Chicago Tribune and The Los
Angeles Times. OpenTable's customers include leading hotel chains and at least
1,100 of the restaurants making them ReserveNet's largest and most established
competitor.
ISeatz.com Inc. is another provider of reservations solutions to the foodservice
industry but their product uses only email and fax notifications. Although both
companies have established market share, we believe that their products are
inferior.
Although these companies have an early to market advantage, ReserveNet believes
an opportunity exists to develop a technically superior reservation product. We
believe that by incorporating voice response and recognition systems, in
addition to an interface specifically tailored to technology within mobile
phones, our product will capture market share based on ease of use and highly
relevant consumer behavior data.
19
PRODUCT DEVELOPMENT
Currently, we are conducting a search for software engineers that have expertise
in communications interfaces, web design and database programming. We've
approached several outside sources to develop the concept, and have received
quotes of hourly rates from $65 to $125 per hour. The Company estimates the time
to develop a prototype to be roughly three to six months from the receipt of
additional capital, for a total expenditure of up to $120,000 if we outsource
the project. Our alternatives are to hire a technical staff and bring the
project in-house or form a strategic technical partnership to dedicate their
resources to the project's development. Both alternatives will require a
distribution of equity to be negotiated. Our goal is to begin beta testing of
our product approximately six months after receipt of our additional funding.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
Although we will not depend on any one customer, we may rely on a few major
internet alliances. Our strategy in each regional market will rely on our
ability to build and maintain strategic relationships with providers of
restaurant guides and reviews including entertainment guides. Typically each
city has established "brands" of content providers in which consumers access
their information regarding dining. These portals may include but are not
limited to local newspapers, national branded sites with local dining guides
such as CitySearch, and restaurant guides such as Fodors and Zagats. By building
alliances with these companies, we hope to capture a critical mass of restaurant
patrons in each city that ReserveNet targets. In this manner ReserveNet hopes to
captivate an audience for its product. If the Company is unsuccessful in
establishing an alliance with an established brand in a market where few content
providers exist, the Company may fail to attract the requisite critical mass of
patrons to utilize its service. This may have an adverse financial impact on the
Company.
The Company must also build a critical mass of restaurant owners to subscribe to
its products and services. The Company hopes to amass a diverse restaurant base
to appeal to the taste and preferences of its web and wireless consumers. In
order to shorten the time to acquire individual restaurants, the Company will
seek partnerships in the restaurant supply industry to capitalize on
cross-selling opportunities and build strategic relationships.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts. When
we have sufficient funding, and a successful test market of our prototype,
management will seek legal counsel to determine if any registrations would be in
the best interests of the company.
20
REQUIREMENTS FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES
We are not required to apply for or have any government approval for our
products or services.
EFFECT OF GOVERNMENTAL REGULATIONS ON THE COMPANY'S BUSINESS
ReserveNet's business is not subject to material regulation by federal
governmental agencies.
RESEARCH AND DEVELOPMENT FUNDING DURING THE LAST TWO YEARS
We have not expended funds for research, although there has been limited
progress in the development of ReserveNet's website, no progress has been made
to date on the specifications of its prototype.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
We have not expended any funds for compliance with environmental laws and do not
anticipate our business plan will encompass any such compliance requirements.
NUMBER OF EMPLOYEES
ReserveNet's only current employee is its CEO, Daniel Regidor. The Company plans
to rely on the services of its outside board member, Rick Collins, who will
focus on formulating its sales and marketing strategies in addition to forming
strategic relationships. The two officers are currently able to devote no more
than about ten to fifteen percent of their available time to manage the affairs
of the company. The officers intend to work on a full-time basis when the
company raises capital per its business plan and has the ability and resources
to better facilitate the payment of salaries.
REPORTS TO SECURITY HOLDERS
We provide an annual report that includes our financial information to our
shareholders. In connection with the filing of this registration statement, we
intend to simultaneously request that we become an SEC "reporting company." In
doing so, we will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-B for a small business issuer under the Securities Exchange Act of
1934. As a result of its "reporting" status, ReserveNet will become subject to
SEC disclosure filing requirements and will be required to file its quarterly
financial information on Form 10-Q and an annual report on Form 10-K. In
addition, we will file Form 8's and other proxy and information statements from
time to time as required. We do not intend to voluntarily file the above reports
in the event our obligation to file such reports is suspended under the Exchange
Act.
21
The public may read and copy any materials that we file with the Securities and
Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450 Fifth
Street NW, Washington D. C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC.
PLAN OF OPERATION
ReserveNet is seeking to raise $1,500,000 by way of a private offering, debt, or
some combination thereof to fund its product development, initial product
rollout, establish offices, pay salaries and purchase capital equipment. It is
also likely that between twelve and eighteen months from this 2nd stage funding,
we will seek to raise an additional $1.500,000, at higher valuations. These
funds will be used to support additional staffing, working capital and costs of
branding requirements over a two-year horizon.
Our current cash balance is $15,658. Management believes the current cash
balance is sufficient to fund its current minimum level of operations through
the fourth quarter of 2001, however, in order to advance the business plan we
must raise capital through the sale of equity securities and/or debt. We are a
developmental stage company and have generated no revenue to date. We have sold
$28,500 in equity securities. The sales of equity securities have allowed us to
maintain a positive cash flow balance. We have received a going concern opinion
of our financial statements that raises substantial doubt as to our ability to
establish the Company as a going concern.
We will only be able to advance our business plan after we receive capital
funding through the sale of equity securities and/or debt. After raising
capital, management intends to hire employees, rent commercial space in San
Francisco, CA, purchase furniture and equipment, and begin development of its
operations. We intend to use the equity capital to fund the business plan during
the next twelve months, as cash flow from sales is not estimated to begin until
year two of the business plan. We will face considerable risk in achieving each
of our benchmarks in our business plan, such as difficulty of hiring competent
personnel within budget, difficulty in securing the most current technology in
light of the fast pace of technological obsolescence, and a possible shortfall
of funding due to the overall general market conditions. If no funding is
received during the next twelve months, we will be forced to rely on the
Company's existing cash in the bank and funds loaned by the directors and
officers. The officers and directors have no formal commitments or arrangements
to advance or loan funds to the company. In such a restricted cash flow
scenario, we would be unable to complete our requisite benchmarks according to
our business plan, and would, instead, delay all cash intensive activities.
Without necessary cash flow, we may be dormant during the next twelve months, or
until such time as necessary funds could be raised in the equity securities
market.
DESCRIPTION OF PROPERTY
ReserveNet's principal executive office address is 3701 Sacramento St. #323, San
Francisco, CA. The principal executive office and telephone number are provided
by an officer of the corporation. The costs associated with the use of the
telephone and mailing address were deemed by management to be immaterial.
Management considers the current principal office space arrangement adequate
until such time as we are able to achieve our business plan goal of raising
additional capital of $1,500,000 and then begin hiring new employees per the
business plan.
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The principal executive office and telephone number are provided by Mr. Regidor,
an officer of the corporation. The costs associated with the use of the
telephone and mailing address were deemed by management to be immaterial as the
telephone and mailing address were almost exclusively used by the officer for
other business purposes.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
ReserveNet plans to file for trading on the OTC Electronic Bulletin Board which
is sponsored by the National Association of Securities Dealers (the "NASD") as
soon as the Securities and Exchange Commission notifies us that our SB-2
Registration Statement is effective and we have also become a "reporting"
company. There can be assurance that the company will be cleared for trading by
the NASD if, and when, it ever files for public trading. The OTC Electronic
Bulletin Board is a network of security dealers who buy and sell stock. The
dealers are connected by a computer network that provides information on current
"bids", "asks" and volume.
As of the date of this filing, there is no public market for our securities.
There has been no public trading of our securities, and, therefore, no high and
low bid pricing. As of July 31, 2001, ReserveNet had twenty-seven (26)
shareholders of record. We have paid no cash dividends and have no outstanding
options.
EXECUTIVE COMPENSATION
ReserveNet's current officers receive no compensation and have received no
restricted stock awards, options, or any other payouts. As such, we have not
included a Summary Compensation Table.
There are no current employment agreements between ReserveNet and its executive
officers.
The officers currently devote an immaterial amount of time, no more than 10-15%
of their time, to manage the affairs of the company. The directors and principal
officers have agreed to work with no remuneration until such time as we receive
sufficient revenues necessary to provide proper salaries to all officers and
compensation for directors' participation. The officers and the board of
directors have the responsibility to determine the timing of remuneration for
key personnel based upon such factors as positive cash flow to include stock
sales, product sales, estimated cash expenditures, accounts receivable, accounts
payable, notes payable, and a cash balance of not less than $100,000 at each
month end. When positive cash flow reaches $30,000 at each month end and appears
sustainable, the board of directors will re-address compensation for key
personnel and enact a plan at that time which will benefit the company as a
whole. At this time, management cannot accurately estimate when sufficient
revenues will occur to implement this compensation, or the exact amount of
compensation.
23
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the corporation or any of its subsidiaries, if any.
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
The following audited financial statements of the Company for the seven months
ended May 31, 2001, the two months ended December 31, 2000, and the cumulative
period since inception were prepared by Beckstead & Associates an accountancy
firm.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There have been no changes or disagreements.
G. BRAD BECKSTEAD
Certified Public Accountant
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877 (efax)
24
INDEPENDENT AUDITOR'S REPORT
June 18, 2001
Board of Directors
ReserveNet, Inc.
Las Vegas, NV
I have audited the Balance Sheets of ReserveNet, Inc. (the "Company") (A
Development Stage Company), as of May 31, 2001 and December 31, 2000, and the
related Statements of Operations, Stockholders' Equity, and Cash Flows for the
periods then ended, and for the period October 31, 2000 (Date of Inception) to
May 31, 2001. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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 statement presentation. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of ReserveNet, Inc. (A Development
Stage Company) as of May 31, 2001 and December 31, 2000, and the results of its
operations and cash flows for the periods then ended, and for the period October
31, 2000 (Date of Inception) to May 31, 2001, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/G. Brad Beckstead, CPA
- -------------------------
G. Brad Beckstead, CPA
RESERVENET, INC.
(a Development Stage Company)
BALANCE SHEETS
May 31, December 31,
2001 2000
-------- ------------
Current assets:
Cash $ 18,633 $ 3,575
Total current assets 18,633 3,575
Total Assets $ 18,633 $ 3,575
Liabilities and Stockholders' Equity
Current liabilities:
Due to shareholder $ 385 $ 2,732
Total current liabilities 385 2,732
Stockholders' equity:
Common stock, $0.0001 par value,
100,000,000 shares authorized,
1,900,000 and 1,400,000 shares
issued and outstanding as of 5/31/01
and 12/31/00, respectively $ 190 $ 7
Additional paid-in capital $ 28,310 3,493
Deficit accumulated during
development stage (10,252) (2,657)
-------- --------
Total Stockholders' equity 18,248 843
Total Liabilities and
Stockholders' Equity $ 18,633 $ 3,575
25
RESERVENET INC.
(a Development Stage Company)
STATEMENT OF OPERATIONS
Period October 31, 2000 October 31, 2000
Ended (Inception) to (Inception) to
May 31, 2001 December 31, 2000 May 31, 2001
----------- ----------------- ----------------
Revenue $ -- $ -- $ --
Expenses:
General administrative
expenses
7,595 2,657 10,252
----------- ----------- -----------
Total expenses 7,595 2,657 10,252
Net loss $ (7,595) $ (2,657) $ (10,252)
----------- ----------- -----------
Weighted average
number of common
shares Outstanding 1,523,967 623,358 1,045,736
Net loss per share $ (0.00) $ (0.00) $ (0.01)
RESERVENET, INC.
(a Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
---------- ---------- ---------- ---------- -------------
December 2000
Founder shares 1,400,000 $ 7 $ 3,493 -- $ 3,500
Net loss
October 31, 2000
(inception) to
December 31, 2000 -- -- -- $ (2,657) (2,657)
Balance 12/31/00 1,400,000 7 3,493 (2,657) 843
May 2001
Private offering 500,000 3 24,997 -- 25,000
May 2001
Forward 20:1
Stock Split -- 180 (180) -- --
Net loss
January 1, 2001 to
May 31, 2001 -- -- -- (7,595) (7,595)
---------- ---------- ---------- ---------- ----------
Balance 5/31/2001 1,900,000 $ 190 $ 28,310 $ (10,252) $ 18,248
---------- ---------- ---------- ---------- ----------
26
RESERVENET INC.
(a developmental stage company)
STATEMENT OF CASH FLOWS
Period Ended October 31, 2000 October 31, 2000
May 31, 2001 to December 31, 2000 to May 31, 2001
------------ --------------------- ----------------
Cash flows from
operating activities
Net loss $ (7,595) $ (2,657) $(10,252)
Adjustments to reconcile
net loss to net cash
used by operating
activities
Increase/(decrease) in
due to
Shareholder 6,766 2,732 9,498
(Increase)/decrease
in due from
shareholder (9,113) -- (9,113)
Net cash used by operating
Activities (9,942) 75 (9,867)
Cash flows from investing activities
Net cash used by
investing activities -- -- --
Cash flows from financing activities
Issuances of
common stock 25,000 3,500 28,500
Net cash provided
by financing
activities 25,000 3,500 28,500
Net increase in cash 15,058 3,575 18,633
Cash - beginning 3,575 -- --
Cash - ending $ 18,633 $ 3,575 $ 18,633
Supplemental disclosures:
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
Non-cash transactions:
Stock issued for
services provided $ -- $ -- $ --
Number of shares
issued for services -- -- --
27
RESERVENET INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - History and organization of the company
The Company was organized October 31, 2000 (Date of Inception) under the laws of
the State of Delaware, as ReserveNet, Inc. The Company has no operations and in
accordance with SFAS #7, the Company is considered a development stage company.
The Company is authorized to issue 100,000,000 shares of $0.0001 par value
common stock.
The Company is developing a web-based reservation management system for the
restaurant industry.
Note 2 - Accounting policies and procedures
Accounting method
The Company reports income and expenses on the accrual method.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash equivalents
The Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash equivalents. There
are no cash equivalents as of May 31, 2001.
Reporting on the costs of start-up activities
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up
Activities," which provides guidance on the financial reporting of start-up
costs and organizational costs, requires most costs of start-up activities and
organizational costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the adoption of SOP 98-5,
there has been little or no effect on the Company's financial statements.
28
Loss per share
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss per
share is computed by dividing losses available to common stockholders by the
weighted average number of common shares outstanding during the period. As of
May 31, 2001, the Company had no dilutive common stock equivalents, such as
stock options or warrants.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid or declared since inception.
Year end
The Company has adopted December 31 as its fiscal year end.
Note 3 - Income taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS #109)
"Accounting for Income Taxes". A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities. There is no provision for income taxes for the period
ended May 31, 2001 due to net losses.
Note 4 - Stockholder's equity
The Company is authorized to issue 100,000,000 shares of its $0.0001 par value
common stock.
All share and per share amounts have been retroactively restated to reflect the
splits discussed below.
During December 2000, the Company issued 2,800,000 shares of its $0.0001 par
value common stock to an officer and director in exchange for cash in the amount
of $3,500.
During May 2001, the Company closed its private offering and sold 500,000 shares
of its $0.0001 par value common stock for total cash of $25,000 pursuant to
Section 25110 of the Corporate Securities Law of 1968 under the Rule 260.103
exemption from qualification requirements.
On May 28, 2001, the Company rescinded 70,000 shares of its $0.0001 par value
common stock from the founder of the Company in order to increase the
attractiveness of the capital structure to potential outside investors and to
increase the relative control of its current shareholders.
On May 28, 2001, the Company effected a 20-for-1 forward stock split of its
$0.0001 par value common stock.
There have been no other issuances of common stock.
29
Note 5 - Going concern
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not commenced its planned principal
operations and it has not generated any revenues. In order to obtain the
necessary capital, the Company intends to raise funds via future securities
offering. If the securities offerings do not raise sufficient capital, it would
be unlikely for the Company to continue as a going concern.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
Note 6 - Warrants and options
There are no warrants or options outstanding to acquire any additional shares of
common stock.
MANAGEMENT'S PLAN OF OPERATIONS - KEY BENCHMARKS
(1) Outline prototype specifications RFPs 2-6 months
(2) Raise additional financing VC/Angel presentations 6-10 months
(3) Develop prototype Engineering 10-12 months
(4) Test prototype Engineering 12-15 months
(5) Raise additional financing VC/Angel presentations 14-16 months
(6) Hire operating staff Recruitment 16 months
(7) Test market prototype Strategic alliances 16-19 months
30
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our By-laws provide for the indemnification of our officers and directors with
respect to their duties in performing in the capacity of their offices. The
board of directors makes the determination with respect to the indemnification
of the directors, officers, or employee as is proper under the circumstances if
he has met the applicable standards of conduct set forth in the Delaware Code.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We have estimated the costs of this offering to be as follows. These will be
borne by us, on behalf of the selling security holders.
Registration Fee $ 13
Legal Fees 1,000
Accounting Fees 1,500
Other 500
-----
Total Estimated Costs 3,013
RECENT SALES OF UNREGISTERED SECURITIES
The company has had the following sales of unregistered securities:
During December 2000, the company's board of directors authorized the issuance
of up to 300,000 shares of its common stock to the founder at a cost of $0.025
per share. The founder subsequently purchased 140,000 shares of common stock for
a total of $3,500. In such transaction, the company relied upon Section 4(2) of
the Securities Act of 1933, as amended. The founder falls under the definition
of an accredited investor under Regulation D, Rule 501(a) of the Act.
During May 2001, the company closed its private offering and sold 25,000 shares
of its common stock at a price of $1.00 per share to twenty-five (25)
non-affiliated private investors. In doing so, the company relied upon Rule 504
as promulgated by the Securities Act of 1933, as amended. As part of this
offering, each prospective investor was provided a detailed offering memorandum
which sought disclose to the investor all the pertinent details and risks of an
investment in the company. These included such things as the offering details,
risks, financial statements, management, and the business plan/strategy. The
subscription agreement also provided for such investor acknowledgements that
they were either an accredited or sophisticated investor, that they were buying
for their own account and not with a view towards further distribution, and that
they indeed had the opportunity to ask management questions and to seek further
corporate advice, if necessary. The Company did not accompany the offering with
any general advertisement or general solicitation.
31
On May 28, 2001, the Company rescinded 70,000 shares of its common stock from
the founder in order to increase the attractiveness of the capital structure to
potential outside investors and to increase the relative control of its current
shareholders.
On May 28, 2001, the company effected a 20-for-1 forward stock split of its
shares.
EXHIBITS
Exhibit 3(i) Articles of Incorporation Included
Exhibit 3(ii) By-Laws Included
Exhibit 5 Opinion re: Legality Included
Exhibit 11 Statement re: per share earnings See Financials
Exhibit 23 Consents of Experts and Counsel Included
UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers of sales are being made, a
post-effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
b. Reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent
post-effective amendment, which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
c. Include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and that 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 hereby which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to the Company's Directors, Officers, and controlling persons
pursuant to the provisions above, or otherwise, the Company 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, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of the Company's Directors,
Officers, or other controlling persons in connection with the securities
registered, the Company will, unless in the opinion of its legal counsel the
matter has been settled by controlling precedent, submit the question of whether
such indemnification is against public policy to a court of appropriate
jurisdiction. The Company will then be governed by the final adjudication of
such issue.
32
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing Form SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in the city of San Francisco,
state of California, on August 22, 2001.
ReserveNet, Inc.
By /s/ Daniel Regidor
------------------
Daniel Regidor,
President, Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
dates stated.
/s/ Daniel Regidor August 22, 2001
- ------------------ ---------------
Daniel Regidor Date
President and Director
(Principal Executive Officer,
Principal Financial Officer,
Principal Accounting Officer)
33